Insight

Market Overview • Sector Focus • Company Profiles
%FDFNCFS 2010

Published by Edison Investment Research

Edison Insight

Table of contents
Market overview Sector focus Company profiles Events diary Stock coverage 2 15 19 123 125

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Published 2 December 2010

Welcome to the December edition of the Edison Insight. We now have over 250 companies under coverage, of which 208 are profiled in this edition. The book opens with a market overview from Alex Gunz, where we discuss prospects for 2011. We believe many of the problems that have characterised the past year (ongoing deleveraging, moribund growth, rising inflation) look set to persist at least for the coming months. As a result, equities are likely to continue to experience volatile movements. Against this background, our equity allocation process remains unchanged for now, favouring diversified growth and high cash returns. In this month’s sector focus section, Elaine Reynolds talks about little victories in oil & gas and Katherine Thompson gives a summary of our cloud computing report. 4SC, Endace and Evolva have been added to the Edison Insight this month. Readers wishing greater detail should visit our website (www.edisoninvestmentresearch.co.uk), where reports are available for download. Edison is Europe’s leading investment research company. It has won industry recognition, with awards in both the UK and internationally. The team of more than 50 includes over 30 analysts supported by a department of supervisory analysts, editors and assistants. Edison writes on more than 250 companies across every sector and works directly with corporates, investment banks, brokers and fund managers. Edison’s research is read by major institutional investors in the UK and abroad, as well as by the private client broker and international investor communities. Edison was founded in 2003 and is authorised and regulated by the Financial Services Authority. We welcome any comments/suggestions our readers may have. Neil Shah Director of Research

December 2010

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we forecast that markets in 2010 would exhibit none of the synchronicity they showed in 2008 and 2009 (downwards and upwards respectively) and that 2010 would be characterised mostly by volatility.2%. In reality. Gold also remains highly attractive in our view.Edison Insight Equity market overview and strategy Events from the last month constitute a familiar pattern to the extent that equities continue to exhibit profound swings both to the upside and downside as investor psychology appears to be overruling fundamentals. Inconsistent macro and micro data. utilities) principally at the expense of the consumer and financials sectors. Edison Investment Research May/10 VIX Looking ahead. the auguries are not good: GDP growth is slowing in 2 2 December 2010 Nov/10 Aug/10 Jan/10 Jun/10 Feb/10 Mar/10 Oct/10 Apr/10 Jul/10 . it may be difficult for equities to break out of their relatively range-bound trading patterns. a particularly disappointing performance when one considers the positive effect that should have been accorded by interest rates being effectively at zero. Set for a repeat One year ago in our December 2009 Equity market overview and strategy. We continue to expect equities to trade within a relatively narrow band. Exhibit 1: A volatile year for equities 3200 3000 28 00 2600 2400 2200 2000 20 10 0 50 40 30 Sep/10 All-Share Source: Bloomberg. but as fundamentals move back to dominate. tried and tested policies (QE II) have all seen our thesis broadly borne out. Stagnating growth and rising inflation represent other concerns. while down almost fourfold from its Lehman spike. there is a risk that these encouraging results patterns may not prove sustainable. How long such a process may take remains fully to be seen. it is hard to see how the next 12 months will be markedly different. and surprises/disappointments along the way will undoubtedly create investment opportunities. At present. As we have written previously. with pronounced swings both to the downside and upside. These factors have somewhat masked a recent improvement in corporate earnings. Until we see a consistent and coherent approach to debt reduction (excess leverage is still the biggest issue plaguing the financial system) and/or sustainable top-line growth from corporates. Further volatile dislocations may have to come before confidence can return fully. volatility (measured by the VIX index). the All-Share has oscillated in a range of 2485-3033. Looking ahead to 2011 we consequently see no reason to change our current equity strategy. A broadly similar pattern has been repeated in other global indices. favouring diversified growth (basic materials) and high cash returns (telcos. With but a month of the year remaining. exogenous shocks (from eurozone sovereign debt crises to agricultural product price hikes via hints of war in Korea) and the resort to tired. where investors would “most likely gain distinction through differentiation”. what this may imply is more pain: fiscal austerity needs to be combined with monetary loosening. and finds itself up just 6. namely a lack of suitable policy instruments to manage the ongoing painful process of deleveraging across the developed world. is still more than double where it has traded for much of the mid-2000s. labour markets need more structural reform and the euro probably needs to go. A review of the latter suggests the same familiar problems beset the global economy.

the All-Share crossed the 3. the biggest issue (which matters particularly in markets that are being driven more by psychology than fundamentals) is simply one of confidence: investors do not seem to believe either in the potentially restorative powers of further quantitative easing or in the EU’s latest bail-out – more may be needed of both. with the All-Share having since declined by 2.Edison Insight Germany and France. These oscillations (a repetition of the trends seen for most of 2010) have been a function of several factors. It is interesting to note how little investor euphoria has been apparent over the conclusion of Ireland’s rescue – in stark contrast to the reaction following the confirmation of the Greek support package – and movements in bond yields (see Exhibit 2) suggest that more bail-outs may now been an unfortunate inevitability. After the initial excitement of QE II. industrial output has shown signs of stalling in China and India. the main engines of the eurozone. we do not discount the possible launch of QE III at some stage in 2011. and inflation seems to be on the rise almost everywhere. and even Belgian) spreads relative to the Bund have continued to widen. Recent history suggests there is a strong element of moral hazard attached to failing-nation behaviour and the eurozone’s problems are arguably increasing rather than diminishing. the gloss seems to have worn off remarkably quickly. An eventual IMF/EU €85bn bail-out for Ireland combined with at least €15bn of domestic spending cuts and tax rises is unlikely to mark the end of the eurozone saga. Spanish (as well as Italian. a risk that will only be exacerbated by unresponsive policy-making from other recalcitrant nations. there has been no consolidation of these gains. At heart is the question of for how long German voters (even with unemployment at a 20-year low and business confidence at a 20-year high) remain willing to support failing peripheral eurozone nations.000 mark. but most crucially relate to sentiment/ reality centred on quantitative easing and the future of the Eurozone. it has taken just over six months for all (and more) of the vociferous concerns over its stability cited at the time of Greece’s bail-out to resurface.6% and November having seen more ‘down’ trading days than the inverse. increasing policy (re)application also runs the inevitable risk of suffering from diminishing returns. The day after America’s second round of quantitative easing was announced (4 November). a level last seen before the collapse of Lehman Brothers in September 2008. According to economic analysis by the IMF. Putting this factor to one side. but also by the high degrees of scepticism voiced by central bankers from a number of nations. Not only is QE II an untried policy that “smacks of desperation” (according to the Lex column in The Financial Times. as evidenced not only by investors’ reactions. Optimists asserted that the path to recovery was clearer and the UK market hence moved to a peak of 3033 on 9 November. At the most basic level. up 22% from its July low and with a rise of c 10% from the start of the year. Trading patterns in the last month demonstrate just how quickly sentiment can change. However. 2 November). As we have written previously. Given the challenges that QE II may face combined with the possible stagnation of the global economy. concern over these matters has also clearly overlaid emerging signs of slowly improving corporate earnings. but also most economists appear in agreement that they have little idea whether a second round of quantitative easing will actually work. it may take as long as four years following the end of a recession for unemployment to return to pre-recession levels. With regard to the eurozone. Furthermore. our more specific concerns relate to the fact that the Fed may be overestimating by how much and how fast unemployment can fall. suggesting that the US (and much of Western Europe) is still on a long and painful journey. Greece recently announced that its 2 December 2010 3 . the Fed alone cannot do everything to turn around the global economy and a notable lack of consensual support (more the opposite) from other nations suggests the challenge will be significant. However.

There is only a finite amount of cost-cutting and leverage gains companies can bring to bear in the absence of top-line growth.55 1. As positive as this trend is surprising.4%. Revenue improvement. Next) as well as some global industrial players (e.20 1.g. particularly in the face of weak growth.Edison Insight public debt (at 15. has been the strength in recent corporate earnings. spreads on bond yields continue to rise and the euro weakens. as mentioned previously. for example. Burberry and BT all having recently surpassed expectations when reporting results. but also that failure becomes a self-fulfilling prophecy. may also be likely further undermined going forward by rising inflation. Exhibit 2: Eurozone crisis as ‘periphery’ nation bond spreads widen and the euro weakens 10-year govt bond spreads over German bunds 10 8 6 4 2 0 1. Reckitt Benckiser and Vodafone to name but a few. Compass Group.35 1.40 1. such as it is. favouring undervalued growth with emerging markets exposure and/or highly cash generative (and shareholder-returning) businesses and against this background it is possible to identify a strong range of candidates – in the UK. A number of consumer-facing businesses in particular (e. a similar picture has occurred with firms as diverse as Barclays. ArcelorMittal) are already warning of this risk and whether cash-constrained consumers and corporates will accept input-cost pass-through and continue to spend remains highly uncertain. while the gap between those firms raising guidance relative to those cutting stands at its highest since 1999 according to Bloomberg. The stark reality is that at present only two of the eurozone’s states (Luxembourg and Finland) meet both the deficit (not more than 3% of GDP) and debt (no more than 60% of GDP) criteria for EU membership.50 1. Our strategy pertains to one of stock selection. Over 75% of US companies reporting in Q3 exceeded consensus expectations.6%) and it has already begun to fall behind with its repayments to the EU/IMF. In the interim. While it is hard to predict how events will ultimately play out. Aggreko. In the UK. Beyond such best-in-class businesses. There remains a clear confusion between the political and economic ends of the EU and there is a clear risk not only of contagion (from Greece and Ireland).45 1. it is fair to contend that investors will likely have to endure further bouts of substantial volatility. Edison Investment Research If a second round of quantitative easing and the bail-out of Ireland both have their antecedents in events of the previous 18 months – and so ought not to have constituted a major ‘surprise’ to investors given the challenges facing the global economy – one source of revelation. combined with a mean dividend yield of 3. it appears that investors have had some tendency to overlook better performance amid macroeconomic tumult.25 1. GSK. 4 May/10 2 December 2010 Nov/10 Jan/10 Jun/10 Feb/10 Mar/10 Oct/10 Apr/10 Jul/10 . Marks & Spencer. we are forced to question the sustainability of such recent strength.g.15 EUR/USD rate Percentage points May/10 Sep/10 Jan/10 Jun/10 Feb/10 Mar/10 Apr/10 Jul/10 Nov/10 Aug/10 Oct/10 Sep/10 Aug/10 Spain Portugal Ireland Greece Source: Bloomberg.30 1. our concerns relate to sustainability.2% year-to-date (some 14 points ahead of the All-Share). Investors in these five names have been rewarded by an average share price return of 20. Even if we are incorrect in this thesis.4% of GDP) was higher than previously disclosed (13.

inherent scarcity value and a hedge against either inflationary or deflationary scenarios. Edison Investment Research Market review: Still stumbling The story of 2010 for UK (and global) equities has been one of pronounced swings as Exhibit 1 amply demonstrates.8% despite having hit a 52-week high on 9 November. domestic investors can at least take comfort from the fact that the FTSE-100 and the All-Share have comfortably outperformed their European counterparts. Robert Zoellick. On a year-todate basis.Edison Insight After the robustness of the Q3 reporting season. balanced with underweights in the consumer and financial space. World Bank President. On a three-year view. we continue to stress the merits of gold. with the All-Share having traded down 0. Put simply. further stoking positive sentiment. As we discuss in more detail below. up from 6. at the risk of repetition (from previous editions of Insight). Additionally. the disparity in index performance has. at least for the early part of 2011. Trading patterns from the last month have served only to reinforce this thesis. particularly since our central thesis is for further volatility. has also recently suggested the return to a modified gold standard.5 points a month ago. this leads us to an overweight stance in basic materials. The precious metal hit a 52-week high on 9 November while it has outperformed the MSCI Global equity index by 20. we favour emerging over domestic growth and place a high emphasis on free cashflow/dividend generation. 130 120 110 100 90 80 Dec/09 Sep/10 Aug/10 Jan/10 Jun/10 Gold May/10 Feb/10 Mar/10 Nov/09 MSCI World Source: Bloomberg. telcos. As in previous months. With internal planning and budgeting likely to complete soon. While the UK’s performance can hardly be described as satisfying. Again. the number of positive and negative trading days have been roughly equal (down days have won out slightly).000/oz.9% on a year-to-date basis. while also continuing to keep a high focus on defensives. combining some sectors/stocks that would benefit from any move towards the risk trade. with the relative gains between these indices having widened in the last month. while an equal number of the market sectors we track have gained relative to declined in value (see Exhibit 8 below). We therefore continue to advocate the adoption of a ‘bar-bell’ approach. been most notable between perceived ‘safe’ and ‘failing’ eurozone nations. some 40% above current levels. the All-Share has outperformed the Euro Stoxx by 8. we see limited reason for changing our theoretical asset allocation strategy. utilities and healthcare. As a result. with the German market (DAX30) having outperformed the Spanish 2 December 2010 5 Oct/10 Apr/10 Jul/10 . the next two months will also likely see companies issuing guidance for 2011 for the first time. we are also concerned that there may perhaps be undue optimism levels ahead of the impending fourth-quarter reporting season. Exhibit 3: Gold has been a significantly better investment than equities in the last 12 months Note: Rebased to 100.7 percentage points. however. with a similar pattern repeated between the FTSE-100 and the Euro Stoxx 50. In the last month. We reiterate our view that this remains an attractive asset class with no counterparty risk. we see here some risk for disappointment. we believe it could reach $2.

5) (5.1 10.3 7.3% relative to the estimated 2. Returning to the UK.9 4. then the Euro Stoxx’s performance would likely be notably worse.8 ) (4. a negative indicator.6) (7.0 (18 .6% despite 151.5) Source: Datastream. Meanwhile.0% year-to-date.6 5.3 22.6) 0. we remain sceptical about whether a slowing growth scenario is fully discounted. it is also clear to see that those sectors that have delivered the most impressive gains year-to-date – namely industrials and basic materials – have a strong non-domestic bias. the largest increase since May.7 6.2 (7.8 1. In the US (still the world’s largest economy. Exhibit 4: Relative performance of major European indices (in percentage points) Y TD FTSE 100 FTSE All-Share DJ EURO STOXX 50 DJ EURO STOXX France CAC40 Germany DAX30 Spain IBEX35 Italy MIBTEL30 U K re la tive to E urope FTSE 100 vs EURO SROXX 50 FTSE All-Share vs EURO STOXX 12. As we discuss in more detail below.3 15. the spread between these two indices has exceeded 40 points.0% reading for Q2).0 5. Edison Investment Research Outlook: Six key questions for 2011 As inevitable as it is topical.0 10.8 ) (3.7 9.7 3. Below is a (non-exhaustive) list of considerations we feel important.8 (4. risks logically seem weighted on the downside.7 (2.000 jobs having been created in the last month. Despite record post-reunification confidence levels and employment rates in Germany.7) (0. and where The Economist forecasts a slowdown in 2011 GDP to 2. having gained 15. durable goods orders have declined for two of the last three months.6% for 2010). the unemployment rate remains stuck at 9.4% (against a 1.0 2.2) (2.6) La s t month (0.3 7.3% drop comparing to a 5. the rate of GDP growth 6 2 December 2010 . The picture is little different elsewhere in the developed world.3 2.3) 15.6 (11. On a 12-month basis. and with output set to decelerate.4 8 .4 19. The robustness of the DAX is notable. the health of the global economy will be crucial to these gains being maintained going into 2011.7) (2. We see good reason for such trends to continue and.8 8 . This has been helped by a favourable macro picture in Germany (discussed earlier) and stimulated by a large number of well-performing export-led businesses. were it not for the strength of the DAX.2) 2.6 La s t s ix months 12.2 10.0 (20.1 11. The ISM index remains above 50.0 5.5 12.0) (14.0 7.2) 3. Data released by Eurostat since the last edition of Insight highlighted a slowdown in eurozone GDP growth in Q3 to 0. While this does not suggest that the global economy will return to recession any time soon.5% rise the previous month. Current data points from around the world are also far from encouraging. with inventories rising faster than new orders.1) (9. Moreover. with October’s 3.5 2. December constitutes the moment when it seems appropriate to look ahead to the coming year and consider what factors may influence equity markets and what may be the sector/stock implications from our observations.1) La s t thre e months 10.2 5.7 La s t 12 months 9. When does the world start growing again? Policymakers and investors in 2011 will have to contend with a world where GDP growth in almost every nation – both developed and emerging – will decelerate relative to 2010. but has fallen in the last month. over 10 points better than the AllShare. recently rising consumer confidence (up in November for the first time in three months) masks the fact that the US Conference Board’s gauge is still almost 20 points below its five-year average.Edison Insight bourse (IBEX35) by over 15 percentage points.9 4.

How this can be enacted in the US. the developed world’s output gap remains significant GDP es timates : for 2010 and 2011 US UK Japan EU Germany France Brazil Rus s ia India China 0 2 4 2010 6 2011 8 10 12 Output gap as a % of GDP UK OECD US France Germany Japan 0 2 2011 4 2010 6 8 Source: IMF. but assuming that growth rates here will continue at their current pace also seems debatable – and hence implies some additional risks – as we discuss in more detail below. The Economist. that significant unused capacity exists in the economies of the developed world (see output gap data in Exhibit 5 below). it needs to be combined with fiscal reform. as the economies of Brazil.7% unemployment rate. there is the issue of timing – how quickly will it happen.8% decline compares to a 5. More broadly. next. the reality is more complicated: first.1%.Edison Insight over the last quarter shrank by more than threefold (2. The OBR has also recently (29 November) trimmed its UK GDP estimates both for 2011 and 2012. Industrial new orders are dropping (September’s 3. It is still rising in 19 of the EU’s member states and stands at above 20% in Spain. With unemployment rates still stubbornly high. The developing world may be able to help the western world through some of its transition. With regard to the output gap. even if there will likely be political stability in the world’s major developed economies in 2011 (no general elections are scheduled). and. However. which would logically eat-away at improved production. Both assumptions may be called into question. Optimists premise their better-growth outlook on two factors: first. then it will also likely result in higher inflation. Russia. there is also a strong case for labour market reform. combined with an absence of aggressive exchange rate devaluations. will all countries benefit equally. the UK can draw little comfort from its 7. Exhibit 5: 2011 GDP estimates point to a slowdown. most notably. OECD. finally what comes after BRIC? Investors also need to be selective in how they seek to gain exposure to this theme either through domestically listed plays or 2 December 2010 7 . higher than it has been in 12 years and also above levels in either the US or the UK.3% to 0. The current rate of growth in manufacturing may not be sustained. India and China necessarily continue to industrialise and modernise. Edison Investment Research When does the BRIC bubble burst? Few doubt the structural case. Furthermore. Even if QE II in the US does bring better growth (the expectation). a view endorsed by the Bank of England’s latest report (10 November) which states that “growth may slow in the near-term”. it seems unlikely that a consensus will emerge regarding coordinated fiscal and monetary policy. closing it requires efficient and coordinated policy stimulus. Despite robust manufacturing growth (at its fastest in the last 16 years according to figures released on 1 December). QE II alone may not deliver an improved performance. and second. remains to be seen. that deteriorating western world growth trends may be offset by robust emerging market patterns. with a now divided legislature.7%) and Germany’s relative success cannot mask the broader challenges besetting the eurozone. unemployment stands at over 10.1% rise for the previous month) and.

stating on 4 November than food inflation is “returning in force”. especially with growth also currently slowing in a number of peripheral Asian economies such as the Philippines and Thailand. Its index is close to peak levels witnessed during early 2008 and has risen by five percentage points in the last month. inflation has emerged as an incipient threat. In the near-term. inflation hit a two-year high in October of 4. The challenge is how to manage robust growth without the risk of over-heating and how to implement interest rate rises without choking growth. We do not expect the BRIC bubble to burst any time soon. its highest in two years according to the Office for 8 2 December 2010 .0%. Inflation is emerging in two distinct areas. South Korea and Australia. According to the UN. the inflation rate stands at 3. with consumer price inflation currently at its lowest level (0. both here and in China. considering other geographies (especially Africa) and also sectors. This view has been reiterated by a number of industry bellwethers.2% for October.6% for October) since 1957. in India. industrial output has now shrunk for two consecutive months.2% year-to-date. Visibility on these factors is low.3% since 1 January. with the CEO of Unilever.4 point rise in global GDP. However. the bigger concern relates to the rate at which rising input prices will feed into the economies of the developed world. Will we be best by inflation or deflation? The question of global growth is inextricably bound up with that of inflation.0% in the last month and input price inflation is running at 8.Edison Insight with. levels are “dangerously close” to creating a crisis. the UN Food & Agriculture Organisation is already warning that the world should “be prepared” for higher food prices next year. for example. Critics of Chairman Bernanke’s policies are wide of the mark in asserting that QE II can both not work and that it will result in inflation. with interest rate rises implemented over the last month in China. The other concern relates to Chinese (and other BRIC) demands for raw materials combined with the growing power of the consumer in these economies. but even putting this to one side. but the Sensex Index in India up 14. However.4%. which we see as an additional risk for investors. the Shanghai Composite Index down 13. up 0.8 points relative to the previous month. growth rates will likely slow. The Bank of England warns that it is likely to “remain elevated throughout 2011” and cites a “highly uncertain” outlook (comments from 16 November Inflation Report). Some steps have been taken to cool inflation. Beyond Japan. the US economy seems an exception in being preoccupied with deflationary concerns. which has seen structural downward pricing pressures for the last 20 years. A relative slowdown in growth (China should see its c 10% GDP rate come down to close 7%) combined with rising inflation remain near-term risks. up slightly relative to the previous month and still rising on a 12-month rolling basis. India (for the sixth time in 2010). where the rhetoric also currently and firmly remains one of keeping interest rates in check. Factory gate inflation – ie producer prices – rose 4. eating into already slowing growth. for example. More significantly. we believe inflation is more likely than not to grow in force during 2011. 30 October) suggests that every percentage point of incremental GDP growth in China takes at least five years to feed through to a 0. but remain significantly above developed market levels (see Exhibit 5 above) and. First. gold a clear beneficiary. The concomitant of one is the other. we would also advocate thinking beyond this tactic. Here. but investors should be mindful of assuming that these economies alone can drive the world back to prosperity. The UK constitutes an interesting (and potentially worrying) case study. Diversified basic materials stocks remain our favoured strategy for gaining exposure to emerging economies (and investors following this approach have gained >25% in the last year). Stagflation is a plausible scenario in our view. Analysis from the IMF (reproduced in The Economist. In China.

Our concerns relate to excess leverage and insufficient liquidity within the financial system. Edison Investment Research Wither the consumer? The consumer matters. we see negative implications for other sectors under the consumer umbrella. it is unlikely to be a panacea for equity markets in our view.0% 6. being responsible for more than 60% of GDP in the UK and over 70% in the US. How the economy performs is.0% 0.0% 2. Marks & Spencer. We find little cause for comfort within the financial sector. Will there be light at the end of the tunnel for the financial sector? Our other major negative sector stance for the past year (in contrast to our consistently positive stance on basic materials. Among the retailers. reinforcing our negative stance on these sectors. both factors that will likely be compounded by the still-unknown consequences on ongoing eurozone sovereign debt exposure.Edison Insight National Statistics. The indicators are negative.0% 1. Exhibit 6: UK inflation and unemployment trends suggest stagflation may be coming Inflation 4. risks seem heavily weighted towards the downside. discussed earlier) has been the financial sector. Even if the current environment does favour M&A (companies might logically look to ‘buy’ growth if they are unable to generate it organically). 2 December 2010 9 Aug/10 Feb/09 Jun/09 Oct/09 Apr/09 . In this respect. VAT rises on 1 January will also only likely exacerbate matters. rising prices and high unemployment. with retail sales growth currently slowing (according to the ONS).5% 5.0% 3. highly contingent on the strength of domestic consumption. Could M&A help restore investor confidence? Investors faced with a slowing growth-rising inflation scenario may be able to find some scope for optimism from potential deal-making. but it will take time for the evidence on this to become clear. With regard to the former. our concerns relate not only to consumer exposure. In the meantime – and also. From an investment perspective. Next and Sainsbury’s are already warning of the consequences.0% Unemployment Feb/10 Dec/08 Dec/09 Aug/09 Jun/10 Apr/10 Aug/10 Oct/09 Feb/09 Jun/09 Oct/10 Apr/09 Feb/10 Dec/08 Dec/09 Aug/09 Jun/10 Apr/10 Value 12M rolling Value 12M rolling Source: Office for National Statistics. but also to the effect from a high oil price combined with ongoing capital intensity requirements. In the UK specifically. its lowest in 18 months and down from a recent peak of 120 in February. we find it hard to construct a positive case for the year ahead.0% 7.0% 8 . particularly airlines and media. and the Nationwide’s consumer confidence index at 53 for October.5% 7.5% 6. A more optimistic consideration would suggest that judicious policy-making (via interest rate rises) can help ward off inflation. and in common with the consumer space.0% 5. The implementation of Basel III regulation is another risk factor. 2011 will be see the negative impact of a lack of super-quadrennial events and therefore limited scope for upside potential to estimates. with the output gap failing to close. with the full impact of October’s spending cuts (and job losses) still to come combined with January’s increase in VAT. Turning to media. Additionally. domestically-oriented consumer plays would logically be the biggest potential losers from a moribund consumer. Stagflation remains the worst of all possible worlds. even of a scenario where deflation were to come to pass – then we reiterate our view that investors can benefit most through retaining their exposure to gold. therefore.5% 8 .

5% weighting in the All-Share relative to 13. we believe that the ‘bar bell’ approach makes most logical sense. Mid-cap UK equities may provide fertile ground for stock-picking. our views have remained highly consistent over the last 12 months. We therefore suggest choosing carefully. Risk aversion levels remain high and not all companies have the requisite balance sheet strength. which began 2010 as our most favoured sector and has been our second most preferred (after basic materials) for the last three months.7% in the last 12 months. valuation not supportive Structural concerns given outlook. given an uncertain macro environment. with over 20 FTSE-250 companies having succumbed to deals in the past year. Towards a sector ranking: Key considerations We review our theoretical sector allocations monthly and we see few reasons to change our stance for December and looking ahead into 2011. Moreover. utilities and healthcare allow us to gain exposure to both the ‘risk on’ and ‘risk off’ mentalities that could drive performance through until the year-end and beyond. underperformance creates opportunity Earnings momentum positive but slowing. With more than 150 transactions cancelled this year (note the recent postponements of the proposed floats of First Wind in the US and Bluestar Adiesso Nutrition in Hong Kong). Market volatility/ uncertainty have been typically cited as the reason for deferral. equivalent to a combined total of $55bn. heavy domestic bias D e c . M&A potential Valuation. The sector us up 17. but valuation demanding.09 Telecoms Basic materials Healthcare Utilities Industrials Technology Oil & gas Consumer services Consumer goods Financials As exhibits 7 and 8 highlight. Our conviction in basic materials has been vindicated by a 27. heavy domestic bias Structural concerns given outlook.8%). These sectors also have the benefit of high emerging markets exposure (basic materials) and substantial cash returns (the defensives) both themes we believe currently matter. the basic materials sector has persistently sat in either first or second place within our conceptual framework of sector rankings.2% gain in the last 12 months. Exhibit 7: Edison sector rankings and rationale for December. cash returns. present appetite for M&A is low. but at a noticeably slower rate than in the past. Against a backdrop of ongoing uncertainty and likely rising risk levels. M&A potential Defensive profile. valuation Valuation. The IPO market is also subdued. our core overweight sectors (in order) of basic materials. although this latter sector has a but 1. global exposure. According to a recent survey by Ernst & Young fewer than 25% of global companies say they are now seeking acquisition targets. risk aversion levels clearly remain high. 10 2 December 2010 . cash returns. some global exposure. recent gains unjustified M&A potential. the current distressed debt cycle still has much further to run (estimates suggest that $450-500bn of debt will need to be refinanced in the next three years). perhaps unsurprising. while the consumer sectors have also been among our least favoured for all of 2010. In other words. risks emerging Poor macro prognosis. relative to 38% six months ago. we have also been rewarded with a market-beating gain. As we have written in previous editions of Insight. On telecoms.4% for the former. telecoms. but we expect this to be a selective rather than broad trend for 2011. and how they compare to a year ago Pos ition Bes t D e c . US trends also negative Risk aversion levels rising.Edison Insight Deals have happened for much of the last year. While there have clearly been variations.10 Basic materials Telecoms Utilities Healthcare Industrials Oil & gas Technology Financials Consumer services Wors t Consumer goods Source: Edison Investment Research R a tiona le M-term fundamentals. some global exposure. a performance bettered among the UK sectors only by technology (29. some seven points ahead of the All-Share benchmark.

in reality. key valuation and performance data Note: * All Share benchmark weight.5% 4.4% 0.2% La s t s ix months 25. the performance of these sectors has been somewhat more robust.2% 2.0% (5.8 % La s t 12 months 27.9% 2.6% 6.4 13.7% 9.2% La s t month 1.9% 8 .9% 5. Exhibit 9: Edison sector rankings.1% 16.9% 12.4% 6. consistency in core sector calls Note: sectors ranked from 10 to 1.2% 20.2% 12.1%) (1. with 10 being the most preferred and 1 the least.8 % 2. 10 8 6 4 2 0 Sep/10 Nov/10 Dec/09 Telecoms Industrials Consumer goods Source: Edison Investment Research Basic materials Technology Financials May/10 Healthcare Oil & gas Utilities Consumer services Exhibit 9 below shows our current sector strategy.4% 1. with financials having been the second worst performing sector (up just 2.8 % ( 0.3% (1.7% Source: Datastream.9% 1.4 18 .5%) in the last 12 months.8 % 8 . growth and value As discussed earlier.0% 13. with consumer services performing in line with the market and consumer goods gaining 680 basis points on a market relative basis.0%) 23.6% 11.0% P/E 10.9 22.4% (1.5% 11.5% 23.4% 9.8 %) 0. however.2%) 29.8 % 2.4% 2. Exhibit 8: How our rankings have changed in the last 12 months.5 12.8 % 7. This strategy has worked.2% 7.5 14.3% 3.4% 6. Despite our caution on the consumer.5%) 1.4 18 .1% 100. we began 2010 being most cautious on the financial sector.7% 9.2% 17.0% 25.7 14.5% 17.3% 2.1 10.3%) (3.7%) (2.2% 4.9% 8 .6% 14.6% 6 .1% 0.9% 18 .2 13.0% Y TD 16. we have been encouraged by positive recent and more medium-term (one year) performance and believe there is substantially more to go for given structural long-term growth trends and also 2 December 2010 Dec/10 11 Aug/10 Jan/10 Jun/10 Feb/10 Mar/10 Oct/10 Apr/10 Jul/10 .0% (2. which coincided with a brief period of outperformance).5% 8 . investors will likely take into consideration a much broader range of factors. This performance.6% 2.3 Y ie ld 1.8 % ) La s t thre e 26. only serves to reinforce our negative conviction for the year ahead.6% 9.8 % 3.Edison Insight On the negative side.2% 1. Only oil and gas – compounded by BP – has performed worse.2% 0.9% 10. We have made no changes relative to the previous month. and while we turned more optimistic during the summer (July through to September.4% 3 .9% 13. we downgraded the sector again in October and have been cautious since.8 % 13.2% 4. which we caution is strictly illustrative since it only relates to hypothetical positioning across UK equities whereas.0% 10. Pos ition Best S e c tor Basic materials Telecoms Utilities Healthcare Industrials Oil & gas Technology Financials Consumer services Worst Ave ra ge Consumer goods We ight* 13.5% 8 . Edison Investment Research Basic materials: Momentum.7% 15.9 8 .5% 10.5% 13.7% 14.2% 23.

Exhibit 10: Defensives screen well on value and yield 2011 P/E multiples (x) Technology Industrials Financials Consumer goods FTSE All Share Consumer services Healthcare Oil & gas Basic materials Utilities Telecom 0 5 10 15 20 25 Utilities Telecom Healthcare Consumer goods FTSE All Share Oil & gas Financials Consumer services Industrials Basic materials Technology 0 2 4 6 2011dividend yields (%) Source: Datastream. and cash returns (4.1x 2011 P/E). while Cable & Wireless. from BT. healthcare looks the most expensive of the three defensive sectors and offers less scope for near-term M&A potential.Edison Insight currently supportive (c 11x 2011 P/E) valuation. we have concerns about potentially deteriorating earnings momentum and rising input costs (see. Vodafone is in the process of disposing of assets and unlocking value. Meanwhile. cost-cutting and operating leverage benefits may have begun to run their course. for example. GSK and Astra). and particularly its exposure to the BRIC economies. for example. Oil and gas: Near-term gains may not prove sustainable With the oil price close to a six-month high. Hill & Smith. within industrials we favour those stocks that offer global. in particular.9% sector yield). Arcelor’s last earnings release) may constitute an additional risk. All three sectors currently trade on sub-market multiples with above-average dividend yields. we believe that a headline P/E of more than 18x and a premium of greater than 20% relative to the UK market implies that much future upside potential has already been discounted. Some of the larger sector names also offer global exposure (especially in the form of Vodafone. Despite strong performances over the last six months – particularly from the telco and utility sectors – we see substantial valuation attractions (reinforced by recent strong results. the Q3 reporting season may represent an apogee for the sector.0% since 1 January) and investors may also welcome some of the increased clarity that was provided by the Strategic Defence & Security Review and Comprehensive Spending Review. Telco. Edison Investment Research Industrials: Risks to rise The performance of the industrial sector has been robust year-to-date (up 18. National Grid and Vodafone) and also upside potential from possible M&A. Looking ahead. and particularly emerging market exposure. Other UK industrials that have also referenced greater caution regarding the outlook in their recent releases include Cobham. the sector has rallied 13. their combination of attractive dividend yield and value. combined with relatively low economic risk. Elsewhere. United Utilities and Northumbrian Water have all attracted bid speculation in the past months. Given the heterogeneous nature of the sector. utilities and pharma: Attractive on yield and other factors The appeals of defensive sectors are broadly understood. However. Our relative preference for telco over utility and pharma is a function of valuation (8. Rolls Royce and Smiths Industries. Relatively. hence its relative undperformance. We favour this sector owing to its global characteristics. and BP’s well-documented problems now seemingly having passed.8% in the last three months. a performance only bettered by the basic 12 2 December 2010 .

we see risks weighted to the downside and expect recent underperformance to continue into 2011. Consumer goods and services: underweight on fundamentals Both the consumer services and consumer goods sectors have underperformed on a market relative basis in the last three months. while chip industry forecasts (from SIA. sees “a very sluggish. iSuppli) have also recently been trimmed. an outcome not fully reflected in current valuation levels in our view. Apple and Cisco have recently warned. Our team discussed the outlook in a recent note (see “The market remains well supplied”. October’s US durable goods figures were particularly weak for electronics (down 7.3%). low to no-growth consumer environment for some time to come”). Lloyds citing weak mortgage demand and RBS highlighting increasing losses. more may follow.2%) on a 12-month view appears to create an opportunity. while inventories stand at close to record levels.Edison Insight materials sector. on a headline multiple of more than 18x forward P/E is not supportive in our view. sector valuation. Despite recent rises to guidance from Dell and HP. and one driven largely by overseas exposure.7%) and communications equipment (down 12. As discussed earlier. the tech sector’s weighting in the UK market (at 1.and three-month view as being as welcome as it is overdue. While these factors may help drive some further near-term performance (and the Saudi Oil Minister has said on record that he sees oil in a “comfort zone” of $70-90/barrel).1% in the last month. 15 October). Even if sales do receive a temporary fillip in the run-up to Christmas and ahead of January’s VAT increase. but it remains the best performer in the All-Share since 1 January.5%) is small. but we expect this to be concentrated towards the lower end of the market cap spectrum. First. That the sector remains in negative territory (down 1. but supply and demand remain imbalanced. Next. Technology: More downside potential to come As discussed earlier. the performance of the UK financial sector – down 3. Beyond valuation and performance. for example. On the positive side. As a result. Companies including Debenhams. fundamentals give us cause for concern. only HSBC sounded an upbeat note. results from the recent reporting season have been highly mixed with Barclays citing a subdued economic environment and slowing new business growth. 2 December 2010 13 . especially given the sector’s rating of more than 22x forward earnings. 2011 looks set to be a considerably more difficult year. Financials: Performance disappointing. for UK investors some further M&A activity may materialise. Standard Chartered. Eurozone uncertainty notwithstanding. but have gained more than the All-Share on a one-year view. both which may likely be compounded by VAT hikes and potentially higher unemployment. outlook uncertain With bank exposure to Irish (and Portuguese) debt at the forefront of many investors’ minds. Moreover. Next. new Basel regulations may force banks (in particular) into another round of capital rising. we are concerned that the macro prognosis appears to be deteriorating. worse than any sector – is unsurprising. Marks & Spencer and Sainsbury’s have all highlighted increasing notes of caution in recent releases and interviews (Next. Home Retail. The sector has also lagged over every time period we analyse (see Exhibit 9 above) and we expect this to continue for the near-term for several reasons. BNP Paribas and Société Generale have all recently come to the market. Among the UK majors. Kingfisher. Finally. Our concerns are driven by poor consumer confidence and declining retail growth. while valuation (c 13x 2011 earnings) is also supportive. BBVA. we see its market relative underperformance on both a one.

Gold also remains highly attractive in our view. Stagnating growth and rising inflation represent other concerns. which has shown a recent improvement. utilities) principally at the expense of the consumer sectors. equities may likely remain volatile. namely a lack of suitable policy instruments to manage the ongoing painful process of deleveraging across the developed world. Lack of future visibility may also cloud the outlook for corporate earnings growth.Edison Insight Conclusions Equities may have risen more than 15% from their July lows. Global indices continue to exhibit profound swings both to the upside and downside as investor psychology appears to be gaining the upper hand over fundamentals. An assessment of the latter suggests that the same familiar problems beset the global economy. Looking ahead to 2011. but may not prove sustainable in our view. but events from the last month serve as a more appropriate indicator of current sentiment. we believe that until there is a consistent and coordinated approach to monetary and fiscal policy. It is against this background that our strategy for equities stays centred around favouring diversified growth (basic materials) and high cash returns (telcos. 14 2 December 2010 .

Edison Insight Focus on: Technology Oil & gas 2 December 2010 15 .

Sector performance 3. Given the predominant subscription model of SaaS businesses versus upfront licensing in software. Sales from US-listed software-as-a-service (SaaS) pure-plays alone are expected to be $4. see our sector report “Cloud computing: Managing the transition” available on the Edison website.2bn in 2010 and estimates call for 18% annual growth over the next two years Analyst Katherine Thompson versus c 7% for the rest of the software sector. For more information.PRICE INDEX Significant price changes one month (%) Nasstar 54 Focus Solutions 34 Endace 33 Belgravium Technologies 32 Scotty Group (24) Nov/09 Dec/09 Apr/10 Oct/10 16 May/10 Aug/10 Sep/10 Nov/10 Jan/10 Jun/10 Feb/10 Mar/10 Jul/10 2 December 2010 . and cloudrelated take-out values averaging 5. at a disruptive pace in some areas and evolutionary one in others.Edison Insight Sector focus: Technology Cloud computing: Managing the transition The emergence of cloud computing will reshape the software industry.000 2.500 3. Just like any other business model.1x Key sector data Number of constituents Average market cap. We offer advice to investors and corporates on how to manage this transition. Fundamental technology shifts are usually presented as an opportunity with the threats being underestimated – SaaS is no exception. We believe it is vital that software companies consider their approaches to cloud computing and define their strategies. This presents significant opportunities for companies and investors alike but threats and pitfalls also lie on the transition path ahead. with 36 SaaS businesses acquired in Q310 alone. successes and failures. The emergence of platform-as-a-service (PaaS) offerings from the likes of Salesforce.000 1. M&A in the sector is also rife.4x trailing revenues over the last year.8x 13.PRICE INDEX FTSE ALL SHARE S/W &COMP SVS £ .500 2.000 500 0 900 800 700 600 500 400 300 200 100 0 Sector P/E FY1 FY2 17. it is possible these figures underestimate the extent to which SaaS businesses are winning share. It is not clear to us whether SaaS will be value-creative or erosive for the software sector as a whole. there will be good SaaS companies and bad ones.com and Google could reduce barriers to entry for specialist applications while concentrating value around the first movers.3m 89 FTSE ALL SHARE .500 1. No of profitable companies Significant deall flow/catalysts Holiday season trading 102 £2. disclosing development milestones and metrics for the new business in order to give investors the tools to assess performance and valuation.

000 8 . it could see from experience that a rapid turnover of leases was very effective in stimulating exploration and appraisal activity. with the proposal being voted down in October and Europe-wide oil and gas safety regulations being strongly resisted. let’s make sure we don’t throw the baby out with the bathwater.000 3. Whatever solution is found.000 9.000 4. With terms designed to attract independent oil companies and niche specialists.000 6.500 2.500 1.PRICE INDEX FTSE ALL SHARE OIL &GAS £ . The oil price collapse in 1998 had resulted in a massive reduction in capital spending on the UKCS. No of profitable companies Significant deal flow/catalysts Bentley well results for Xcite Commence drilling at Catcher discovery Rachel well results for Desire Cairn completion of sale of Indian blocks to Vedanta 100 £2. Co. Promote gave the North Sea the kick-start it needed and helped to deliver increased activity. Clearly the issue of how small companies can handle a Macondo-style blowout needs to be addressed. Here we arrive at a serious dilemma: how to allow the smaller players to continue the activities that have been so crucial in the revival of fortunes in the North Sea and still maintain the ability to respond to a worst-case scenario? Without their involvement. with UK energy minister Charles Hendry stating that the UK sets the gold standard for safety in the EU. Analyst Elaine Reynolds Fast-forward 10 years and the industry is grappling with a different set of lessons from the Gulf of Mexico.000 2. and from this observation the Promote Licences were born. the jury is out as to how this will affect small companies in the North Sea. 137 Bowleven 92 Woburn Energy 83 Xcite Energy 71 December December December December Dec/09 Sep/10 Aug/10 2 December 2010 May/10 Nov/09 Nov/10 Jan/10 Jun/10 Feb/10 Mar/10 Oct/10 Apr/10 Jul/10 17 . Looking at the Gulf of Mexico. as seen on Macondo. the requirement to meet a worst-case scenario – with the equipment and significant resources that entails – risks restricting deepwater drilling in the area to the big players.000 500 0 10. Could the same thing happen here? The immediate threat of a suspension of EU Oil & Gas licences has been avoided for now.Edison Insight Sector focus: Oil & gas Little victories At the start of the decade.1x Key sector data Number of constituents Average market cap.1x 14. which could significantly affect small companies. Sector performance 3. however.000 1. This time round. In the Gulf. The main concerns regard high-pressure wells and deepwater drilling on the Atlantic Margin – where such a blowout is most likely to occur – and ensuring that smaller operators have both the technical backup facilities and access to funding to cover an extended operation.000 5.000 2.000 1. and the UK government was looking for ways to stimulate investment in the sector.PRICE INDEX Significant price changes one month (%) Haike Chemical GP 214 Bahamas Ptl.000 7. activity in the UK sector of the North Sea had slumped.000 0 Sector P/E FY1 FY2 19. There are suggestions that the government is looking to change the qualification criteria to become an operator in the North Sea.9bn 75 FTSE ALL SHARE .500 3. the government will not be able to extract as much as possible of the estimated 20mmboe left in the North Sea.

0 5.0 0.2) (1.8 5.2 17.1 32.0 308.1) 0.8) 24.7 N/A 2.6 (2184.35 6.7 1.9 8.5 N/A N/A N/A 21.7 (3.94 6.5 10.4 (2266.1) 0. Stock Year end Movement FY1 change in EPS h From To N/A 5.0 23.7 1.1) (2.1) N/A 5.1 9.5 0.4 (137.7) 23.3 18.2 10.1 11.4 304.6 5.5 27.9) 0.8 3.9) 4.9) (0.8 N/A N/A N/A 43.5) FY2 change in EPS 2 From To (93.5) (0.2 3.8) 251.1 3.5 (4.1) Ablynx Alliance Pharma Antisoma Arian Silver Armour Group Aurizon Mines Avon Rubber Bezant Byotrol Chemring Clearstream Technologies Group Daisy Group Eastern Platinum Entertainment One Fronteer Gold GMA Resources Gold One Gold One Goldplat Hogg Robinson Group Ithaca Energy K3 Business Technology Group KCOM Landkom LSL Property Services MDM Engineering Medcom Tech MedicX Fund Merrion Pharma Monitise Nevsun Resources Petropavlovsk Psion QinetiQ Rolls-Royce Group Sosei Supergen Trifast Umeco Volex WILEX Dec Jun Jun Dec Aug Sep Sep Jun Mar Oct Jul Mar Dec Mar Dec Dec Dec Dec Jun Mar Dec Jun Mar Oct Dec Mar Dec Sep Dec Jun Dec Dec Dec Mar Dec Mar Dec Mar Mar Mar Nov p nn nn nn pp pn n n pp pp pp pn p pp pn nn nn p nn nn n pn pp n p n nn p n pp nn p p n pp p nn nn nn nn nn 18 2 December 2010 .2 2.0 N/A (0.32 10.6 5.3 (4.6 39.2 21.2 (0.9 6.8) (1.40 46.5 N/A (1.9 (155.5 N/A N/A 0.7 6.9 3.9) 4.4) 108.52 38.0 19.4 N/A 11.92 7.4 7.2 27.8 3.3) 162.15 N/A 26.4 12.8) 22.5 (2.0 N/A N/A 0.3 (133.9) 245.2 (17.0 1.0) 10.7) 1.3 N/A 13.7 N/A 13.8) (94.72 13.5 15.0 (1.7 N/A 23.5 16.0 12.0 N/A (0.93 39.7 N/A 14.9 (177.9 2.2 (17.74 33.Edison Insight Forecast changes The table below details stocks where we have changed our forecasts to 2 December.2 1.3 22.7) 0.0 N/A N/A N/A 44.0 1.1 N/A (1.5 13.6 12.3) 73.9) (4.3) 2.9) 55.9 0.1 6.5 (18.5 N/A N/A N/A 27.2 9.3 22.2 5.0 (4.6 N/A 1.6 22.2 (0.4 12.5) 0.17 44.1 3.83 6.8) 0.9 38.1) (3.3 0.8 4.1 (41.3 22.

9) (22. The most important will be the COMPONENT study of vidofludimus in rheumatoid arthritis (RA). Y/E Dec Revenue (€m) 3.8 N/A N/A EPS (p) 36.6) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Robin Davison Sector: General Retailers Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 334.9 Forecast gearing ratio (%) N/A Market AIM.0 6.2 (3.7 17.Edison Insight Sector: Pharma & Healthcare Price: €3. Its main operations are in the UK. Pfizer/Amgen).2) 12m (2.9 N/A N/A P/CF (x) 8.0 26. under pressure as a result of government deficits.1 N/A N/A Price performance % Actual Relative* 1m (0. INDUSTRY OUTLOOK Company description Abcam is focused on making. 2017-18. has just rendered a positive result and the other three are all due to read-out by mid-2011. There are millions of such antibodies and the market is fragmented.0 EBITDA (€m) (10.6) (22. if successful.8) (15.3) EPS (c) (45. The major TNF inhibitors already generate sales already in aggregate of c $18bn across all indications (RA and other autoimmune diseases). It must balance the proportion of newly added proteins and reagents (which have less potential as data-rich products) with new antibodies in niche areas to drive and sustain future growth.0 1.6 N/A N/A P/E (x) 9. would confirm blockbuster potential for this product.0) (19. INDUSTRY OUTLOOK The RA and IBD markets are expected to be worth $14bn and $5bn respectively by around Company description 4SC is a drug discovery/development company with four compounds in clinical trials.01) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 16.17 Market cap: €122m Forecast net cash (€m) 16.2) (18.7) (15. which.9 56.3p £603m N/A N/A AIM Abcam (ABC) INVESTMENT SUMMARY Demand for Abcam's products will be driven by a combination of factors including the availability of grant funding in core market North America.1 5.1 2009A 2010A 2011E 2012E * % Relative to local index Analyst Robin Davison 2 December 2010 19 .3) 0. FRA Share price graph (€) 4SC (VSC) INVESTMENT SUMMARY 4SC’s investment proposition will be driven by the outcomes of four clinical trials – two each with vidofludimus and resminostat. Positive results from these trials should enable 4SC to secure development partnerships with major pharmaceutical groups.0 3m 15. with a global customer base. Abcam is focusing on medium-term geographic expansion and intends to develop market share in the Far East.9 1. with three products Enbrel (etanercept.7 65. These include vidofludimus for rheumatoid arthritis and inflammatory bowel disease and resminostat for liver cancer and Hodgkin’s lymphoma. providing Abcam enough growth potential.0) (18. Y/E Jun Revenue (£m) 56.0) PBT (€m) (10.0 12.4 3m 8. Antibodies are an essential and fundamental tool of life sciences research. sourcing.89) (58. Abcam and Santa Cruz Biotechnology are market leaders.0 N/A N/A PBT (£m) 17. Humira (adalimumab. and selling antibodies online for research use.1 N/A N/A EBITDA (£m) 17. J&J/Merck & Co) all achieving sales of over $5bn/year.17) (48. the ENTRANCE study of vidofludimus in IBD.7 28. Abbott) and Remicade (infliximab. The first of these. since the company relies on added value from characterisation data to enhance long-term turnover from its products. Its product mix is a vital driver of future demand.0 1.8 71.87) (51. the US and Japan. although Abcam is a smaller niche supplier compared with wider peer group.6 12m 82.

but a diminishing development pipeline will help. despite weak tenant demand.0 EBITDA (€m) (18. included €5.3) (53. Y/E Dec Revenue (€m) 23.8 N/A Price performance % Actual Relative* 1m (10. Y/E Dec Revenue (€m) 16. At c 73% below NAV.3) (41.00 Market cap: €349m Forecast net cash (€m) 108. It has sufficient capital to operate into 2013. which generated FY09 sales of $5. by which time up to five Nanobody programmes could have achieved significant value inflection points.3 (6. Gross commercial rents fell 5.2) (94. but the local housing market remains weak.0) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Mick Cooper 20 2 December 2010 .6 32.8 29.69 vs €2.4) EPS (c) (41.0) 1. if proof-of-concept clinical trials are successful.2 N/A PBT (€m) (17.3) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Roger Leboff Sector: Pharma & Healthcare Price: €8. Asset values were steady during the first half: NAV/share €2.0 113.4) (9.0 N/A EBITDA (€m) 7. A further 12 units are due for delivery in H2. so key markets face oversupply.68 six months earlier.0) (19.5p £66m 231.2 N/A N/A P/CF (x) 27. 14 income producing investments and 19 development projects.1) N/A P/E (x) N/A 28. together with the initial results from clinical trials.Edison Insight Sector: Property Price: Market cap: Forecast net debt (€m) Forecast gearing ratio (%) Market Share price graph (p) 60. It has four products in clinical development.6) (30.2 14.7) 3m 15.3m from 37 units at its Viva Residence in Prague.1 12.2 (14. Gross sales income. These novel therapeutic proteins have the specificity of monoclonal antibodies but with many of the benefits of small molecules.5 (1. the shares fully discount the issues facing the group over the next 18 months.2 3m 10.4) N/A EPS (c) (9.8 8.1) (4.2) 12m (12.8) (29.1) PBT (€m) (15. Its most valuable product is ATN-103 (a potential successor to Enbrel.3 (1.7 Forecast gearing ratio (%) N/A Market Euronext Brussels Share price graph (€) Ablynx (ABLX) INVESTMENT SUMMARY Ablynx has developed a broad pipeline of products using its Nanobody technology in several disease areas.2) (43.6% y-o-y to €8. A shortage of debt finance and lack of well-developed investment markets may delay recovery.7) (69. up 56% to €14.9) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (3.1) (2. mean they have considerable commercial potential across many indications.9 25.3 28. There is a strong demand for novel pharmaceutical products for either unmet medical needs or to improve on current treatments.2) 2. but local recession cut demand and increased competition for tenants. well diversified by sector. It is developing a novel class of therapeutic proteins called Nanobodies to treat a range of indications.9) (21.0 12.7) 12m 5.0 AIM Ablon Group INVESTMENT SUMMARY (ABL) The interims provided a few signs that Ablon's CE European markets may be bottoming out. The characteristics of Ablynx's Nanobodies. INDUSTRY OUTLOOK Company description Ablynx is a drug discovery company with a proprietary technology platform. It holds a portfolio of 33 assets.7 29.5) (19.4m. Company description Ablon Group is a leading developer and investor in commercial and residential property in Central and Eastern Europe. INDUSTRY OUTLOOK Ablon holds 14 completed schemes and 19 development projects.7m after tenant departures in central Budapest.6bn) and it could enter Phase III development in 2011. Other Nanobodies of significant value include the fast followers of Prolia (ALX-0141) and Actemra (ALX-0061). These were built to meet an identified need for modern commercial space.

The disposal will enable management to focus on driving the voltage optimising business. and Active Energy's success will hinge on its ability to further establish itself as one of the UK's leading suppliers while finding appropriate channels to exploit opportunities overseas.1 3m 23. However.3) (1.2 EPS (p) (1. The investment case is now centred around a UK-based subsidiary that designs and sells power optimising transformers under the brand VoltageMaster.3 8. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 2. leaving the company focused on its 72. underlying potential for shipping.0) 3m (41. however. Investment in future growth and weakening shipping rates continue to undermine margins. and carbon reduction initiatives also boosting Company description Active Energy's origins are in supplying various components to manufacturers of gas appliances. but rising oil consumption is stabilising wet freight rates.0 35.9 31. where the opportunity still benefits from the green agenda and cost-saving promises.0p £43m 5.9 P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (32.4 EBITDA (£m) (0. A major investment in developing a presence in the dry cargo market may slow down growth in the short term. demand.5) (32.4 N/A AIM ACM Shipping Group INVESTMENT SUMMARY (ACMG) The manner in which ACM has come through the global recession reflects highly on the business model and the teamwork ethic established by management. combined with the cash-generative nature of the businesses. INDUSTRY OUTLOOK The shift in manufacturing capacity towards lower-cost areas has irreversibly transformed the Company description ACM is a shipbroker with a focus on the global oil tanker market.9) (1.8 8.8 25.5% in the UK. and also handles ship sale and purchase to an international customer base.9 5.34) 0.1 25.6) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Nigel Harrison Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 3.0) (1.7 5.1 6.03) (1.3) 0.52) (1.3 PBT (£m) 8.8%-owned voltage optimising unit. and overseas markets are even more nascent.3 15. It arranges spot and time charters.6 6. steady cash generation and the clear medium-term strategy ought to encourage a higher rating.7 6.9 12m 7. with rising electricity prices likely to speed the return on investment. While the disposal proceeds are modest.0 8. Active Energy Ltd.8 (2. INDUSTRY OUTLOOK The demand outlook for voltage optimisation equipment looks compelling. The larger shipbrokers are better equipped to provide advice to customers which. the legacy businesses had limited growth prospects and were challenging to manage.5 N/A AIM Active Energy INVESTMENT SUMMARY (AEG) Active Energy has disposed of its Gasignition and Derlite businesses.1 8. Current market penetration is estimated at c 0.2) (72. Y/E Mar Revenue (£m) 30.19 P/E (x) N/A N/A N/A 17.7 26.6 7.9 29. but as demonstrated this week with the interim figures. The global recession has created volatility in freight rates.1 6.3) 0.1) 12m (69.3 4. Competition is present.Edison Insight Sector: Financials Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 222.9 6.4p £4m 0. the emphasis on broking. suggests a quality of earnings that is not recognised in the City.8 P/E (x) 6.4 Price performance % Actual Relative* 1m 3.9 7.3) (0.2) * % Relative to local index Analyst Dan Ridsdale 2 December 2010 21 .0 2.3 0.2 PBT (£m) (0.0 EBITDA (£m) 8. underlying growth is being sustained.3) (72.0 EPS (fd) (p) 36.4 P/CF (x) 4.

The group also has mining interests which are in the process of being demerged.0) (42. By early/mid-2011. The company is also planning a small Phase II trial in focal dystonia and is considering exploring the potential of ADX48621 in Fragile X syndrome and autism. Recent presentations to the Society for Neuroscience served to reinforce the strength of the allosteric modulation technology.5 5.15 Market cap: CHF72m Forecast net cash (CHFm) 73. Addex's partner J&J has confirmed plans to start Phase II studies with ADX71149 in schizophrenia and anxiety in early 2011. The announcement confirms the understanding of geology and the larger resource makes the possibility of commercialising the combined Lambouka and Dougga prospect more likely. ADX has every chance of success if it finds commercial quantities of hydrocarbons in its prospects.7) (2.3 1.4) (0.4 1. Y/E Jun 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m (1.4) PBT (CHFm) (22.4) (28. Elsewhere the company launched the expected IPO of its Australian mining assets.5 3m (34.4 0. Company description Addex is engaged in the adaptation and expansion of its allosteric modulator discovery platform for targets in central nervous system (CNS). metabolic disorders and inflammation. AFQ056.3 EBITDA (CHFm) (21. Along with strong farm-in partners and stable operating regimes. ADX48621 in Parkinson’s disease levodopa-induced dyskinesia (PD-LID).9 Forecast gearing ratio (%) N/A Market Swiss Stock Exchange Share price graph (CHF) Addex Pharma INVESTMENT SUMMARY (ADXN) Addex will shortly start its Phase II study of the mGluR5 NAM.0 12m (71.9) (2.5 4.0) (25. Addex should have two programmes in Phase II studies. in Fragile X and PD-LID further endorses the potential of the platform. compounds which offer significant potential advantages over classical agonist/antagonists.9) N/A EPS (c) (1.1) (72.8) (40.7) N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Ian McLelland 22 2 December 2010 .7) (2.1) 12m 4.9 4.3 Revenue (A$m) 0. INDUSTRY OUTLOOK With oil prices remaining in the $70/bbl to $80/bbl range. Romania and Australia.8 N/A ASX ADX Energy INVESTMENT SUMMARY (ADX) In early November ADX Energy announced a resource upgrade at Dougga following the completion of 3D seismic processing.0 0. offshore Italy.2) (38. The next share price catalyst is drilling of the Sidi Daher prospect on the Chorbane block onshore Tunisia that is due to begin late 2010 or early 2011.0) 2008A 2009A 2010E 2011E Revenue (CHFm) 26.3 3m 25.0) 0. Meanwhile. which we expect to close in December.9) EPS (CHFc) N/A N/A N/A N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Robin Davison Sector: Oil & Gas Price: Market cap: Forecast net cash (A$m) Forecast gearing ratio (%) Market Share price graph (A$) A$0.2) (4. Y/E Dec Price performance % Actual Relative* 1m 1.1) (9.10 A$34m 0. INDUSTRY OUTLOOK Addex has established a world-leading position in the identification of allosteric modulators.1) N/A PBT (A$m) (2. Novartis's decision to undertake pivotal/Phase III studies of its mGluR5 NAM.0 N/A EBITDA (A$m) (2.0) (39. none of which is currently in the share price.0 0.5) (39. the economics of a number of Company description ADX Energy (formerly AuDAX Resources) is an oil and gas exploration business listed in Australia with exploration activities in Tunisia.Edison Insight Sector: Pharma & Healthcare Price: CHF11. exploration plays remain attractive.

3 EPS (p) 2.0p £13m 24. New distribution is driving strong growth.6 6.6) (10.3 4.9) (5.6) (132.1) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Mick Cooper Sector: Financials Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 22. INDUSTRY OUTLOOK The industry remains in considerable turmoil as motor insurers seek ways to control claims Company description Ai Claims Solutions provides credit hire and credit repair as well as other accident management solutions nationally. the former remains on track to report at the end of 2011. INDUSTRY OUTLOOK Efficacious oncology and sepsis products can enjoy premium pricing and be sold by relatively Company description Agennix is a drug development company based in Germany and the US. but there is significant competition in oncology and sepsis is difficult to treat. Talactoferrin has the potential to become a complementary treatment in oncology to the current treatments without competing directly against other drugs. Ai Claims' lower cost.5bn.7 91. Y/E Dec Revenue (€m) 12. to 'non-fault' drivers and the insurance companies of 'at fault' drivers.7 5. more insurer-aligned offering is serving it well. Y/E Jun Price performance % Actual Relative* Analyst Martyn King 1m (6.3 P/CF (x) N/A N/A N/A 2.7 3.3 30.7 0. It is now planning to start a Phase II/III trial in severe sepsis at the end of Q111. For now we maintain our revenue expectations.2) 3m (7.6 144. costs and restore their own profitability. Typically.4) (5.7 4. In this environment. the insurers have been slow to pay and have challenged claims. It represents non-fault drivers and insurers of at-fault drivers.5) (30.66 €152m 50. the drug could generate peak sales of $2.0 EBITDA (€m) (19.4) (48. with further strong 39% growth this year.2 4.1) 12m 44.3 131. which should be sufficient obtain top-line data from the first NSCLC trial and the initial part of the severe sepsis trial. having recently amended its development programme.2 5.0 AIM Ai Claims Solutions INVESTMENT SUMMARY (ACS) Ai Claims provides accident management solutions.2 6.4 5. There are two Phase III trials for the treatment of non-small cell lung cancer (NSCLC) under way for third-line and first-line treatment.8 * % Relative to local index 2 December 2010 23 .7 PBT (£m) 2.6) (27.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (€m) Forecast gearing ratio (%) Market Share price graph (€) €3.4 2009A 2010A 2011E 2012E Revenue (£m) 55. Its lead product talactoferrin is being developed for the treatment of cancer and sepsis.0 0.3) (7.8) (9. cancer and sepsis.5 N/A FRA Agennix (AGX) INVESTMENT SUMMARY Agennix is developing talactoferrin for two major indications.3) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (1.9 127.8) (29.0 2.4 3. small sales forces. both better than expected. but increase our PBT expectation by 6% and EPS by 8%. built around credit hire and credit repair. Agennix raised €76m in equity in October.4 7. and to be widely used in the treatment of sepsis.0 4. starving the industry of cash.1 P/E (x) 9.9) EPS (c) (254. Its product set and low-cost strategy align it better with the motor insurers than many peers.1) 12m (1.7) (91.7) 3m (4.5) PBT (€m) (18.9) (109.5 EBITDA (£m) 3. For the year to June 2010 revenue grew 65% and adjusted PBT 35%.3) (48.3) (19. Net debt is higher than we expected but we foresee sufficient resources to fund expected growth.

Alkane intends to use TGP revenues to re-invest into the DZP.9 21.1 2.6 (2. The next data is likely to be from the Phase II study in breast cancer bone metastases in H111.8) (164.0 579. with studies showing 400koz Au recovered over six to eight years.71) P/E (x) 2100.2 EBITDA (A$m) (0.96Moz resource estimate. We have used a long-term gold price of US$1.6 3m 45.2 7. The YHREE sample will undergo further testing to develop a marketable product.7 2008A 2009A 2010E 2011E * % Relative to local index Analyst Robin Davison Sector: Mining Price: A$0. Y/E Dec Revenue (A$m) 2. Alpharadin is in three clinical studies including the pivotal ALSYMPCA Phase III monotherapy trial in prostate cancer bone metastases. Company description Alkane is a multi-commodity explorer.6) 2.00 Market cap: NOK4900m Forecast net cash (NOKm) 502. which should open the way for a Phase III trial start in this indication in 2011.8 189.9 (6.04 0.0 84. A definitive feasibility study for the Tomingley Gold Project is being finalised.7) (475.9) 6.84 Market cap: A$210m Forecast net cash (A$m) 10. with projects located in the central west region of New South Wales in Australia.9 8. Three deep drill holes were also announced for the McPhillamys project.7 202.4 6. its alpha-emitting drug for the treatment of bone metastases.8 Forecast gearing ratio (%) N/A Market ASX Share price graph (A$) Alkane Resources INVESTMENT SUMMARY (ALK) Alkane is a diversified explorer with interests in REEs and gold.4 EPS (øre) (1034. INDUSTRY OUTLOOK Recent increases in the price of REEs point to potential annual revenues of between US$135m and US$196m (company announcement). We value Alkane's assets collectively at A$0.9) (154. held with JV partner Newmont.6 PBT (NOKm) (170.3 26. helped by growing interest in potential new therapeutics for prostate cancer following the approvals of Dendreon's Provenge and Sanofi-Aventis's Jevtana and the positive results in Phase III for J&J/BTG's abiraterone. Y/E Dec Revenue (NOKm) 0.4 4. although Algeta intends to co-commericalise in the US.1 Forecast gearing ratio (%) N/A Market OSE Share price graph (NOK) Algeta (ALGETA) INVESTMENT SUMMARY Algeta's investment case firmly centres on Alpharadin.4 P/E (x) N/A N/A 289. It recently recovered its first yttrium heavy rare earth product and a light rare earth sample from its DZP Pilot Plant.3 EBITDA (NOKm) (180. Alpharadin is enjoying good visibility.0 31.9 57.Edison Insight Sector: Pharma & Healthcare Price: NOK124.8 0.94 (2.5 0.1 N/A N/A Price performance % Actual Relative* 1m 25.8) EPS (c) 0.4 P/CF (x) N/A 30.3 202.7 9.6 105.99 1.6) 0.9 3m 87. The drug is partnered globally with BayerSchering.91 per share.177/oz for valuing the gold assets. This study is expected to complete enrolment around the end of the year and should render initial results in the first half of 2012.8 43.1 30.1) PBT (A$m) 0.3) 16. with the LREE sample process being tested before it is added to the production circuit.1) 42.3 N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (0. supporting the initial 2. INDUSTRY OUTLOOK Company description Algeta is a Norwegian listed biotech company.2 2008A 2009A 2010E 2011E * % Relative to local index Analyst Charles Gibson 24 2 December 2010 .0 12m 103. Algeta is the world leader in the development of alpha-pharmaceuticals for cancer.0 12m 75.

6 45. having posted its maiden operating profit in FY10.3) 2009A 2010A 2011E 2012E Revenue (£m) 37. due in early 2011. well-established.0 AIM Alliance Pharma INVESTMENT SUMMARY (APH) Alliance's renegotiation of financing indicates that an acquisition is possible. INDUSTRY OUTLOOK Pollinex Quattro (representing roughly 50% of Allergy's revenues) is an ultra-short course Company description Allergy Therapeutics is a European-based speciality pharmaceutical company focused on the treatment and prevention of allergy. however we had factored this in to our 2011 revenue well in advance. It aims to be among the top three global players in allergy immunotherapy.0 N/A 23.1 EBITDA (£m) 6. The entrance of a competitor to Deltacortril has now been confirmed.0 AIM Allergy Therapeutics INVESTMENT SUMMARY (AGY) Allergy Therapeutics’ investment case is geared to M&A and to German regulatory approval of Pollinex Quattro Grass.8 40.6 4.0) (4.4) (4.5 2008A 2009A 2010E 2011E Revenue (£m) 21.7 8.7 6.5 8.7 4.3 (0.3 83.1 * % Relative to local index Analyst Robin Davison 2 December 2010 25 . since the company has drawn down just £2m of the revolving credit facility.5) 3.9) (13.8 40.8 5.3 0.8p £82m 25.0 13. INDUSTRY OUTLOOK Alliance Pharma markets and distributes a range of branded pharmaceuticals with Company description Alliance Pharma is a speciality pharmaceutical company that develops.0 3.3 EPS (p) (13.7 5.2 43. It is now on a stronger financial footing.3) (44.5 11. off-patent sales.4 18. by exploiting the evolving commercial opportunity for registered finished products over the next five to 10 years.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 9.9) 0. any potential product acquisition would need to enhance earnings so that debt/EBITDA ratio would not fall below 2. markets and distributes pharmaceutical products.3 P/E (x) 21.3 14.1 36.1 P/CF (x) 10.0 2.0 0.0 257.5) 12m 51.6 16.5x.3 P/CF (x) N/A 26.0 EBITDA (£m) (3.4 P/E (x) N/A 31.7) 0. allergy vaccine given as four shots over three weeks. This compares favourably with existing vaccines (typically requiring 16-50 injections under specialist supervision pre-hay fever season) and with comparable efficacy.1) (4.8 PBT (£m) 2.3p £29m 10.1 8. Y/E Jun Price performance % Actual Relative* 1m (5. smoothing seasonal revenue fluctuations.4 * % Relative to local index Analyst Lala Gregorek Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 34. the level of debt appears to be well within the expected covenants.2 5.2 50. and should be able to take advantage of M&A opportunities for further revenue growth.7) 12m (38. Allergy is moving from single-product promotion to a product portfolio in Europe.3) 1.0 N/A 10. The financing is around 5% lower rate of interest than previously and at present.7) 3m (8.0 5.5 PBT (£m) (10. If Alliance exercises the full £20m RCF. Its products usually have few direct competitors and are low priced to encourage high prescription take-up. The company achieves growth by a combination of product in-licensing and organic sales.4) 3m (11.6 EPS (p) 1. Y/E Dec Price performance % Actual Relative* 1m (5.8 31.

2 N/A EBITDA (A$m) 18.2 N/A PBT (A$m) (2. This is a 44% discount to the industry average for AIM-listed gold companies (US$121/oz).3 N/A PBT (£m) 2.5 N/A N/A N/A * % Relative to local index Analyst Charles Gibson Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 76.0 Market AIM.2 Forecast gearing ratio (%) 10.6 N/A P/CF (x) 10. Y/E Jun Price performance % Actual Relative* 1m 18. which reported good deal flow across the portfolio. multi-skilled workforces. The Gold Ridge mine is still on-track to produce its first gold in Q211.5 (1.1 8. lifting production from around 73koz to 100koz during 2011. TSX Share price graph (p) Allied Gold INVESTMENT SUMMARY (AGLD) Allied has finalised its decision to upgrade the Simberi oxide plant from its current 2.8 22.0 3.6 31. ASX. Company description Allied Gold is a gold explorer-producer with its main assets the Simberi Oxide Gold mine in Papua New Guinea and the Gold Ridge mine in the Solomon Islands.4 19.4 N/A AIM Allocate Software INVESTMENT SUMMARY (ALL) The recent investor day demonstrated how powerful Allocate's solutions are for organisations with complex staffing needs but also how strategically important these solutions have become to the customer base. UK public sector spending concerns still cannot be ignored.6 127.7 3. The recent oppointment of a Director of International Marketing signals increased confidence in the ability to expand overseas.1 N/A P/E (x) N/A N/A 49.9 N/A P/E (x) 14.2 40.5 5.9 19. A PFS on the sulphide ore at Simberi identified that a further 100koz pa could be added mid-decade.Edison Insight Sector: Mining Price: 33.2) 1. Allied intends to proceed to BFS-stage with an investment decision regarding the sulphides in 2012. but the CSR was about as positive as it could be and projects that generate nearer-term financial savings should be more shielded from cuts. reaching a potential 330koz in 2015 if the sulphides are mined.4) 31. Both the expanded plant at Simberi and Gold Ridge should produce a total of approximately 220koz pa from 2012.7 N/A EPS (fd) (c) (0.0 28.1 13. We consider both estimates and valuation to be undemanding.8 3m 5.3 5.0) 12m 31. Healthroster's headroom for growth is starting to reduce.9) (19.2 2009A 2010A 2011E 2012E Revenue (A$m) 77.0 N/A EPS (fd) (p) 5. Y/E May Revenue (£m) 15. A Q2 update is due mid-December following a positive Q1.0 N/A P/CF (x) 18. adding 120koz pa after ramp-up to Allied's annual production.7 5. Ten.9 8. Further.3) (1. extensive resource drilling is planned for 2011. INDUSTRY OUTLOOK Company description Allocate Software is the leading provider of software applications designed for workforce optimisation within global organisations employing large.5 12m 55.2 2009A 2010A 2011E 2012E * % Relative to local index 26 2 December 2010 .8 N/A Price performance % Actual Relative* Analyst Dan Ridsdale 1m 3.5Mtpa.4 3m 64.2 12. INDUSTRY OUTLOOK On an EV per resource basis Allied Gold is trading at a value that equates to US$68/oz.6 N/A EBITDA (£m) 2.6 3.5p £48m 5. but Allocate has built a very solid platform for expansion through product diversification and progress overseas.8p Market cap: £351m Forecast net debt (A$m) 38. A growing proportion of international and SaaS revenues also adds robustness to Allocate’s revenue profile.and nine-year mine lives currently exist for Simberi and Gold Ridge respectively.5 67.2Mtpa to 3.4 6.7 (2.0) 46. Within the UK.

9% year to date at the end of October 2010.5 Revenue (£m) 0. In addition to supplying local demand for fuel and power (including potentially BHP Billiton’s nearby Olympic Dam project).3) 12m 116.1 PBT (£m) (0.0 N/A 11. The HFN Hedge Fund Aggregate Index was +2.Edison Insight Sector: Financials Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 64.4) (1.0 EBITDA (£m) (0.6) (1. +7.38) (0.0 0.7) EPS (p) (0.9) (9.4 (13.8 3m (1.7) PBT (£m) (1.41) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Michael Starke 2 December 2010 27 .6) (1. The BFS commenced last month and is expected to take around two years.5) (15.3) 12m (30.3 0.5p £3m 1.1) 0.1) (0.3p £47m 1.3) (37.0 0.4 N/A AIM Alpha Strategic INVESTMENT SUMMARY (APS) On 28 October Alpha amended a management agreement held by its 100% subsidiary ACME Advisors Limited. INDUSTRY OUTLOOK The hedge-fund industry has nearly recovered from all its investment losses sustained during the credit crunch. led us to raise our forecasts marginally last month.3) (2. which will result in a minimum of $800k of revenues being paid to Alpha in the year to 9 July 2011.5) (0.5) (0. Y/E Jun 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m 9.6 3m 36.0 EBITDA (£m) (1.8 10.0) 2009A 2010A 2011E 2012E Revenue (£m) 0. The third-largest state-owned oil company in China.5) (1. Since then there has been little movement in the share price. INDUSTRY OUTLOOK Company description Altona holds a 49% interest in three exploration licences covering 2. which commenced in October this year.500km square in the north of the Permian Arckaringa Basin.1) 0.31) (0.5 151. The deal is important for Altona Energy as it highlights the growing importance of syngas in the production of various synthetic fuel types (including aviation fuels).0 0.1 EPS (p) (4. energy companies Solena and Rentech agreed to establish a commercial scale sustainable jet fuel facility in the UK using Rentech's Fischer-Tropsch synthetic fuel technology.0 N/A AIM Altona Energy INVESTMENT SUMMARY (ANR) In early November.64) (0. South Australia. This.6) (1.0 P/CF (x) 71. Its immediate focus is completing a bankable feasibility study for a coal to liquids plus co-generation facility.2) (0. CNOOC. Altona Energy plans to use this technology to produce liquid fuels from its flagship Arckaringa coal deposit in South Australia where it has signed a joint venture deal with CNOOC. Y/E Mar Price performance % Actual Relative* Analyst Neil Shah 1m 0.0 0. coupled with the strong performance of the Winton and IKOS funds.1% in October 2010 and Company description Alpha Strategic plans to pool a portion of the revenue streams from several single strategy hedge funds. has agreed to provide $40m for a bankable feasibility study (BFS).3 95.3 P/E (x) N/A N/A N/A 28.4 0.4 * % Relative to local index Sector: Mining Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 11. the JV is also looking to export fuel and possibly coal to the Asian markets. although the Winton Futures Funds continues to grow assets under management based on newsflow we have seen.8 1.1) 2.3) (2.

25% rise in earnings for Anglesey from 6.2p. when spring arrives. all with potential peak sales of over £100.9 7.000 to sustain its growth.Edison Insight Sector: Mining Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 45.6) 12m 23. The growth is being sustained by the public continuing to care deeply for their pets.9 12.6 3m 24. and are talking with interested parties.9 PBT (£m) 2.7 168.2% in 2009.9 P/E (x) 19.0 0.9 P/E (x) N/A N/A N/A 15.0 N/A AIM Animalcare Group INVESTMENT SUMMARY (ANCR) Animalcare reported revenue growth of 12.6 3. The main growth driver was the companion animal division. which highlights its resilience.9m for the year to June 2010.9% to £19. Y/E Mar 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m 54.6 2009A 2010A 2011E 2012E Revenue (£m) 17.5) (0.6) 4. It also owns 100% of the Parys Mountain zinc-copper-lead deposit. which saw revenues grow 15. animal identification products and animal welfare goods for the companion animal market across the UK.9 3m 90.2 Revenue (£m) 0.0 3. The company remains confident that commercial production should begin in April. INDUSTRY OUTLOOK The most important factor is variation in the price of iron ore. Y/E Jun Price performance % Actual Relative* Analyst Mick Cooper 1m 0. this equates to around U$120/t FOB. The companion animal market in the UK grew by 8.4 3.4) 2. which has resources of 150 Mt of direct-shipping hematite iron ore.3 13.2 10. The company believes there is significant value in its 100% owned Parys Mountain zinc/copper/lead property.8 EPS (p) 6.7% and generated 83% of EBITDA.3) (0.5 EBITDA (£m) 2. and subsequent sale of Travik to Aquajet for an undisclosed sum.5) (0.5 13. with EPS before exceptionals up 56% to 11.3p per share to 7.8 * % Relative to local index 28 2 December 2010 .5 39. It is about to commence production.2 * % Relative to local index Analyst Anthony Wagg Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 123.4 11.25m in cash. This was part of the rationale for disposing of the livestock divisions (Ritchey and Fearing) to Tru-Test for £3.5 13. TSX LIM.5 11.5p £25m 2. On 25 November Anglesey announced that the work on the plant and the accommodation camp continues to be on track for completion by end of 2010.7 8.3) (0.3p £69m 0.6 P/CF (x) N/A N/A N/A 26.0 EBITDA (£m) (0.3) PBT (£m) (0.6 6. Animalcare is now focused solely on the companion animal market.4) (0.0 0.2 3. Current comparable spot prices are strong at U$160/t (62% fines CFR Chinese ports). INDUSTRY OUTLOOK Company description Animalcare markets and sells licensed veterinary pharmaceuticals. It is aiming to launch five new products per year. With shipping rates at $40/t.6 19.8) (0.2 3.5 12m 196.9 P/CF (x) 7.8 1.8 (5. A 10% fall would see a drop of around 27%. A 10% rise in the ore price from $68/t 65%Fe fines would result in a 21% rise in net earnings from C$42m to C$50m and a Company description Anglesey has a 41% interest in TSX-listed Labrador Iron Mines.7 55.0 9. which has resources of 150Mt of direct-shipping hematite iron ore. Its products are sold in Europe through distributors.5 8.4 EPS (p) (0. with the money from the disposals being used primarily to pay down its outstanding debt. Wales.9p per share.6 N/A FULL Anglesey Mining INVESTMENT SUMMARY (AYM) Anglesey has a 41% interest in Labrador Iron Mines Holdings. and the increasing numbers of new treatments and products.0 0.6 3.6) (0.

6 101.1m should last to mid-/late 2011).4 (20. The investment case is heavily geared to success of the AS1413 Phase III ACCEDE study and the partnering of this programme.2 19. Positive ASA404 news from Novartis would represent upside.1 EPS (c) (1.6 0.4) (28.6 EBITDA (£m) (22.9 Price performance % Actual Relative* 1m (13. or up to $670m including de novo AML.5 15.5) (3. INDUSTRY OUTLOOK Company description Antisoma is a UK biotech company specialising in the development of drugs for the treatment of cancer.3 0.3) (28. We expect Aquarius's valuation to continue to improve on the back of the operational turnaround at Everest and Blue Ridge as well as recent positive automotive sales data from the US.6) (12. While Aquarius will have no problem funding its share (US$20m) of the new capex. it should partner AS1413 in relation to read-out of the Phase III ACCEDE study.9 592.6) 3m 24. with five mines in southern Africa: Kroondal (50%).3 30.9) (4.9 111. Blue Ridge (50%) Everest (100%) and Mimosa (50%) as well as tailings retreatment operations and exploration projects.0p £38m 4.9 457. Marikana (50%).1 3m 0.4) * % Relative to local index Analyst Lala Gregorek Sector: Mining Price: 329.1 Forecast gearing ratio (%) N/A Market FULL Share price graph (p) Aquarius Platinum INVESTMENT SUMMARY (AQP) Aquarius has now closed its Blue Ridge mine until mid-next year to implement a redevelopment plan.1) 12m (2.9 141.3 683. Y/E Jun 2009A 2010A 2011E 2012E Revenue (£m) 25. It has a broad R&D pipeline with a lead product licensed to Novartis.8 17.3) (12.5) (82.8 16.5 P/E (x) N/A 31.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 6. we estimate total Blue Ridge capex for FY11 of US$56m.7 12m (80. its BEE partner (Imbani Platinum) may struggle.9 P/CF (x) 65.3 1.0) 16.0 EBITDA (US$m) (0.0 7.1) (29. remaining capex from previous development (of R70m) and new capex of US$40m. Management remains confident that a post-positive data deal represents the best risk/reward trade-off for shareholders. Furthermore.6) EPS (p) (2.3) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 0.1 N/A FULL Antisoma (ASM) INVESTMENT SUMMARY Antisoma faces the dilemma of when.2) 135. One option is for Aquarius to provide additional funding and dilute the BEE partners.2 PBT (US$m) (34. We remain cautiously optimistic about the current outlook following recent positive US automotive sales.7) 110. It has ambitions to establish a US sales franchise in oncology products. Y/E Jun 2009A 2010A 2011E 2012E Revenue (US$m) 298. ATTRACT-2 data revealed as expected that ASA404 provides little benefit in NSCLC. INDUSTRY OUTLOOK Company description Aquarius is the world's fourth largest PGM producer. Market research indicates global AS1413 sales potential of $440-580m in secondary AML. which could bring in a substantial sum.2) (18.1p Market cap: £1521m Forecast net cash (US$m) 152.4) (28.7 19. Negative ACCEDE data would leave Antisoma with limited options other than a distressed trade sale.1 33.5) (2. A pre-data deal in H111 would be worth less than one afterwards. we believe platinum prices will continue to recovery in early to mid-2011 as auto producers restock ahead of forecast increases in vehicle production in 2012. Including capitalised net operating costs (of R50m). but would be negotiated against the tight deadline imposed by the cash runway (FY10 cash of £32.5 133.6) (19.3) PBT (£m) (18.2 20. and if. presuming a positive result.0) * % Relative to local index Analyst Michael Starke 2 December 2010 29 .

07) (309. It has a development pipeline of late preclinical and early clinical programmes.5) 3m (78. Lorcaserin is one of three FDA-filed obesity drugs. The likely way forward is to re-file the NDA with additional preclinical analysis and Phase III BLOOM-DM data (top-line data indicates all three co-primary efficacy endpoints were met).8) 12m (61.69) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (10. Private banking remains competitive with low interest rates limiting the value of deposits. which should occur before year-end and should give more clarity on the approval path and time-line.69) (309. The CRL highlighted non-clinical (rat cancer signal and read-through to humans) and clinical issues.4) (78.9 (7.4 15. Qnexa also received a negative 10-6 AdCom vote in July and a Complete Response Letter. INDUSTRY OUTLOOK Company description Arena's lead project.9 10. credit conditions appear to have stabilised.4% for Vivus’s Qnexa and 5.7 12. For those with good funding. a risk-averse but innovative management.6) (54.69) (165.4 30.4 8. Paul Lynam.7) PBT (US$m) (226.5 23. INDUSTRY OUTLOOK Retail lending margins continue to benefit from competitors having limited appetite to lend.1 6.6) (0. Y/E Dec Revenue (£m) 41. Market conditions for investment banking remained tough through the summer and into Q3.5) (113.7 60. arguably over-liquid (2010 margin strain led to estimate cuts) and tightly controls costs.2% for Orexigen’s Contrave) but had the best cardiovascular and CNS safety profile. and a high dividend yield (6% on our 2010e) covered by earnings.Edison Insight Sector: Financials Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 391.7 Forecast gearing ratio (%) N/A Market NASDAQ Share price graph (US$) Arena Pharmaceuticals INVESTMENT SUMMARY (ARNA) Arena’s investment case hinges on FDA approval of lorcaserin in obesity. seeking a more restricted label (especially as lorcaserin is likely to be scheduled).2 38.4 EBITDA (£m) N/A N/A N/A N/A PBT (£m) (2. Y/E Dec 2008A 2009A 2010E 2011E Revenue (US$m) 9. The FDA issued a Complete Response Letter. ex-MD of small businesses for RBS retail. market and credit risk well. it is an excellent time to lend. following the negative Ad-Com.1 55. is pending FDA approval for the treatment of obesity. including one partnered with Ortho-McNeil-Janssen (J&J).7) (60. It is strongly capitalised.0p £57m N/A N/A AIM Arbuthnot Banking Group INVESTMENT SUMMARY (ARBB) Arbuthnot Banking Group has diversified financial earnings.2) (10.41 Market cap: US$171m Forecast net cash (US$m) 110.2) (95.0 EBITDA (US$m) (213.9) 3m (5.7 16. lorcaserin (partnered with Eisai). and Company description Arbuthnot Banking Group is engaged in retail.1) (74.2) (12. In Phase III it showed the least impressive efficacy (placebo-adjusted weight loss of 3.0) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Mark Thomas Sector: Pharma & Healthcare Price: US$1.7 EPS (p) 3.9 52. investment and private banking and other financial services. which will adversely affect the results.3) (63. bringing further experience and breadth to this key division.2) 5.8) 12m 2.4) EPS (c) (309.3 P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (1. Management has sold non-core assets. Management has requested a Type A meeting.0 P/E (x) 111.5 7. outlining the deficiencies of the NDA application. was appointed CEO of Secure Trust on 13 September.8 10.6% vs 9.8) * % Relative to local index Analyst Lala Gregorek 30 2 December 2010 . invested in new businesses and controlled liquidity.8) (139.

1 191. through its wholly-owned Turkish subsidiary Galata Madencilik San Ve Tic. in which each may own a 50% interest.5 3m 184. giving Ariana 15% of the total shares issued in the company. To this must then be added the likely value of exploration success.5 769.4) PBT (£m) (0.9) 0.8 PBT (US$m) (3. with ore being stockpiled for delivery to the mill from around mid-November. Tigris is a exploration stage company with interests in south-east Turkey. Its San Jose mine is expected to enter production soon. located in Zacatecas.19/oz.5 2008A 2009A 2010E 2011E Revenue (£m) 0.4) (0. share in current money terms.5m per year and earnings between 2. Zacatecas.0 0.57pps. specialises in Mexican silver deposit exploration and development. Arian has the ability to generate revenue of up to US$18. and Tepal in Michoacan.5 46.7) (2. sectors. we estimate a US$10m exploration programme should delineate a resource valued at 88-195p per AGQ Company description Arian Silver. Assuming that Arian delineates new resources at the same rate per km of exploration drilling as in the past.1 Price performance % Actual Relative* 1m 60.2 P/CF (x) N/A N/A 38. currently MD Dr Kerim Sener.2 EBITDA (US$m) (3. to yield a profit before tax of c US$8.0 3. As part of the arrangement Ariana is entitled to appoint one non-executive director to the board.9 6.0 0.3p £85m 11. part of the Red Rabbit JV with partner Proccea. We currently value Ariana's assets at 5.9 EPS (c) (2.7) (5.7m.0m per year at a gross cash cost of US$6.7m shares in Tigris Resources for a total consideration of C$115. we see Arian turning cash-flow positive by year-end.4) (0.0 0.0 * % Relative to local index Analyst Charles Gibson Sector: Mining Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 4.7c and 3.6 N/A AIM Arian Silver INVESTMENT SUMMARY (AGQ) Arian has announced that it has commenced commercial production at its 100%-owned San José mine.5) (0. At a silver price of US$27. The company has resources of 448koz gold equivalent across all categories and Company description Ariana is a gold exploration company focused on exploration and development projects in the Republic of Turkey.4) (2.9 P/E (x) N/A N/A 166. In the short term.3 2.6 12m 861.8 7. Its other three projects are Calicanto and San Celso. Ariana is continuing with its BFS and EIA on its flagship Kiziltepe Sector.6) (0. INDUSTRY OUTLOOK Often know as 'poor man's gold'.0 7.000.7) (0.3) EPS (p) (0.3) (0.1) 0.Edison Insight Sector: Mining Price: Market cap: Forecast net cash (US$m) Forecast gearing ratio (%) Market Share price graph (p) 31.1) (0. INDUSTRY OUTLOOK Our valuation uses a long-term gold price of US1.7) (2.9 18. listed on AIM and TSX.6) (0.6 16.177/oz. during bull markets silver nevertheless tends to outperform its yellow companion. Mexico.0 EBITDA (£m) (0.0 0.3 12m 17. Y/E Dec 2008A 2009A 2010E 2011E Revenue (US$m) 0.0) 1.7 17.5) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Charles Gibson 2 December 2010 31 . Y/E Dec Price performance % Actual Relative* 1m (5. The JV agreement has seen Ariana. and Proccea incorporate a Turkish joint stock company named Zenit Madencilik San Ve Tic AS.0c per share over the mine's official four-and-a-half year life.9 N/A AIM Ariana Resources INVESTMENT SUMMARY (AAU) Ariana has recently announced that it has subscribed to 2.1p £9m 2.4) (0.0) 3m 37.3 61.

1 2. confidence seems likely to remain low following the government Company description Armour Home designs and distributes a comprehensive upmarket range of home entertainment products.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 4.4) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (15.0p £8m 7.2) (50.1) 12m (45. as reinforced by last month's results announcement. and has in-house manufacturing capabilities.9 3. INDUSTRY OUTLOOK There has been some improvement in the macro environment.3) (15. although the situation remains fragile.0 3.0) (89.2) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Robin Davison Sector: Electrical Equipment Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 8.0 AIM Armour Group INVESTMENT SUMMARY (AMR) Trading conditions remain challenging.6 11. Estimates have been lowered across the sector.0 6.1 EBITDA (£m) (18. INDUSTRY OUTLOOK Important clinical validation of NRP-1 antagonism (EG014) may come from Genentech’s Company description Ark Therapeutics specialises in developing products for treating vascular disease. are expected over the next six months. Competitor therapies to EG011 for refractory angina are mainly stem cell therapies.0) (7.0 0. However.8 3. there is an asset value of 44p per share.4) 2009A 2010A 2011E 2012E Revenue (£m) 51.9) (9. Net borrowings are still under control. despite positive action by management. more significantly.0 EBITDA (£m) 3. as well as potential wound care and manufacturing deals.5 N/A FULL Ark Therapeutics INVESTMENT SUMMARY (AKT) Ark Therapeutics’ Q3 IMS provided additional detail on the progress and timelines for its strategic restructuring aims. profits remain under pressure.2 26. experience shows that businesses which invest in innovation and quality consistently outperform their peers.1 * % Relative to local index Analyst Nigel Harrison 32 2 December 2010 . Y/E Aug Price performance % Actual Relative* 1m (2. The adverse share price reaction reflects natural caution about UK consumer trends and. Large pharma interest in foetal growth restriction (EG013) is evidenced by Pfizer's Phase II/III sildenafil trial. while EG016 is a novel approach in peripheral vascular disease.8 2. spending review.6 EPS (fd) (p) 1.9 6. Further updates on the core pipeline. human IgG1 antibody. MNRP1685A.0 2. manufacturing collaborations and pipeline licensing). The focus remains on product development and tight internal controls as key factors in driving the business forward.2) PBT (£m) N/A N/A N/A N/A EPS (p) (6.1) (14.3) (8.38 0.2) 12m (88.0 59. However.0 3.5 P/CF (x) 0.4) 3m (19.6 56. and Armour Auto supplies in-car communications and entertainment components and systems.9) (2. reflecting the consistent investment in the group's brands.0 PBT (£m) 1.1) (56.6) (4.1) 3m (27. cancer and wound care.44 1.2 1.7) (43.5 3.74 P/E (x) 5. Deal execution that releases value from the pipeline should ensure end-June cash of £14.0 20.1m is sufficient into 2013.6 57. Ark is seeking to bolster its cash position through cost containment (including now suspension of the Trinam Phase IIb trial) and business development deals (wound care disposal. The company is a leader in the field of gene-based therapies. with gearing maintained below 20%.0) (18. but we remain optimistic that Armour can deliver meaningful recovery over the medium term.5p £6m 6.32 0. Y/E Dec Revenue (£m) 0.3 0.

Y/E Dec Revenue (HK$m) 1508. Resolution of the latest.0 0.0 0.2 5. There is no shortage of demand for modern healthcare facilities. In that respect. Y/E Apr Revenue (£m) 23.0 N/A Price performance % Actual Relative* Analyst Roger Leboff 1m 0. but an emphasis on cash preservation saw October’s final dividend delayed.2 N/A AIM Ashley House INVESTMENT SUMMARY (ASH) Completion of the acquisition of Strategic Property Solutions.3) (30. These are primarily allied to the delivery of new medical facilities for NHS-led primary care.0 N/A N/A EBITDA (HK$m) 303.Edison Insight Sector: Construction & Blding Mat.4 2008A 2009A 2010E 2011E * % Relative to local index 2 December 2010 33 .0 N/A EPS (p) 10.5 4. with stable gross rents from investment properties in Hong Kong and China. often a component of large integrated developments.0 N/A N/A PBT (HK$m) 247. It adds delivery of community mental health and associated infrastructure. is at odds with conservatively financed growth plans. but clients have been more reticent to commit to new projects until the government's NHS spending plans are clearer. the management of assets and clinical services. INDUSTRY OUTLOOK AGP's developments aim to capitalise on the growing demand for residential property in Company description Asian Growth Properties is an investor and developer of commercial and residential property in Hong Kong and mainland China. The recent trading update showed operational progress.5 4. Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 30.6) (67.3 4.0 N/A EBITDA (£m) 5.0 6. Each project is phased and budgeted to achieve satisfactory returns at prices supported by occupational demand.0 7. despite recent moves by the PRC government to discourage speculation in residential property and similarly motivated moves in Hong Kong. The valuation.0 39.8 3m 0.7 N/A P/E (x) 3. at c 68% below NAV.5p £226m N/A N/A AIM Asian Growth Properties INVESTMENT SUMMARY (AGP) H1 saw 15% y-o-y revenue growth to HK$306m. more detail on budgets and responsibility for investment decisions awaits publication of the healthcare bill.0p £17m 0.5 N/A P/CF (x) N/A N/A 3. An existing pipeline delivered the first scheme.3 2. a £5m development of 28 assisted living units for adults with learning disabilities.1) 2009A 2010A 2011E 2012E * % Relative to local index Sector: Property Price: Market cap: Forecast net debt (HK$m) Forecast gearing ratio (%) Market Share price graph (p) 25.0 0.0 151. The drivers for the group's schemes remain sound. ie Chengdu.0 89. Occupancy remained high at the Dah Sing Financial Centre in Hong Kong and AGP received a first contribution from the new Crowne Plaza Hong Kong Causeway Bay hotel and sale of one of the remaining units at The Forest Hills development. INDUSTRY OUTLOOK Company description Ashley House supplies project management and consultancy services.8) 12m 13. ongoing bid for property partner AHMP should help investors to re-evaluate Ashley House's inherent value.0 N/A N/A P/E (x) N/A N/A N/A N/A P/CF (x) 3.0 4. fits with a strategy to reduce dependence on NHS revenues.8 24.4 N/A PBT (£m) 5. mainland China. well balanced portfolio of investment and development assets in mature and emerging markets and a measured and affordable approach to new development.0 517. originally announced in May.0 N/A N/A EPS (c) 0.0 (17.7 N/A N/A Price performance % Actual Relative* Analyst Roger Leboff 1m 0.8 3m (6.9) 12m (63.9 29. Nanjing and Guangzhou.1 5.

5p £26m 5. Portugal) tensions.8 5. Operationally.Edison Insight Sector: Support Services Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 26. the tribulations of Q310 were temporary and we anticipate a full recovery in Q410.2 33. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m 11.8 0.5 4. pro-mining jurisdictions.2 Forecast gearing ratio (%) N/A Market TSX Share price graph (C$) Aurizon Mines INVESTMENT SUMMARY (ARZ) Despite its first disappointing quarter in Q310.6 234. we have upgraded our forecasts for Aurizon for FY10 on account of the consistently high gold price and also the expiration of all of the company's gold hedge positions.000oz (or 94%).4 6. the decision of which is expected in the new year.5 P/CF (x) 15. exploration drilling has increased in-pit measured and indicated resources at Casa Berardi's Principal Area by 690.1 1.4 32. Y/E Dec Price performance % Actual Relative* 1m 1. Despite the impact of the poor weather in early 2010.0 1.0 EPS (p) 7.2 * % Relative to local index Analyst Charles Gibson 34 2 December 2010 . we do not expect a meaningful contribution until 2011.5 4.9 28.6 134. elsewhere intersections as high as 112g/t have been recorded.3 26.5 PBT (C$m) 21.0 1.44 Market cap: C$1202m Forecast net cash (C$m) 145. Its aims to become an intermediate producer focused on favourable geological trends.9) (4.6 182.0 P/E (x) 75. While new regulations since 2004 initially caused confusion.8 10. in politically stable.0 9.9 2.0 P/E (x) 3.0 5.4 11.7 14. Meanwhile.0 5. we believe that as the industry understands what is required and enforcement improves. recovery and recycling within the waste hierarchy as highlighted in the government's Strategy for Hazardous Waste Management. Although these will open up significant opportunities.350/oz is consistent with the US's additional QE2 stimulus. while treatment was flat and the progress in developing the asset base and success in new target markets was important. INDUSTRY OUTLOOK Company description Aurizon is a Canadian gold company with three major assets in Canada's Abitibi region.5 31.3 3m 13.2 Revenue (C$m) 144.9 EBITDA (£m) 10. Q2 landfill signals turned positive.6 PBT (£m) 4.8 17. volumes will become increasingly predictable.0 AIM Augean (AUG) INVESTMENT SUMMARY The most significant short-term driver for Augean will be the outcome of the LLW appeal. including hazardous landfill and treatment services.6 EPS (fd) (c) 9. The current gold price of US$1. It provides a range of services to the hazardous waste sector.9 22.5 P/CF (x) 1.9 9.3) (37. Meanwhile.0 1. Longer term.9 EBITDA (C$m) 59.3 91.1 54.9 31.1 92.9 35. we see 2010 as a year of consolidation as demonstrated by the interims. with the result that earnings have the potential to rise by almost 100%.7 N/A 26. Company description Augean is a United Kingdom-based waste and resource management company.5 175.1) 12m (30. Spain.9 12m 42.35 is possible at the current gold price.3 0.0 11.9 68.7 3m (1. while upward pressure on prices will continue to be exerted by geopolitical (eg Korea) and economic (eg Ireland.0) 2008A 2009A 2010E 2011E Revenue (£m) 40. quarter-on-quarter. close to infrastructure.8 20.6 * % Relative to local index Analyst Roger Johnston Sector: Mining Price: C$7.1 31.8 72. we estimate that annual EPS of C$0. INDUSTRY OUTLOOK There is an increasing trend towards treatment.

when combined with growth in international and recovery in non-defence markets.9 295. Y/E Sep Price performance % Actual Relative* 1m 19.0p £61m 9.9 51.9 * % Relative to local index Analyst Roger Johnston Sector: Aerospace & Defence Price: 527. We feel that management has cast off the shadow of the ‘old Avon’ and created a thriving business that is developing a track record of outperformance.7 * % Relative to local index Analyst Roger Johnston 2 December 2010 35 .5 (15.0 186.3 2009A 2010A 2011E 2012E Revenue (£m) 100. With operational performance consistently improving. the emerging portfolio effect should enable continued growth.5 P/CF (x) 18. combined with a significant order book and expanding pipeline. defence and dairy sectors.8 EBITDA (£m) 9.4 PBT (£m) 6.3 10.Edison Insight Sector: Aerospace & Defence Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 200. the protective nature of Avon's products provides resilience.7 63. Support Services (33%) and International (15%).8 7.3 P/E (x) 12. we feel the rating is being unduly discounted for general government spending fears.0 8.9 1895.3 3m 70.9 402.7 12m 113. Its major contract partners are defence and national security and safety organisations.0 10.6 15.0 16.0 P/E (x) 13.0 Market FULL Share price graph (p) Babcock (BAB) INVESTMENT SUMMARY Babcock's interims highlighted the continued strong performance across the business with revenues up 31%. this provides opportunities for outsourcing and.6 125. providing a Company description Avon Rubber designs.1 3.1 PBT (£m) 121. with contributions from both Dairy and Protection & Defence (P&D).7 13.3 EPS (p) 14.3) 3m 5.7 Forecast gearing ratio (%) 85.8) (23.3 P/CF (x) 7.8 4. INDUSTRY OUTLOOK The UK defence market is set to undergo a period of pressure with budget cuts and a strict Company description Babcock is a primarily UK-based support service company with operations in Marine (34%). PBT up 27% and EPS up 24%.7) 12m (15.4 52.0 31.8 12. However.9 27. INDUSTRY OUTLOOK Despite the pressures on defence budgets. which caused us to progressively upgrade throughout the year.9 117.7 61.1) (10. base to target buyers including other security and safety agencies and international militaries.1 4.6 3502. leaves Babcock well placed to benefit in a cost down environment. Defence(18%).1 145.4 6. new banking facilities in place and the pension issue under control.8 224. Y/E Mar Price performance % Actual Relative* 1m (11.8 9.9 93.8 7. focus on supporting operations.5 327. underlying operating profit up 38%. the US DoD contract supports demand over the long term.8 EPS (p) 41. It is our belief that the company will weather the storm in terms of CSR/SDSR and indeed this will create many opportunities for Babcock to extend its reach in defence outsourcing.4 20.2 62.0 EBITDA (£m) 169.1 7.0 FULL Avon Rubber INVESTMENT SUMMARY (AVON) Results from Avon Rubber were ahead of expectations. While the timing of such inroads is difficult to predict. With the integration of VT well on track and synergies starting to come through.5 21.2 9.5p Market cap: £1891m Forecast net debt (£m) 816.9) 2009A 2010A 2011E 2012E Revenue (£m) 1901. develops and manufactures products in the respiratory protection.5 2998. we believe Avon is set to benefit from a period of sustained growth.6 10.1 7. In addition.9 134.

the cancellation of Nimrod MRA4.0 Market FULL Share price graph (p) BAE Systems INVESTMENT SUMMARY (BA. Pro-rata the higher resource estimate implies a share price of c 65p (49p after dilution).3% Fe.6) (2. medium and long term.4 5.8 45.6 2009A 2010A 2011E 2012E * % Relative to local index Analyst Charles Gibson 36 2 December 2010 .0 EPS (p) 37.1p Market cap: £11593m Forecast net debt (£m) 98.0 22929.8 (6.2) (1. INDUSTRY OUTLOOK The UK's Strategic Defence and Security Review re-prioritised BAE's programmes.0) (2. In addition.2) Revenue (£m) 18543.5 P/CF (x) 6.7Mt at 25. Sweden.1 N/A AIM Baobab Resources INVESTMENT SUMMARY (BAO) Baobab's focus is the Tete Fe-Vn-Ti project close to Cahora Bassa in Mozambique. US. With negotiations still to be conducted.3 26.0 2004. which we estimate should rise to c 340Mt at 27.1 40. The current rating still appears to apply an arbitrary 'defence cuts' mentality.3) N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 6.0 2179.4 6. retirement of the Harrier fleet and the decommissioning of HMS Ark Royal.0 2077.5) (2.4 P/E (x) 9.3 0.0 PBT (£m) 1795. The group has operations in the UK.) BAE Systems' 9 November investor day highlighted the benefits of its international focus and home markets strategy.2 8.0 23119.9) (1.3 66. However.0 2467.0 0. The company’s currently declared JORC resource is 47. this has been offset to a large extent by the positives of the confirmation of the aircraft carrier build and the full complement of seven Astute submarines. land.9 * % Relative to local index Analyst Roger Johnston Sector: Mining Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 11. sea and security markets.3 (4.0 Forecast gearing ratio (%) 2. A pre-feasibility study is expected in mid 2011. we believe the business is capable of delivering sustained growth over the short. Recent initiatives include negotiating a boundary change to give it access to an area (never previously explored) showing both prominent magnetite ridges and lower Karoo (ie coal) sediments. the balance across air.Edison Insight Sector: Aerospace & Defence Price: 340. INDUSTRY OUTLOOK Baobab has an EV equivalent to c US$2/t JORC iron (cf an industry average of US$3.0 5.1) N/A EPS (p) (1.3% in due course. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (2.8 7. Company description Baobab Resources is focused on developing its Tete iron-vanadium-titanium open-pit project in central-western Mozambique.4) 12m 3. Australia and now India.0 21990.8p £19m 2.0 2328. Kingdom of Saudi Arabia.0 2509.1 42.4) 3m 13. This was demonstrated with the post-SDSR IMS highlighting the impact on EPS growth due to programme cuts would be c 2%. underestimated by investors. in our view.5 7. Its announcement of a £5m equity facility leaves it funded until c FY14. rising to over £1 at the industry average rating.0 EBITDA (£m) 2096.53/t).0 N/A EBITDA (£m) (1.4) (1. Y/E Jun Revenue (£m) 0.1) N/A PBT (£m) (1.9 7.3 12m 84.0) (2. A recent joint venture makes it the operator on ground that was previously very well explored indicating massive magnetite mineralisation with no associated deleterious elements. Baobab does not intend to develop its mine alone and is looking to take on a partner before completing a BFS. including Company description BAE Systems is a global defence company with activities spanning production and support across air. land and sea in both original equipment and support provides an inherent robustness.7 3m 34.

4) (24.8) 0. Declining Chinese copper imports and lower global inventories of the metal highlight the impact of higher prices on restocking.116 square kilometres. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (0. In recent days. assuming the ore body is tabular with a density of 3kg per cubic metre.8) (3. It was founded in November 2007 and listed on AIM in April 2010.9) Revenue (£m) 0.9) PBT (£m) (1. INDUSTRY OUTLOOK Company description BZT has a 40% stake in the Mankayan copper-gold project on the Philippine island of Luzon and an option to acquire the remaining 60% for ~US$40.0 0. the outlook for 2011 remains positive.55bt of oxide.2) (1. Nevertheless. including discussions with various third parties. the Mankayan scoping study remains on track with results expected before the end of the year.7) (21.7) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Michael Starke Sector: Mining Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 31.5) (14.5p £351m 39.9m.0 25.6) 3m 63.6) (3. In Tanzania.2 (2.000.9) (4.55bt). As of that date.7) PBT (US$m) (15. isolated incidents of election-related unrest have not affected the company’s ongoing operations in Guinea.1) (16.3) (12. The company's strategic review of this project.0bt of magnetite and 2.7) 12m 0.8) (0.0p £15m 1.5) EPS (c) (3.0 0.8) (1.530m).0 0. we believe the longer-term fundamentals remain robust.0 EBITDA (£m) (1.0 0.4) (0. Y/E Jun 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m (13.3 N/A AIM Bellzone Mining INVESTMENT SUMMARY (BZM) We anticipate that in early 2011 Bellzone could announce a total maiden oxide resource of up to 420Mt compared to company estimates of between 150Mt to 350Mt (and an estimated attributable oxide resource potential of 2.8 (8.4 12m N/A N/A Revenue (US$m) 0. is ongoing. and other exploration tenements. Looking ahead. Assuming recent drill holes were stopped once they had drilled through the oxide (which outcrops at surface).0 0. in Tanzania Bezant has fully earned-in a 50% interest in nine early stage but highly prospective gold tenements covering a total of 2. Also expected before the end of the year is a potential maiden JORC probable reserve at Mankayan.0 3m 22.Edison Insight Sector: Mining Price: Market cap: Forecast net cash (US$m) Forecast gearing ratio (%) Market Share price graph (p) 66. West Africa. Meanwhile.4) (21.4) (0.3 N/A AIM Bezant Resources INVESTMENT SUMMARY (BZT) Bezant Resources has released its annual report for the year to 30 June 2010. we estimate an average thickness of 70m (based on 309 holes for 21.0 0. Meanwhile. Meanwhile. the company had a net cash position of £1.5) (22.2) (4. benchmark prices of iron ore have hit six-month highs (of around US$170/t) on the back of healthy demand from Asian steel mills and lower iron ore exports from India. it has a 46% stake in a joint venture with AngloGold Ashanti.0 EBITDA (US$m) (14.1) (1.9) (0. Its estimates suggest Kalia hosts an attributable iron ore resource of 10. We derive an approximate resource by applying this thickness to an area of 2km squared.9) EPS (p) (2. INDUSTRY OUTLOOK Company description BZM is focused on developing its Kalia iron ore deposit in Guinea.2) (1.8) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Michael Starke 2 December 2010 37 .

Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 370. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* Analyst John Savin 1m 22. This is structured as a scheme of arrangement for 1.1) (0.7 12m 56.Edison is a connected party in the transaction. shareholder meetings in early January and completion by early February. including Bead Products and BrachySciences.6 N/A N/A EBITDA (£m) (2. operating via two divisions: Oncology Products.1) N/A N/A EPS (p) 0.2 EBITDA (£m) (2.9 12.0) PBT (£m) (2.9 (4.3) (1.1) (0. It is expected that the actual timtable will be that documentation is posted by mid December. net cash at the end of Q3 was unchanged from the end of H1. Encouragingly.4m.5) 3m 53.8 17.2 N/A N/A * % Relative to local index Sector: Engineering Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 0.4) (3. including CellMed and PC Licensing. plus either 10p cash or €0. A range of third-party estimates indicates CAGRs of 12% to 20% in the coming years for the industry.8 (3. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (23.5 16.5) EPS (p) (0.5 41. A BTG circular will be published by 18 December and an offer document by 21 January 2011.9) (48.0p £146m N/A N/A FULL Biocompatibles INVESTMENT SUMMARY (BII) An agreed Class 1 bid from BTG was announced on 19 November. The bioplastics division produces an organic-based resin (rather than oil based) for use in the production of plastics. by targeting niches where packaging is a small proportion of the overall cost of a product.4) (1.0 N/A AIM Biome Technologies INVESTMENT SUMMARY (BIOM) A Q3 trading update highlighted ongoing business development. The updates on identified trials seem positive so far and we await news on further new major account wins. The conversion of these prospects into orders and revenues would provide a strong validation of Biome’s product and technology offering. and the consumer appeal of being eco-friendly adds enough differentiation. Bioplastics are still more expensive than petroleum-based products.6 36.5) (2. plants with capacities between 5-60mt are now in place as the consumer and regulatory drive to move away from petroleum-based plastics gathers momentum. with Biocompatibles' shares trading at 370p Company description Biocompatibles is a leading medical technology company in the field of drug-device combination products.7 26. and Licensing. INDUSTRY OUTLOOK Around Europe.4 Revenue (£m) 17. at c £4.7) N/A N/A P/E (x) 411.2p £12m 3.1) 0.6733 BTG shares per Biocompatibles share (41m fully diluted). compared to a theoretical bid price of 430p (based on the BTG share price prior to the bid). However.1 N/A N/A N/A P/CF (x) N/A 1079. The parties aim to complete the offer by 24 March 2011.2) N/A N/A PBT (£m) (0.0 P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Toby Thorrington 38 2 December 2010 .3 23. growth is being achieved Company description Biome Technologies (previously Stanelco) is focused on two areas: bioplastics and radio frequency (RF).7) (2.1) (3.9) 12m (42.3 3m 39.56 (50p) if the AstraZeneca license option on CM3 is taken up. INDUSTRY OUTLOOK Market reaction has generally been negative.4) Revenue (£m) 14.1) (22.8) (1.7) (1.

1 17. Bionomics is approaching interim analyses in its Phase II trials of BNC105 in renal cell carcinoma (due in Q111) and mesothelioma (in H111).5) 2009A 2010A 2011E 2012E Revenue (A$m) 4. attractive profile with a possible direct anti-tumour effect as a single agent.potentially in 2012).37 €65m 21. The anti-anxiety drug BNC210 could have a competitive advantage over existing anxiety treatments in terms of speed of onset.4 3.1) PBT (A$m) (6. There are >50m alcohol Company description Biotie Therapies is a Finnish biotech company with a focus on clinical programmes in CNS and inflammatory disease.1) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Robin Davison Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (€m) Forecast gearing ratio (%) Market Share price graph (€) €0. ronomilast and BTT-1023.2 1. The product could become a very significant advance in this area. INDUSTRY OUTLOOK BNC105 is one of the leading agents in the putative vascular disrupting agent class and has an Company description Bionomics is an Australian biotech company focused on developing small molecule products for cancer.8% stake. The outcome of these will coincide around the same time as results from two Phase Ib studies of its anti-anxiety compound BNC210. nalmefene.4) (38. Positive results would trigger up to €72m in milestones from partner Lundbeck (presumably on approval and launch . nalmefene would enter a potentially large.32 Market cap: A$104m Forecast net cash (A$m) 3.0 OMX Biotie Therapies INVESTMENT SUMMARY (BTH1V) The results for the first of three Phase III studies of nalmefene for the treatment of alcoholism are due imminently and are central to the investment case. for the treatment of alcohol dependency. Its lead project.3) (8. epilepsy and multiple sclerosis.2) (12.5) (6. of which only a very small proportion is currently treated with the available treatment options. if successful.9) PBT (€m) (5.1 5. would trigger an offer for the company.7) 12m (12. which. These data are all likely to be important in Bionomics's efforts to establish a development/marketing partnerships for the drugs.8) EPS (c) (5.5) (13.0) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Lala Gregorek 2 December 2010 39 .1) (6.5) (2. memory or motor impairment and risk of habituation. Its lead programmes are a VDA and an anxiolytic compound.Edison Insight Sector: Pharma & Healthcare Price: A$0.0) (2.8 EBITDA (A$m) (5.3 3.8) 2008A 2009A 2010E 2011E Revenue (€m) 5.2) (7. misusers in the major markets. market with little competition on the horizon.4 Forecast gearing ratio (%) N/A Market ASX.4 (4.6 3.6) (12.4 99.6) (7.4) (8. A restructuring has reduced costs by >€4m pa and positioned Biotie to exploit its two un-partnered Phase II-ready assets.2) (11.5) (7. although almost completely undeveloped.8) 3m (19.8 3m 20.4) (6. INDUSTRY OUTLOOK If Phase III trials are successful. Y/E Dec Price performance % Actual Relative* 1m (2. Y/E Jun Price performance % Actual Relative* 1m 16. NASDAQ Share price graph (A$) Bionomics (BNO) INVESTMENT SUMMARY In the short term Bionomics’s investment case will be determined by the outcome of Start-up Australia Ventures’ efforts to find a trade buyer for its 27. anxiety.3) 12m (27.4 EBITDA (€m) (4.5) (2.6) (0.9) (12. The company is funded into 2011 and can raise further sums under its Yorkville SEDA (equity line).7) EPS (c) (2.6) (35. the absence of sedative.2) (6. is partnered with Lundbeck.6) (7.8 3.1) (5.

1% of the project and a further US$30m in project finance.2 (9. forecast net cash excludes liquid investments.0 (29.72) (9.0) (10.89) (3.67 A$72m 3.72) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (19. With constantly developing technology and a growth profile that is expected to continue.5 N/A ASX Blackthorn Resources INVESTMENT SUMMARY (BTR) On 23 November 2010 Blackthorn Resources concluded an agreement with Glencore to form a JV for the Perkoa zinc project. As a result.4p £4m 0.6) (2. this provides unique investment opportunities.8) 12m (42. construction and development has commenced and production of zinc concentrate is expected by the second half of 2012. This was highlighted within the UK's National Security Strategy and the SDSR with £650m of additional funding in the area. Blackthorn Resources has announced a JORC code-compliant mineral resource of 139koz of gold at their Guido prospect.0) 0. Also in Burkina Faso. Y/E Sep Price performance % Actual Relative* 1m (4. The company held its AGM on 25 November and all resolutions were passed. management believes the benefits of the company’s growing US relationships.0) (4.3) (4.3) 3m 0.05) (1.093/t but the long-term price outlook remains positive. Gold remains at record levels above US$1. will become increasingly visible over the next six to 12 months.5) (0. while the economic backdrop is challenging. effective and rapidly deployable system to protect mobile and fixed assets with initial deployment in 2011.1 N/A AIM Blue Star Capital INVESTMENT SUMMARY (BLU) The October announcement that Zimiti has secured an ongoing contract with BP highlights the potential of Blue Star's homeland security-focused investment strategy. INDUSTRY OUTLOOK The zinc price lost ground in November falling to US$2.3) PBT (A$m) (0.1 (0.5) (4. including revenue and operational opportunities.3) EPS (c) (0.7) N/A PBT (£m) (1. Overall.1) 3m 7.0 0. the company aims to become a self-funding exploration and mining company. Zambia and South Africa.0 0. are vital.8) (0.5) N/A EPS (p) (1.0 N/A EBITDA (£m) (2. Note. In Zambia the fourth phase of drilling has confirmed additional copper and significant gold mineralisation at the company's Mumbwa JV copper and gold project. INDUSTRY OUTLOOK Homeland security is a large but highly fragmented market. Y/E Jun Revenue (A$m) 0.4) (48. The contract is to develop a low-cost. copper fell sharply and is trading at US$8.0) (3.3) (18.3) N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Roger Johnston 40 2 December 2010 .254/t.5) (0.000/t in mid-November.6) (0. By focusing on priority projects.0) 12m (5.0 EBITDA (A$m) (2.6) (4.300/oz.0 0.9) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Warren Johnstone Sector: Financials Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 2.0 0.Edison Insight Sector: Mining Price: Market cap: Forecast net cash (A$m) Forecast gearing ratio (%) Market Share price graph (A$) A$0.0 0. where contacts within end-users Company description Blue Star Capital invests primarily in unquoted homeland security companies with significant dual-use commercial market opportunities.0) 2008A 2009A 2010E 2011E Revenue (£m) 0. After rising to almost US$9. Glencore will provide US$50m for 50. Company description Blackthorn Resources is an Australian exploration company with projects in Burkina Faso.1) (2.

1 12. banks etc.6 18. selling 2.3 11. However.2 EPS (p) 3. particularly with its tools designed to garner emotional as well as rational reactions.3) (9.0) 3m (8.0 15.1 2.2 10. Brady's shares trade below its peers.7) * % Relative to local index Analyst Richard Jeans Sector: Media & Entertainment Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 199. COO Alex Batchelor has now been appointed to the Board.2 8. recovery in the UK and strong cash flow.6 PBT (£m) 1.2) (20.9m.9 20. We view the acquisition as another excellent fit.7 EBITDA (£m) 0.8 9. including some of the largest financial institutions and mining corporations.9 2. BrainJuicer continues to differentiate itself and to challenge traditional market research approaches and methodologies.0 10. and lifting recurring revenues to more than 50% of the total.7 4.4 9.5 PBT (£m) 1. multinational companies.5 40. bespoke software to produce insightful market research for large.0) (4.9 3.9 Price performance % Actual Relative* 1m (5.5 2008A 2009A 2010E 2011E * % Relative to local index Analyst Fiona Orford-Williams 2 December 2010 41 .1 18. strengthening the group’s position in Europe.5 P/E (x) 26. It has more than 20 years of expertise and more than 500 users worldwide.0 P/CF (x) 7. Unilever UK Holdings has been scaling back its initial investment.5 1. helped by Company description BrainJuicer carries out quantitative online research using innovative.0p £25m 2.1 19. Volatile commodity prices and potential general delays in clients’ decision making add some short-term uncertainty to the sales cycle. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 6. comparatives being poor. a greater proportion of revenues derived from the innovative ‘Juicy’ products.3 EPS (fd) (p) 7.7 15.2%.4 1.4 12m 55.7 1. fabricators. Industry techniques are evolving rapidly and the group is at the forefront of developments harnessing emotional as well as rational response.3 1.9 1.8) (5.9 P/CF (x) 22. on 1.9 N/A AIM Brady (BRY) INVESTMENT SUMMARY Brady has announced the conditional acquisition of Viz Risk Management Services AS for £9.0p £17m 6. and regulators are seeking increased reporting and accountability across the industry.8m shares. improving liquidity and broadening the shareholder base. Further.9 22.4 1.7 12.8 4. INDUSTRY OUTLOOK Brady provides trading.0 EBITDA (£m) 1. which will boost the group's revenues by more than 50%.7 Price performance % Actual Relative* 1m (5.9 2.7 13. GfK and Synovate's Q3 revenues both made double-figure gains.8 15.7 1. market – miners.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 61.1 4.3) 3m 13.5 39. INDUSTRY OUTLOOK Trading updates from industry majors have had a more positive tone lately. enabling far richer and more valuable insight for corporate customers.4x EBITDA. leaving it with a holding of 14. risk and connectivity software solutions to the global commodity Company description Brady plc provides trading and risk management software for global commodity markets.1) 12m (12. the target market is underinvested in IT and auditors. further broadening the solutions it can offer clients into the energy vertical.1 1.4x enterprise value to our FY11 sales forecasts and 7.6 11.8 3.7 8.2 N/A AIM BrainJuicer INVESTMENT SUMMARY (BJU) BrainJuicer’s interim figures confirmed the growing US contribution.0 13.7 P/E (x) 19. Y/E Dec Revenue (£m) 9. it has raised £15m (before expenses) through a share placement to fund the acquisition and position the group for further bolt-ons.

1 8.3 3.7 60. discretionary funds up 3x advisory.9 12. with underwriters becoming more selective in their risk profiles and some withdrawing from specific lines of business.5 N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Mark Thomas Sector: Financials Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 28.1 37.6 16. income up 18%. The 2010 dividend yield is around 5% and well covered by normalised earnings. Company description Brewin Dolphin is one of the largest independent private client investment managers in the UK and manages around £23bn. on an attractive valuation. although it could also stimulate greater demand for advice. and the provision of debt management solutions. Y/E Dec Price performance % Actual Relative* Analyst Martyn King 1m 1.3 * % Relative to local index 42 2 December 2010 .6 6.4 PBT (£m) 7.7 (2.0) Revenue (£m) 212.Edison Insight Sector: Financials Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 139.3 250. Y/E Sep 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m 1.7 50. INDUSTRY OUTLOOK Tax increases in the post-election budget are likely to help move customers to higher-margin.5 9.6 N/A AIM Brightside Group INVESTMENT SUMMARY (BRT) Brightside reported interim 2010 results in September. Equity markets remain volatile with sovereign risk concerns on top of stock-specific issues such as BP. due to its widening product range and competitive pricing. The group is expanding its panel of underwriters to allow for further growth. charities and pensions and has an investment banking division. Strong growth continues with a 24% increase in revenue and 33% increase in PBT.6 74. especially with an announcement of a review of pension contributions.4 17.5p £321m N/A N/A FULL Brewin Dolphin INVESTMENT SUMMARY (BRW) Brewin Dolphin (BD) offers geared equity-market exposure in high-growth wealth management.5) (21. costs 14% and pre-tax profits up 43%. the provision of premium finance and medical reports.9 9.1) (16.8 2.4 9. fierce. although Brightside continues to expand market share.2 EBITDA (£m) 7.9) 2008A 2009A 2010E 2011E Revenue (£m) 33. The outlook for the premium finance business is likely to be enhanced at least in line with the growth in the insurance broking business. INDUSTRY OUTLOOK Motor industry premiums continue to rise.8 11.2) 12m (12.0 13.5p £130m 14.8 2.9 475. Online competition remains Company description Brightside Group’s principal activities are insurance broking.6 12.5 P/CF (x) 10. Rising premium rates translate directly into higher commission levels in cash terms. advice-rich products.1 18.2 N/A EBITDA (£m) N/A N/A N/A N/A PBT (£m) 32.3 13.7 EPS (p) 2.7 9. Investors may be more cautious on high-margin equity-related products as a result. Our forecasts are under review.1 2. It provides a complete service for private investors. BD's results on 1 December confirmed positive business trends with total FUM up 13% v benchmark 8%.5 N/A P/E (x) 12.9 276.8) 12m (8. The purchase of eBike and eCar completed in June.0 P/E (x) 14.6 3m 1.2 44. It has consistently grown FUM faster than benchmark indices and margins are helped by an improving product mix.0 2.6 3m 17. lead generation. and will be accretive to our estimates for 2010 and 2011.8 (9.7 14.9 N/A EPS (p) 10.

Y/E Dec Price performance % Actual Relative* 1m 2.4 12m 34.8 98. If consummated.Edison Insight Sector: Basic Industries Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 249.8 5.4 16. However.5 EPS (fd) (p) 22.7 148. It is also Europe's largest recycler of waste polythene film.7 424.5 31. The enlarged company would have a pro-forma market capitalisation of more than £700m and should have at least £63m cash. leaving our FY estimates intact.1 N/A N/A EPS (p) 1.0 * % Relative to local index Analyst Toby Thorrington Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 219.5) (16.1 43.7 5.2 2009A 2010A 2011E 2012E Revenue (£m) 84.5 N/A N/A EBITDA (£m) 8. Limited polymer price visibility is likely to inhibit significant share price progress for now. which remains subject to shareholder approval. seen in some resin grades in the early part of H2. The merger. which has been recommended.2 25.0p £66m 48.1 21.6 44.9p £567m N/A N/A FULL BTG (BGC) INVESTMENT SUMMARY BTG has made an offer for Biocompatibles.2 PBT (£m) 8.7 15. management continues to exercise tight operational control supplemented by strategic actions taken in the UK.3 1. INDUSTRY OUTLOOK Market polymer prices (input costs) rose sharply in H1.3 N/A N/A PBT (£m) 5. INDUSTRY OUTLOOK BTG has a mixed speciality pharma/biotech model with direct sales and internal R&D programmes. particularly in the areas of neuroscience and oncology.3 N/A N/A P/CF (x) N/A 73.8) (8.8 13.2 32. with small increases more recently. representing a sustained (near peak) level.5 3.3 15.8 8.5 16.1 N/A N/A * % Relative to local index Analyst Robin Davison 2 December 2010 43 . That said. the acquisition will create a UK-based speciality pharmaceutical company with a marketing presence in US acute care medicine and interventional oncology sectors.1 20. is expected to complete in February 2011. It also has a number of partnered programmes. including Campath for MS Company description BTG is a UK company specialising in developing and commercialising pharmaceutical products. Yield attractions remain. otelixizumab (Tolerx/GlaxoSmithKline) and ONYX-0801 (Onyx Pharmaceuticals).1) 3m 5.2 EBITDA (£m) 27.7 42.3 12m (7.6 P/CF (x) 2.3 3m 9.7 34.4 470.4) 2008A 2009A 2010E 2011E Revenue (£m) 480.2 2. The weight of supply-side evidence suggests this should reverse but slower commissioning of new capacity together with outages at European producers has prevented this widely anticipated re-tracement from occurring. CytoFab (AstraZeneca).7 N/A N/A P/E (x) 122. Y/E Mar Price performance % Actual Relative* 1m (8.0 FULL British Polythene Industries INVESTMENT SUMMARY (BPI) The November IMS showed that business conditions have yet to improve materially for BPI.6 P/E (x) 11.7 456. (Genzyme). plateauing/softening was been Company description BPI is the largest manufacturer of polythene film products in Europe. abiraterone (J&J).5 3.3 5.7 0.

8) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Fiona Orford-Williams Sector: Basic Industries Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 14.1) EPS (fd) (p) (4. The appointment of an experienced and motivated new chief executive and the subsequent £3. INDUSTRY OUTLOOK The global market for specialist antimicrobial technology is enormous.7) (1.5) 12m (55.1 N/A AIM Byotrol (BYOT) INVESTMENT SUMMARY Byotrol is ready for take-off.7) (1. Revenues above $50m would give a very different scenario on profits and rating. algae.8 3m (2.4 44. but the more coordinated response to the series of successful trials in the consumer products.5) (2. as the various relationships are translated into revenue-generating products.1 2.5) (4. meanwhile.2) 3m (12. publishers and ad networks. under pressure from rapidly-developing Demand-Side Platforms (DSPs).7m fund raising point to a rapid rise in revenues.0p £16m 2.9 3. DSPs and real-time bidding have emerged to provide a less ‘clunky’ mechanism for placing inventory. otherwise threatened by the market changes.3p £4m 1. healthcare and agricultural sectors all point to an exciting next two to three years. need to Company description Burst is a global provider of media.8) (1.0 EBITDA (£m) (2. fungi and virulent diseases such as MRSA and C-difficile.1 (0.4 41.1 EPS (c) (0.1 PBT (£m) (2.0 0.4) (1. maximise revenues while ensuring they display no inappropriate content.3 31.9) 0.7 P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 0.6 PBT (US$m) (0. The group is concentrating on growing the top line while protecting margins. While many products tend to promise chemical Company description Byotrol has developed and patented specialist technology for the safe eradication of harmful microbes.8) (18.0) (45. as awareness of new infections and diseases continues to increase.3) 0.3) 0.9) (0. The recent interim results showed relatively modest underlying revenue growth.6) (59. technology and professional services to online advertisers.2) 0. budgets and timescales.2) (0.3 5. Good technology and exclusive relationships are the 'must haves' for ad networks.8) 12m (40.1 N/A AIM Burst Media INVESTMENT SUMMARY (BRST) Burst continues to put clear water between itself and commodity ad networks.5) (1. These include a variety of bacteria.0) (0.Edison Insight Sector: Media & Entertainment Price: Market cap: Forecast net cash (US$m) Forecast gearing ratio (%) Market Share price graph (p) 5. a product that can damage the reproductive capacity of various types of bacteria offers considerable attractions to the user.1 P/E (x) N/A N/A N/A 84. Y/E Dec Revenue (US$m) 27. INDUSTRY OUTLOOK Audience fragmentation underpins the need for ad networks to deliver the reach sought by advertisers with varying needs. The main challenge for such innovators is to convince major industry players of the efficacy of their technology.6 EBITDA (US$m) 0.6) (0.9) 0. food processing.3) (35. Publishers. September's interim statement indicated that trading had improved since the half-year but we have not made any substantive changes to our forecasts since.2 0.3) (0. solutions (sometimes solving one problem to create another). leaving less unsold and driving up publishers' revenues.8) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Nigel Harrison 44 2 December 2010 .0 P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (18. Y/E Mar Revenue (£m) 0.

6 119. manufacturer and supplier of medical devices.9 (16. ClearStream now has four production lines running two shifts.0 153. revenues will simply plummet.1 2.9 0. Cardiac products are also doing well.8 28.8 P/CF (x) 8. an argument: timescales of withdrawal are difficult to predict.0 804.Edison Insight Sector: Aerospace & Defence Price: 2939.5 6.2 Forecast gearing ratio (%) 95.6 10.0 Price performance % Actual Relative* Analyst John Savin 1m (3.3 13.1 24.0 P/E (x) 18.1 151. Manufacturing capacity is being further expanded. INDUSTRY OUTLOOK Many investors still view Chemring as a pure war stock and that. Y/E Jul Revenue (€m) 13. and acquisitions provide new opportunities (Mecar – non NATO and Roke – counter-terrorism and electronics.9 597.8 12.6) 12m 9.1 190.2 503. which completed on 30 September).5 EPS (c) 6. primarily supplying home governments and NATO forces.2 102.2 5.1 3. is that new safety measures are in place and the £803m order book. Italy and Australia. Co-labelling growth in H2 was 65% and this is expected to continue. Chemring's pre-close statement highlighted that it generated 18% top line growth.1 19.0 (20.1m revenue was achieved despite an H1 manufacturing reorganisation. €15.9 9. in our view.4 * % Relative to local index Analyst Roger Johnston Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (€m) Forecast gearing ratio (%) Market Share price graph (p) 27.6 128. are expected to boost gross margins to c 40% in FY11.4 13. more innovative peripheral catheters. UK. Net margins should rise to the low 40% range due to a more profitable mix and lean production.5) 3m 11.6 1.2 24. Co-labelled peripheral products are sold by Cordis (SLEEK and Savvy range and Bard (UltraVerse range.1 PBT (€m) 1.7 8.5 1. the SatinFlex alloy stent saw good growth in Brazil. launched March 2010). generating overall 18% volume growth.7 245.0p £12m 0.1 212.1 5.7 5.4 P/E (x) 4.5 1.8 6. peacekeeping and conflict.4 EPS (p) 160. this accounts for less than 2% of our previous forecasts.0 9. supports our fundamental investment case for growth.9 (4.5 P/CF (x) 11. Y/E Oct 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (5.2) 12m 5.0 EBITDA (£m) 94. now 63% of sales. INDUSTRY OUTLOOK Company description ClearStream Technologies is a developer.0p Market cap: £1037m Forecast net debt (£m) 310.8 308.3 EBITDA (€m) 2. We believe there are some counters to such Company description Chemring Group is a global leader in aircraft and naval countermeasures and other energetic materials for military use in training.2) (4. It is a testament to management that this is only described as satisfactory.5) Revenue (£m) 354.9 PBT (£m) 74.0 3.4 2. More important.0 (1. In FY10. co-labelled peripheral products grew 65% in H2 and this should continue with a further product launch in H111.3) 2009A 2010A 2011E 2012E * % Relative to local index 2 December 2010 45 .0 AIM ClearStream Technologies Group INVESTMENT SUMMARY (CTN) ClearStream has changed significantly as its underlying business mix is now dominated by higher-margin. It has activities in the US.0 Market FULL Share price graph (p) Chemring Group INVESTMENT SUMMARY (CHG) Despite the difficult defence contracting environment. up 44%. Peripheral products.8) 3m 8.6) (2.9 15. While incidents at Kilgore and Mecar have slipped £7m of revenues and £3m of profit from FY10 to FY11. as hostilities in the Middle East wind down. the group’s balance between front-line and training.

0 1880.7) 113.9 21.5 PBT (A$m) (12. INDUSTRY OUTLOOK Company description CZA's Mooiplaats Mine began production in 2008.4 18. We are reviewing our forecasts.0 PBT (£m) 244.Edison Insight Sector: Mining Price: 73. In other areas underlying growth is expected to be slower.0 338. CoAL announced plans to acquire Chapudi and a number of other thermal and coking coal projects for US$75m from the Rio Tinto/Kwezi joint venture.0 Forecast gearing ratio (%) 24.6 10. INDUSTRY OUTLOOK With 78% of Cobham’s business related to defence and over 60% derived from the US.0 311.6 4.2 15. defence systems. management has indicated active portfolio management relating to c 10-15% of the technology division's revenues. thermal coal leaving Richard Bay is currently priced at c US$100/t.8) 82.1 5. The steel and power generation industries are driving M&A in the sector as both look to secure supply of key raw materials. At Vele. The company plans to apply for a New Order Mining Right at Makhado before the end of the year.040Mt and is contiguous with Makhado where the results of a Definitive Feasibility Study are due in early 2011. coking coal prices are expected to increase c 10% in Q111 from current levels of around US$210/t.3) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Roger Johnston 46 2 December 2010 .9 10.6 P/E (x) 12.0 EBITDA (£m) 283.3) 12m (22. ASX. although the timing of orders has been slower than anticipated.0 1982. mission systems and aviation services.3 118.8) * % Relative to local index Analyst Michael Starke Sector: Aerospace & Defence Price: 198. Meanwhile.4) (29.8) (20.2 6. Meanwhile. Where this is the case. Y/E Dec Revenue (£m) 1467. phasing and financial impact of the Excellence In Delivery (EID) programme.0 EPS (c) (3. Chapudi has a JORC resource of 1.0 295. JSE Share price graph (p) Coal of Africa INVESTMENT SUMMARY (CZA) Earlier this week.5) (22.2 EBITDA (A$m) (20. We feel the clarity over the EID programme will aid the business and remove some uncertainty but concerns around growth will remain for the foreseeable future.7p Market cap: £2294m Forecast net debt (£m) 248. respectively.9) (15.6 Price performance % Actual Relative* 1m (15.3) 3m (1. Y/E Jun 2009A 2010A 2011E 2012E Revenue (A$m) 23. CZA acquired NuCoal’s producing mines for ZAR650m. In addition.8 19.0) (22.0) (113. which should start production in H111 and H113. Thanks to robust demand from Asia's steel mills.0 2108.0 EPS (p) 15.0) 12m (11.6 7.8 417.0 Market FULL Share price graph (p) Cobham (COB) INVESTMENT SUMMARY The 30 November investor seminar provided greater clarity over the structure. It is also developing its Vele and Makhado coking coal projects.8 5.7) (38.2 P/CF (x) 7.5) (12.9 Forecast gearing ratio (%) N/A Market AIM.0 389.4) 3m (4.2) 11.0 9.0 350. £65m of annual benefits will be accrued by the end of 2013 at a total cost of £131m.1 111. we Company description Cobham is an international aerospace & defence equipment supplier with businesses across avionics & surveillance.0 453.4 Price performance % Actual Relative* 1m (17. the company is awaiting regulatory approval before it recommences development. which is masking some good underlying growth.8p Market cap: £391m Forecast net cash (A$m) 46. feel the business will remain resilient to slowing defence spend. Cobham also indicated that order delays have to a large extent continued.0) (16. Earlier in 2010. Coal of Africa’s Mooiplaats Colliery has continued to operate unaffected by the issuance and subsequent withdrawal of a pre-compliance notice in October.3 P/E (x) N/A N/A 10.8 P/CF (x) N/A N/A 11.8 151.0 423.

markets. Company description Consort Medical is an international medical devices company. Although the recent trading statement and contract announcement have helped ease some concerns. cuts. Anticipated near-term newsflow includes US launch of the VAL410 MDI valve and FDA approval of Dr Reddy’s Autoinjector INJ300.0 5.0p £34m 5.9 19.1 20.5 48.6 4.1 10.8) 3m 15.4) 12m (47. the embedded value should become apparent.6 120.5) (52.8 7.2 N/A AIM Cohort (CHRT) INVESTMENT SUMMARY We feel that Cohort is in a difficult position with the business founded on a buy-and-build strategy that. and SEA (39%).4 25.1 42. Y/E Apr Price performance % Actual Relative* 1m 19. While management has indicated 40% of its MoD revenue is not subject to spending constraints.7 P/CF (x) 5.6 6.5p £137m 37.6 9. but relatively fragmented. now finds it difficult to follow that strategy and needs time to demonstrate it can deliver consistent results.7 78.1 3m 13. Consort offers a defensive.2 P/CF (x) 4.2 5. This is Consort Medical’s most recent product launch.3 17. despite solid share price performance.1 10.5 (28. INDUSTRY OUTLOOK Consort designs.7 2009A 2010A 2011E 2012E * % Relative to local index Analyst Lala Gregorek 2 December 2010 47 . Interims are due 2 December. through a lack of financial control. pipeline clarity could prompt upgrades. develops and manufactures high-margin disposable medical devices through its Bespak (inhalation/injection technologies) and King Systems (airway management) divisions.6) 2009A 2010A 2011E 2012E Revenue (£m) 76.5 PBT (£m) 5.1 77.8 Price performance % Actual Relative* 1m (1.3 12m 30.7 6. It operates through two divisions: Bespak (inhalation and injection technologies) and King Systems (airway management products).8 10. we are concerned by the eventual impact of Company description Cohort is a UK-based provider of services and products into the defence industry.3 8.Edison Insight Sector: Aerospace & Defence Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 84.6) (0. that still leaves 60% under pressure.9 28.2 21.5 44.8 79.3 118. although more are anticipated over 2010-13.0 FULL Consort Medical INVESTMENT SUMMARY (CSRT) King Systems unveiled the King Vision video laryngoscope at the American Society of Anesthesiologists’ annual meeting.9 6.9 16.6 P/E (x) 6.3 7. These have leading positions in strong defensive.9 16.4 7.1 127.8 5.4 7. the issues at SEA highlight there is further rehabilitation to occur.5 11. INDUSTRY OUTLOOK With 73% of revenues derived from the UK MoD.2 * % Relative to local index Analyst Roger Johnston Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 472. Mass (27%). With a growing focus on export and non-defence opportunities across space and transportation. improved margins and synergistic acquisitions should support Consort’s target of double-digit profit growth.8 4.0 5.3 PBT (£m) 17.1 EBITDA (£m) 25.1 EPS (p) 12.4 25. New product launches (from Bespak and King) plus new auto-injector device contracts. there are signs of hope.8 EBITDA (£m) 6.8 11. there are good parts to the business and. dividend-paying growth opportunity for investors and. The business operates through three divisions: SCS (34% of FY10 sales). if management can steer the group through the current difficult market unscathed.6 P/E (x) 10. Y/E Apr Revenue (£m) 120.0 46.5 7. However.6 EPS (p) 45.

1) (7.a key opportunity for Daisy as consolidator.3 P/E (x) N/A 22.7 EBITDA (£m) N/A 11. In Company description Daisy provides unified communications to the SME and mid-market sectors and offers a full suite of network services.5 N/A * % Relative to local index 48 2 December 2010 . The upcoming H1 interim statement is likely to show a seasonal weighting of the FY11 results towards H2.9p £6m 1.future revenue growth depends on Cyan winning significant volume orders in the AMR and lighting control markets.0) 3m (8.8) 12m (58.1 9.7 49.5) (6. Y/E Mar 2009A 2010A 2011E 2012E Price performance % Actual Relative* Analyst Neil K Shah 1m (6. most likely from FY11.2) (3.0 39.9 9.800 data resellers . Y/E Dec Price performance % Actual Relative* 1m (8.8) Revenue (£m) N/A 134.9 44.3) N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Katherine Thompson Sector: Technology Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 94.4 272.0 AIM Daisy Group INVESTMENT SUMMARY (DAY) Daisy is proving itself adept as a consolidator in the SME telecoms space.5) (62. the SME space.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 0.1 0. The order should start to ship this year and represents c 10% of the customer's installation programme. Importantly. there are over 600 voice product resellers and over 1.6 P/CF (x) N/A 8. On 11 November Cyan announced it had won a 10.5) 2008A 2009A 2010E 2011E Revenue (£m) 0. Cyan's solutions offer very high performance.1 N/A EBITDA (£m) (4. stable market shares and often low performance requirements mean Company description Cyan is a fabless semiconductor company delivering flexible wireless solutions for lighting control.8 34. and a successful integration of the just-announced £33m SpiriTel deal (its second-largest ever) would go some way to reassuring investors further.6) (0.0p £249m 20. R&D investment in the industry is relatively low. Any progress on cross-selling into FY12 will be key to reducing the c 40% discount we see currently to fair value.0) (2. they also offer a configuration and software tool set and a module strategy that enables the rapid development of customer applications. As sole source. although the £40m EBITDA expectation in the market is still very much within reach. INDUSTRY OUTLOOK The MCU market is dominated by large players. It does not own any network infrastructure and resells services over other operators’ networks.1) 12m (4.5 N/A AIM Cyan Holdings INVESTMENT SUMMARY (CYAN) H1 results showed margin improvement and tight cost control .6 15. although admittedly the industry is highly fragmented with not only low entry barriers but also ongoing price deflation.6 EPS (fd) (p) N/A 4.1 PBT (£m) N/A 9. the growth and profitability dynamics of the market. Daisy itself sees an incremental £500m opportunity to cross-sell additional services to its existing base.0 313. However.6) (13.2) (3.0 (5.4) 3m 3.000 unit production order for its wireless lighting control solution for use in the Indian outdoor lighting market. we expect that Cyan will receive orders for the rest of the programme. Furthermore. Opportunities abound. mobile.6) N/A EPS (p) (1.4 5.5 12.5) (0.1 0. systems services and data solutions.7) (6.6) N/A PBT (£m) (4. INDUSTRY OUTLOOK Ofcom estimates that SMEs spent £4bn on telecoms services in 2008. utility metering and industrial telemetry.9 7.0) (2.

1) 3m (1.8 51.6 1.4) (0. Cash outflow was £0. In October Toshiba unveiled a range of glasses-free 3D TV models at CEATEC 2010. INDUSTRY OUTLOOK There is solid evidence.8 34.2m loss.8) (1.0 EBITDA (£m) (1.5 2008A 2009A 2010E 2011E * % Relative to local index 2 December 2010 49 .6) (0.4 3.0 AIM Deltex Medical Group INVESTMENT SUMMARY (DEMG) Deltex’s interim results show steady growth at 13%.9) (1.5 N/A AIM DDD (DDD) INVESTMENT SUMMARY DDD’s FY10 interims were as expected.6 6. Y/E Dec Revenue (£m) 5.0) (1. mobile and content markets.9) (1.5) (3. DDD has good growth possibilities in the 3D TV.0p £21m 0.4) (0.2) 0.4 1.2) 0. TV and mobile handset screens.0 13. However.5) (0.4) (0.4 EPS (p) (1. that doppler monitoring improves recovery from major surgery.0) 0.0 2008A 2009A 2010E 2011E * % Relative to local index Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 16. Y/E Dec Revenue (£m) 0.2) 0.3 P/CF (x) N/A N/A N/A 494.0 EPS (p) (1. as the NHS National Technology Adoption Centre pushes hospitals to use Deltex’s technology in major surgery for optimal fluid management and patient recovery. However. While we expect good growth in the 3D TV market and sizeable 3D PC shipments to commence. with operating losses cut by 46% to £0. purchasing is subject to budget factors. Competing devices have not been fully clinically proven in surgery and could cause Company description Deltex Medical manufactures and sells medical monitors that are used by doctors and nurses to help patients recover more fully and more quickly from the effects of major surgery. PC.5 PBT (£m) (1.8 Price performance % Actual Relative* Analyst Martin Lister 1m (3.4) (0.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 18. NICE guidance now supports this. IMS Research estimates that over 218m 3D TVs will ship by 2015.9 Price performance % Actual Relative* Analyst John Savin 1m (4. confirmed by NICE.5 EBITDA (£m) (1.1 26.0 P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A 71. we estimate break-even for FY11.6m before a deliberate building up of probe stocks by £0.6) (0. while Movidius launched a video processing chip in its Myriad 3D range.8m.1 12m 48. The 3 November R&D day showed impressive results from the combined arterial pressure and doppler monitor in initial Beta testing.8p £25m 2.0 PBT (£m) (1.1) 0. DDD announced that the license agreement with Quartics has been extended to include a range of prospective customers beyond those who already have direct licences with DDD.2 7.3 P/E (x) N/A N/A N/A 53.7) 3m 56. INDUSTRY OUTLOOK Company description DDD develops and sells software and services for the generation of three-dimensional (3D) pictures and video for PC. scheduled for launch by year-end. Last month. an availability delay of third-party graphics hardware in its PC segment is likely to result in licensed product missing important PC launch windows.3m to £0.3) (41.5) (0. This supports NHS adoption. which has real time 2D to 3D capability. Evidence is emerging that competing arterial pulse pressure monitors may not reliably track the haemodynamic status of patients in surgery.9) (3.2 5.6m.2) 12m 25. This is needed to meet increasing demand. prompting a reduction in our FY10 estimate from break-even to a £1.3) 0. sub-optimal intra-operative fluid management.

0p £10m 1.3) 12m 28.7 15.6 2008A 2009A 2010E 2011E Revenue (£m) 4.0 6.1 662.3 1.8 2.0 N/A EPS (p) 0.7 2008A 2009A 2010E 2011E * % Relative to local index Analyst Roger Leboff 50 2 December 2010 . an integrated client management tool that delivers major productivity gains.6 N/A AIM Dillistone Group INVESTMENT SUMMARY (DSG) Dillistone's H110 interims were reassuring and provide evidence that momentum in the business is continuing.9 13.7 13.0 11.8 * % Relative to local index Sector: Basic Industries Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 8.6 3.9 N/A Price performance % Actual Relative* 1m (5. strong following among the largest executive recruitment firms across the globe. INDUSTRY OUTLOOK Company description DouglasBay Capital (formerly LIT) is a holding company for investments in quoted and unquoted small to medium-sized businesses.7 4. Y/E Dec Revenue (£m) 176.0 1.4 4. value-driven growth strategy to acquired businesses.9 6.0p £107m 3.7 N/A P/CF (x) 8.7 P/CF (x) 4.2 EPS (fd) (p) 17. Y/E Dec Price performance % Actual Relative* Analyst Neil K Shah 1m 12. Dillistone is demonstrably outperforming its peers and has an impressive return on capital and cash generation.0 N/A EBITDA (£m) 10.2 1. Post sale it will have over £185m of equity. a c 7x ex-cash P/E and a 7% yield seem far too cheap.0 4.2 1. INDUSTRY OUTLOOK Dillistone is a developer and vendor of software to the executive recruitment sector.3 1.7 3.0 15.0 N/A PBT (£m) 6. DBAY should receive £205m on completion of the sale in mid-January or February.7 8. It is a single-product company but its FILEFINDER software – now in its ninth revision – has a very Company description Dillistone’s core product is ‘FILEFINDER’. and there is potential for some distribution to shareholders.1 690. Stripping out the cash on the balance sheet. logistics business TDG.9 11.1 EBITDA (£m) 1.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 175.8) (23. Further acquisitions are under consideration and the intention remains to create a standalone investment fund and drive returns through the application of a hands-on. Selling into the global recruitment market.7 19. or 16p/share in liquid assets.4 12m 48.4 P/E (x) 10. TDG has demonstrated management’s skills and provided a platform for future fundraisings and gradual dilution of Laxey’s dominant shareholding.5 1.9 11.9) (5.4 1.8 3m 20. well above the current share price.1 16.2 N/A P/E (x) 26.1 1.5 14.2 7.1) 3m (15.6 10. to France’s Norbert Dentressangle. We have removed forecasts after the current year. the business is clearly economically linked but we are encouraged that the order momentum is being maintained and has been translated into positive revenue growth. We note that Bond International's recent acquisition of VCG is likely to mark a trend of further consolidation in the space.0 AIM DouglasBay Capital INVESTMENT SUMMARY (DBAY) The group has announced the disposal of its largest investment.0 37. The bulk of DBAY assets will shortly be turned into cash and there is no visibility regarding contribution from new operating companies. It is used by 12 of the world’s 20 largest executive search practices. equivalent to a c 34% IRR over the two-year period since its acquisition.5 PBT (£m) 1.9 34.1 11.2 39.

6p came in ahead of our 4.5% in 2011.3 P/CF (x) N/A N/A 26.0 15.5 P/E (x) N/A 198. The deal is expected to close by 8 December.25m (£190m) through the issuance of 195m new shares (excluding a 15% over-allotment option).2) (2. It has an 87.9 EBITDA (US$m) (286.2 72. media owners and PR professionals in the UK and is growing these services in both Europe and the US.2) (0.7 53.55 (approximately 97p) per share and is expected to raise gross proceeds of C$302.8 33.7 111.5% interest in the Crocodile River Mine in South Africa.0 AIM Ebiquity (EBQ) INVESTMENT SUMMARY Ebiquity announced its FY10 prelims in July. It also has four development projects.3 1.0 N/A EBITDA (£m) 2.6 5. We raised FY11 EPS to 5. Y/E Apr Price performance % Actual Relative* Analyst Martin Lister 1m 18.8 12m 47.8 0.2 N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index 2 December 2010 51 .4%). 2012.6 N/A P/E (x) 16.4) 8. Furthermore. INDUSTRY OUTLOOK Advertisers continue to increase their focus on achieving better returns on their marketing Company description Ebiquity is the leading provider of a range of business-critical data.4) 3m 55.4 264.4 152.9 16. we believe platinum prices will continue to recovery in early to mid-2011 as auto producers restock ahead of forecast increases in vehicle production in Company description Eastplats is a mid-tier producer of platinum group metals.8p estimate. Mareesburg (75.2 Revenue (US$m) 114. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (3. analysis and consulting services to advertisers. the company’s first since March 2007.9 19.8% in 2010 and 4.2 42.0p £48m 3.1 2.3 PBT (US$m) (298.1 23.6 3.Edison Insight Sector: Mining Price: 99. Warc has recently increased its international adspend forecast for the 12 major markets to 4. TSX Share price graph (p) Eastern Platinum INVESTMENT SUMMARY (ELR) Eastern Platinum plans to raise c C$300m to fund the first phase of the company’s Eastern Limb development plan and provide general working capital.4 29.6) 17. IDC estimates that business analytics could see compound annual growth of 7% between 2009 and 2014.8 3m 33. The placement.9) 0.3p Market cap: £678m Forecast net cash (US$m) 25.2 N/A PBT (£m) 2. The critical mass that the recent large acquisition of Xtreme brings to the group makes Ebiquity’s marketing and media monitoring and analytics businesses attractive to companies that are intensifying their focus on value and effectiveness of their media spend.1 232.1 10.0 Forecast gearing ratio (%) N/A Market AIM.6 * % Relative to local index Analyst Michael Starke Sector: Media & Entertainment Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 85. Spitzkop (93. INDUSTRY OUTLOOK We remain 'cautiously optimistic' about the current outlook following recent positive US automotive sales.0 15.5 45.6 2009A 2010A 2011E 2012E Revenue (£m) 18.5%) and Kennedy’s Vale (87. DGV (87. primarily due to better than-expected operating profitability. JSE. investment.4 21. has been priced at C$1.3 69.2 15. Underlying diluted EPS at 5.1 12m 87.2 N/A EPS (fd) (p) 5.5%).4p to reflect higher operating profitability for the enlarged group offset by more shares outstanding.5 4.0 EPS (c) (30.2 2.5%).6p from 5.3 5.

7 26.2 Price performance % Actual Relative* 1m (13. The group provides a one-stop new car.2) 0.5m.3 4.7 P/CF (x) N/A 13. but excluding any Company description Electrum Resources is a mineral development company with a substantial interest in THEMAC Resources Group. the operator of the Copper Flat project in southern USA.1) (3.2m can then be added for its warrants.1) (0.9p £20m 2.0p per share (4.3) 3m 14. which is developing the Copper Flat copper project in New Mexico. Considering all other assets and liabilities. While the recession continues to undermine the market for new vehicles in the short term.4) PBT (£m) (1. and interests in Paniai Gold.0 EBITDA (£m) (0.6) (22.6 N/A 20.3 EBITDA (£m) (1.0) (12. further equity dilution). ACS Asia and Paniai Gold. pent-up medium-term demand related to environmental/political pressures and preparation for the 2012 Olympics.8 3m 129.2 0. to which an additional £3. there is a growing Company description Eco City Vehicles has exclusive distribution rights to the Mercedes Vito in the London market.5) (3.76/lb).8) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 34.6 6. we estimate ECR's market cap of £6.06 0.8 35.0 4. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 19.4) 0. Assuming THEMAC re-rates to the NPV of the discounted dividend flows available from the Copper Flat project.6) EPS (p) (3. we calculate that ECR’s net asset value could almost double to £23m or 6.7) (0.8 12m (14. with sales of the Mercedes Benz Vito taxi continuing to increase. used car and after sales service through its subsidiary KPM Taxis in the London market.000 licensed taxis carry 1.4) (3.26 P/E (x) N/A N/A 98. INDUSTRY OUTLOOK Our discounted dividend valuation assumes a long-term copper price of US$6. Y/E Jun / Sep 2008A 2009A 2010E 2011E Revenue (£m) 0.5 30.7) (1.0 AIM Electrum Resources INVESTMENT SUMMARY (ECR) Electrum's principal asset is an interest in TSX-V listed THEMAC Resources.6 55.2 0. Silver Swan and gold exploration projects in Argentina.6) * % Relative to local index Analyst Charles Gibson 52 2 December 2010 .1 PBT (£m) (0.3 22.0) (1.0) (46.1 5. and holdings in Silver Swan Group. This growth in sales and the extension of the group's aftermarket business into Mercedes Benz light commercial vehicles aftermarket point to a useful lift in margins.0) (3.5 1.9 12m (41.0 AIM Eco City Vehicles INVESTMENT SUMMARY (ECV) The autumn interim results announcement confirmed progress in the face of a challenging trading climate.1 85.3m.23) (0. which owns key engineering patent related to the Vito taxi.8 EPS (p) (0.06) 0.289/t (US$3.6p £6m 1.79/lb) compared to a current price of US$8.1p if its convertible bond is converted.6 30. It also has a majority shareholding in Thai metal-products company ACS Asia.8) * % Relative to local index Analyst Nigel Harrison Sector: Mining Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 1.151/t (US$2. Last month's fund raising and concurrent purchase of a controlling interest in One80.3) (3.9) (2. point to a strengthened business into the future. The value of its holding in THEMAC is c £5.0 24.Edison Insight Sector: General Retailers Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 5.3m stands at a 52% discount to a sum of the parts valuation of £13. Plans for strategic group moves into adjacent markets will involve a combination of accurately assessing market needs and sustaining relationships with OEM partners.8 million people every week. INDUSTRY OUTLOOK London's 22.

taking its holding to 94%. with a pick-up in permanent recruitment. In Spain. The company recently acquired an option over an exploration permit covering a known tungsten deposit in Portugal.1) (3.4) (2.0 0.0) 3m (10. Y/E Dec Revenue (€m) 0. with a strong rebound on top of continuing structural changes increasing the penetration of temporary recruitment.5) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Warren Johnstone Sector: Support Services Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 57.8) N/A EPS (c) (3.6 4. The group bought in 28% of the minority in Fastrack.9 Price performance % Actual Relative* 1m (2. Germany.2 7. The current spot prices far exceed the life-of-mine price of US$6. INDUSTRY OUTLOOK After rising to almost US$9.8) 3m 23.7) (3.5 234.2 3. driven by some pockets of real recovery in the economy. The momentum continued into Q310 and we raised our expectations for the full year and for 2011.000/t in mid-November.0p £25m 6.7 22.7 195.0 AIM Empresaria INVESTMENT SUMMARY (EMR) Empresaria's September interims showed strong performances in each of its geographic regions (UK. This is expected to fully fund the equity component of the cost to restart the Rio Tinto Copper Mine. and South-East Asia (the main element of ROW) benefiting from the maturing of start-ups initiated over the last few years. Empresaria’s improving performance is driven by different factors Company description Empresaria is a multi-disciplined international specialist staffing group.Edison Insight Sector: Mining Price: Market cap: Forecast net debt (€m) Forecast gearing ratio (%) Market Share price graph (p) 8.300/oz.9p £38m 8.1Moz (JORC) gold deposit.0 0.9) (9.2 P/E (x) 6.6 2008A 2009A 2010E 2011E * % Relative to local index Analyst Fiona Orford-Williams 2 December 2010 53 .3 12m 35. The company also has a 20% stake in Kefi Minerals plc.2 7.9) (8.4 3.3 EPS (fd) (p) 8.6) (1. operating in 16 countries.9 7.7) (2. the company has discovered a 1.2 7.9 31.6) (34. and it is progressing through permitting and feasibility of its 1.0 N/A EBITDA (€m) (4.79m cash (+£163k deferred).9) N/A PBT (€m) (5.75/lb) used in our valuation.8 EBITDA (£m) 8. Europe. the copper price fell sharply to US$8. Shareholders approved an issue of shares for this purpose at the EGM.6 3.0 AIM EMED Mining INVESTMENT SUMMARY (EMED) At an EGM held on 22 November.6 18.2 6.6) N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (2. although with the earnings number restrained by a higher assumed tax rate.063/t (US$2. it plans to evaluate the property before considering its option to purchase the asset for shares or cash.2) (9. its UK construction and engineering subsidiary. Gold is trading at record levels of over US$1.9 P/CF (x) 3. ROW). INDUSTRY OUTLOOK Larger staffers are seeing the benefits of operational gearing on a reduced cost base driving their renewed profitability.4 9.1 6.2) 12m (27. for £1.9) (8.7 PBT (£m) 6. Y/E Dec Revenue (£m) 207. it expects to be producing copper concentrate from its Rio Tinto mine in late 2011.3 4.2 221.8 83.1Moz Detva Gold Project in Slovakia.0 20. across its operations: UK.254/t. In Slovakia. Company description EMED Mining aims to restart copper production at its 100% owned Rio Tinto Mine (PRT) in Spain.4 5.9 8. EMED obtained shareholder approval to go ahead with a second listing on the TSX and to issue shares at a price of not less than 8p per share to raise up to C$35m.

6 P/E (x) 27.3 36.8 EBITDA (US$m) 7.5 5.2 20. It is incorporated in Canada and moved from AIM to the Main Market on 15 July 2010.2 51.6 12m 113. The recent launch of a Latency Monitoring Service is early stage but could help reduce barriers to deployment and add recurring revenue streams. INDUSTRY OUTLOOK Our Review of 13 October included a feature on the implications of the shift to digital in the film industry.9 1.Edison Insight Sector: Technology Price: 345.6 P/CF (x) 4.5 6.0 41.3 P/CF (x) 21. deploying Probes in 15 data centres and at all levels throughout the bank.4 15.2 P/E (x) 13.6 34.5 42. Meanwhile.4 26.4 3m 119. architectures start to fall down.6 11. assuming piracy Company description eOne is a leading international entertainment company specialising in the acquisition.0 3.0 65.0 7.0 PBT (£m) 16.7 16. with a fundamental competence and ability to capture all of the packets flowing through high-speed data networks. the availability of reasonably priced on-demand entertainment through a variety of new channels should continue to drive market growth and library values.1 13. the box office has remained strong in 2010.3 12m 39. although the cost implications are as yet unclear.1 * % Relative to local index Analyst Jane Anscombe 54 2 December 2010 . INDUSTRY OUTLOOK There is a disruption in the market as network speeds migrate to 10Gbs and legacy Company description Endace supplies high-end network traffic monitoring and analysis technology.0 2009A 2010A 2011E 2012E Revenue (US$m) 30.4 22. The strong slate of film and TV titles bodes well for future growth and our estimates are unchanged (aside for minor adjustments for the conversion of exchangeable notes) as we move into the seasonally stronger trading period.0 EPS (fd) (c) 20.0p Market cap: £52m Forecast net cash (US$m) 2.0 Forecast gearing ratio (%) N/A Market AIM Share price graph (p) Endace (EDA) INVESTMENT SUMMARY Endace is a leader in the market for network traffic capture equipment with a core competency in capturing 100% of packets flowing over high-speed networks. Y/E Mar Price performance % Actual Relative* 1m 35. helped by the popularity of new 3D films.1 PBT (US$m) 5. Hollywood has historically profited from technological change and.0 * % Relative to local index Analyst Dan Ridsdale Sector: Media & Entertainment Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 113.7 2. issues can be overcome.7 Price performance % Actual Relative* 1m 19.8 15.1 41. We expect above-average organic growth to be augmented by acquisitions at some stage.6 444. This is bringing Endace to the fore and our research suggests that major customers are deploying Endace’s technology on a much broader basis.3p £200m 77. with EBITDA up 34% to £12. The broader network security market is also one of the most corporately active globally. Our research indicates that the technology is set to be deployed in a much broader range of applications .0 60.0 FULL Entertainment One INVESTMENT SUMMARY (ETO) eOne released an excellent set of interims on 17 November.a view that was reinforced by the multi-million dollar order with a global financial services firm.7 10. Y/E Mar 2009A 2010A 2011E 2012E Revenue (£m) 342.6 40.5m.3 39.0 35.8 1.8 17.5 12.4 1.2 9. production and distribution of film and television content across all media. the library was recently valued at $250m (14% up on 2009). eOne's balance sheet is strong and year-end debt should be below £80m.3 34.0 490.4 31.1 1.0 EBITDA (£m) 25.1 3m 53.0 13.4 8.7 93.1 30.2 480.9 9.1 35.1 EPS (fd) (p) 8.

8 19.0) (14. This could prove very versatile in the market but needs validation.9 (13.2 104. It has developed a technology platform. work is behind the original research plan so any deals are unlikely until H211.0 4.8) (6.79 0. We are currently reviewing our forecasts. an emerging clinical biomarker technology and a therapeutics discovery unit.3) (19. The recent expansion of the collaboration with Abunda Nutrition suggests that Evolva will be able to reduce manufacturing costs for its partners in health and nutrition.5 42. of nutritional products for cheaper production methods. Epistem has a contracts services operation. INDUSTRY OUTLOOK Biomarker sales are did well but have not yet broken through into mainstream clinical use. The Company description Founded in 2000. GeneDrive.4) (14.8 EBITDA (CHFm) (6. prototype GeneDrive testing instrument may create new growth expectations but the initial markets. The Novartis deal will proceed as planned until February 2011.8) (14.0 N/A EPS (p) 1. Y/E Jun Price performance % Actual Relative* Analyst John Savin 1m 4.2 N/A PBT (£m) (0. The platform's potential has been validated by several partners including Roche.7) (22.02 Market cap: CHF282m Forecast net cash (CHFm) 30. the shares have performed very strongly so that Evolva appears to be fully valued.9 2008A 2009A 2010E 2011E * % Relative to local index Analyst Mick Cooper 2 December 2010 55 . Partnering revenues will fall from March 2011.3) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (14.2m but with higher margins.0) 2009A 2010A 2011E 2012E Revenue (£m) 4. with some use in clinical trials.2 1039. are competitive with Roche.0 5.5 N/A P/CF (x) 16. INDUSTRY OUTLOOK The pharmaceutical industry is continually searching for novel treatments.9m of sales. Evolva's platform has already created several first-in-class drug candidates.1 Forecast gearing ratio (%) N/A Market Swiss Stock Exchange Share price graph (CHF) Evolva (EVE) INVESTMENT SUMMARY Evolva has developed an innovative platfrom using synthetic biology to make novel drugs and new production methods for nutritional and consumer health products. Biomarkers had £0.4 0. there is also one product in Phase I development.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 395. The nutritional products strategy means that Evolva has a lower risk profile than it would if it was a pure drug discovery company.0) PBT (CHFm) (8.9 18. A novel desktop Point-of-Care DNA test system. there is likely to be increased share price volatility as a lock-up agreement lapses on 14 December 2010. For liquidity reasons. which it uses to develop novel drugs and new methods of making nutritional and consumer health products.6) 0.8) (25. Novartis has until February 2013 to use its exclusive option.4) (27.1) 3m (7.2 N/A EBITDA (£m) (0.9 18.7) (19.4) (9.5) (29.8 3m 17.7) 0.7 5. and manufacturers Company description Evolva is a Swiss synthetic biology company.6 N/A N/A N/A * % Relative to local index Sector: Pharma & Healthcare Price: CHF2. is being prepared for Beta testing.38 N/A P/E (x) 329. The company is seeking an acquisition to help GeneDrive commercialisation. However.3) (31.5 0. particularly sexually transmitted disease testing.9) 12m 47. Y/E Dec Revenue (CHFm) 11.0p £31m 4.5) 12m (4.2 3.2) EPS (CHFc) (38. due to a better product mix. However.2 N/A AIM Epistem Holdings INVESTMENT SUMMARY (EHP) The final results showed contract revenues up 10% to £5.

2bn.3 9. it aims to realise the potential of its unique resource and to be a globally recognised iron ore pellet supplier. At present. Evotec's growth depends on it being able to provide a high quality integrated service that cheaper service providers are unable to deliver. surpassing FY08.2 Price performance % Actual Relative* 1m 20.8 N/A FRA Evotec (EVT) INVESTMENT SUMMARY Evotec continues to make significant progress to becoming a sustainably profitable business by 2012.0 Market FULL Share price graph (p) Ferrexpo (FXPO) INVESTMENT SUMMARY In its interim management statement. The outlook remains promising with the order book 31% higher in October than it was last year. Ferrexpo mapped out a route for increasing output to 12Mtpa of 65% Fe pellets from 38Mtpa of iron ore by 2013 and then 20Mtpa of pellets from 60Mtpa of iron ore by 2018 'at the latest'.8 38.9 648.7 482.5) 0. Y/E Dec 2008A 2009A 2010E 2011E Revenue (US$m) 1116.8 Price performance % Actual Relative* 1m 8. INDUSTRY OUTLOOK Pharmaceutical companies are outsourcing their drug discovery activities as they look to Company description Evotec is a drug discovery business that provides outsourcing solutions to the pharmaceutical industry and develops its own proprietary drugs.3 9. which is driving the growth of companies that can provide these services. In the meantime.1p Market cap: £2173m Forecast net debt (US$m) 154.7 53. INDUSTRY OUTLOOK Ferrexpo achieved a price of US$131/t for its pellets in Q210.4 12m 89.0 PBT (US$m) 442.70 €312m 53.8 29. Prices rose 5% in Q3 and look likely to fall c 10% in Q4 for an average for the year of c US$118/t.0 6.7) (21.5) EPS (c) (52. Management has approved a budget of $647m to achieve the first phase of this development. Y/E Dec Revenue (€m) 39.6 42.7 133. The strategic acquisition of DeveloGen in September added a late Phase III product to the pipeline and expertise in the field of metabolism and diabetes.1 2. Revenues increased 33% during the first nine months of 2010 and Evotec has been profitable for the last two quarters.4 501.7) (15.6 PBT (€m) (47.2 63.9) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A 44.4 48.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (€m) Forecast gearing ratio (%) Market Share price graph (€) €2.4 443.2 970. management is testing the plant's ability to produce concentrate at its 1Mtpa nameplate capacity before instigating the northern pushback at its Poltava mine and the development of Yeristovskoye.1 61. of c 644pps.4) (0.0 EPS (c) 47.3 10.5 13.2 EBITDA (€m) (40.7 1096. The second phase will cost an additional c $1. On the basis of a long-term pellet price of $100/t.3 16. It is benefiting from the continued expansion of its drug alliance business (it entered a major alliance with Genentech in May 2010) and tight control of costs.4 9. Backed by one of the largest iron ore resources in the world.2 81. However.7) (1.6 12. we estimate that the successful development of Yeristovskoye will support a future share price Company description Ferrexpo is involved in producing and exporting iron ore pellets to the global steel industry. the company is on course to report a record full-year set of numbers.0 Forecast gearing ratio (%) 19.2 436.6) (1.6 P/CF (x) 7.3 71.4 59.1 2008A 2009A 2010E 2011E * % Relative to local index Analyst Mick Cooper Sector: Mining Price: 369.5 P/E (x) 12.1 * % Relative to local index Analyst Charles Gibson 56 2 December 2010 .5 12m 34.3 9.2 3m 32. improve their productivity and decrease the fixed costs associated with them.2 3m 12.1) (20.7) (0.9 EBITDA (US$m) 494.

6 22. The group achieved growth despite losing its biggest customer last year. improving global industrial activity.1 0.6 6.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 8.5 14. saving institutions the cost of investing in and maintaining their own technology infrastructure and staff department.2 468.0 506.3 P/CF (x) 35. Fiberweb's principal customer. expansionary investment within the JV in both the Americas and Asia is reinforcing the company's global consumer credentials. with the potential to add a range of asset classes. and net cash slipped to £1.0 EBITDA (£m) 48. construction products and protective clothing. Operating profit (prior to a small asset sale and share-based payments) rose 13% to £0.4 7.8 2.3 15.1 12m 35.9 EPS (fd) (p) 0.8 8. higher volumes and a growing number of exchanges all contribute to a resilient outlook for the group against a tough economic backdrop.4 16.7 3m 15.8 EBITDA (£m) 0. industry trends towards electronic trading. we expect working capital to normalise in H2. Working capital expanded due to lower upfront payments on some contracts. manufacturing and supply of nonwoven fabrics. Additionally. In addition.3 0.0 28.8 3.6 * % Relative to local index Analyst Richard Jeans Sector: Basic Industries Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 78.7 17.7 12m 11. The shares trade on c 12x our FY12 earnings.3m.0p £96m 156.1 6.4 6.9 92.6m.7 Price performance % Actual Relative* 1m (3.8 454. such as baby nappies.4 14. Y/E Mar 2009A 2010A 2011E 2012E Revenue (£m) 14.3 0.0 FULL Fiberweb (FWEB) INVESTMENT SUMMARY Building on progress made in the first half.6 12.2 56.5 16.4m.7 2.2 2. filters.4 1.1 P/E (x) 9.6p £34m 2. INDUSTRY OUTLOOK We continue to expect robust volume growth within the industrials business.8m. and stabilisation in raw material costs.5 PBT (£m) 10.7 P/E (x) 86. Hygiene business will benefit from a solid performance in the consumer markets. although this has relented more recently.2 2.6 1. Company description FFastFill provides SaaS solutions for trading and risk management on electronic markets.9 1. INDUSTRY OUTLOOK FFastFill’s software enables banks and other financial organisations to trade exchange-traded derivatives across a number of exchanges. P&G. Margins have been affected by higher raw material (polypropylene) costs.4 10.2 12.2 14. FFastFill had 10 contract wins in H1 and the SaaS order book jumped 12% to £11. helped by Company description Fiberweb is engaged in the development. These services provide full application functionality. continues to see good volume growth in its end markets.5 PBT (£m) 0.4 N/A AIM FFastFill (FFA) INVESTMENT SUMMARY FFastFill reported a 4% increase in H1 revenues to £7.6 50.9 12.3 28.0 EPS (p) 8.0) 3m 33. a strong performance in the FitesaFiberweb joint venture.5 0.2 11. Fiberweb has been substantially re-shaped and reorganised and now operational performance improvements are coming through. The SaaS offering and the straight-through processing capability enable customers to achieve significant cost savings. fabric softeners.6 * % Relative to local index Analyst Toby Thorrington 2 December 2010 57 .7) (3.2 1.4 P/CF (x) 1.0 3.5m.2 49. Fiberweb’s trading update for 1 July to 25 October 2010 points to continued improvement in underlying profit margins driven by ongoing growth in industrials. with SaaS revenue growing 8% to £5. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 512.0 Price performance % Actual Relative* 1m 7.2 15. Nonwovens are used in a range of products.

Y/E Dec Price performance % Actual Relative* 1m 24.3) (10.0 47. Y/E Dec Revenue (C$m) 0.4m programme net to Forum will cover all pre-drill commitments.4) PBT (US$m) (4. such a find would be the foundations of an LNG project. focused exclusively on the Philippines.50 Market cap: C$1430m Forecast net cash (C$m) 104.0 EBITDA (C$m) (26. is an AIM-quoted company developing oil and gas assets.8 2008A 2009A 2010E 2011E Revenue (US$m) 0. In the context of the UK sector Company description Forum Energy.5 3m (8.3) EPS (c) (23.0 0.2) (26. Our total valuation for FRG's assets is US$6. of the North Sea. and is in JV with Newmont and Agnico Eagle on another two promising projects.8 85.6) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A 7991.71Moz gold.0) (56.8) (17.8) (2.0ps in 2016 as Nevadan production increases.8 2. We Company description Fronteer Gold is a multi project gold and uranium developer with a core of near-term producing assets in Nevada. INDUSTRY OUTLOOK Our valuation uses a long-term gold price of US$1.6) (3. where current step-out drilling is taking place.1) (8.8) (11. registering 12.3 54. US.8 3m 18. a 3tcf find would be one of the largest in the last 25 years.5) (26. with gold-copper projects in Turkey and a uranium project in Canada.Edison Insight Sector: Oil & Gas Price: Market cap: Forecast net cash (US$m) Forecast gearing ratio (%) Market Share price graph (p) 68.8 * % Relative to local index Analyst Ian McLelland Sector: Mining Price: C$9.7 15.6) PBT (C$m) (23. high quality gold deposit that FRG hopes to have in production in the next two years using existing cash sources.5) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 17.1) (25.7 12m 108. assuming a normal 60% recovery rate this would imply a world-class resource.5) (3. The $7.6 25. and has a total gold resource base of 4.8 N/A AIM Forum Energy INVESTMENT SUMMARY (FEP) Forum's main play is the development of the potentially world-class Sampaguita gas field in the South China Sea.7 1.9) (58. a high sulphidation copper-gold project in Turkey.3 EBITDA (US$m) (4.7) (2. FRG is developing its Northumberland gold project in Nevada USA. The company announced in November a $10m facility to fund its share of a first phase work programme over SC72 (containing Sampaguita). Similar to Shell's adjacent Malampaya field.7) (1.6) (23. With mean GIP of 3. FRG is also experiencing success with drilling at its Halilaga project.2 2008A 2009A 2010E 2011E * % Relative to local index Analyst Charles Gibson 58 2 December 2010 . INDUSTRY OUTLOOK The Sampaguita field is a potential company maker for Forum.5) 12m 71. Long Canyon is a high grade.8 2.4m with indications that the deposit is starting to thicken to the north.1) (8.1 Forecast gearing ratio (%) N/A Market TSX Share price graph (C$) Fronteer Gold INVESTMENT SUMMARY (FRG) Fronteer recently released its highest-ever drill result at its Long Canyon project.0ps rising to US$8.2) EPS (c) (16.0 0. including shooting 3D seismic over and around Sampaguita and 2D seismic over existing leads.2) (23.4) (41. see a positive re-rating once a revised economic assessment on Long Canyon is published in 2011.177/oz.7) (2.0 0. Along with Long Canyon.3g/t Au over 50.4tcf and 20tcf upside.5p £23m 5.

9) 22.3 5.5) (16.4 12m 105. erectile dysfunction and topical pain relief).6 2008A 2009A 2010E 2011E * % Relative to local index Analyst Lala Gregorek 2 December 2010 59 .4) (2.0 AIM Frontier Mining INVESTMENT SUMMARY (FML) While awaiting certain permits and waivers to be signed by the Kazakh government in relation to its merger and re-domicile to the Cayman Islands (announced October).7 3m 59.3) (2. With mass-market appeal.8) (0.2 EPS (fd) (c) (2. incorporated in Delaware.000/t and after capex of US$55m).6) (0.4) (2.4 29.4 85. Y/E Dec Revenue (US$m) 0.4 5.5) (0.1 P/CF (x) N/A N/A 562. the CE mark issuance is expected in Q410. INDUSTRY OUTLOOK Futura's development pipeline of products based on its proprietary DermaSys delivery platform Company description Futura Medical is engaged in researching and developing pharmaceutical products and medical devices.Edison Insight Sector: Mining Price: Market cap: Forecast net debt (US$m) Forecast gearing ratio (%) Market Share price graph (p) 6. and at least 10koz on the leach pads by end 2010.4 12m (7.7 3.1 3m 16.1 0. revised 6koz of gold produced. Y/E Dec Revenue (£m) 0.3p £45m 0.1p £56m 28.2) (1. FML has signed a US$4m loan facility with HSBC Kazakhstan for a three-year period with an indicative agreement for an additional US$15m on satisfying certain conditions of HSBC. premium pricing potential and Reckitt's marketing muscle. Commercial launch preparations are under way at SSL. Mining at Benkala is planned to start H211.2) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 17. Futura should unlock value through accelerating their development and launch.3) (0.8 18.5 0.2) (1. The company intends to use the loan to purchase equipment for its Benkala project.9 N/A AIM Futura Medical INVESTMENT SUMMARY (FUM) Futura's investment case centres on the EU launch of its CSD500 Durex-branded condom by partner SSL International (recently acquired by Reckitt Benckiser). and their commercial exploitation through out-licensing.000tpa at a cash cost under US$1/Ib. FML plans to extract the smaller (<10% of total resource) secondary oxide copper resource first (NPV estimated by WAI at US$191m using a copper price of US$6.9) (1.1) (1.6 P/E (x) N/A N/A N/A 6. INDUSTRY OUTLOOK Copper currently trades at an LME spot price of around US$8.6 65.3) 1. but with a commercial deal on TPR100 (GSK) and potentially PET500 in H210.0 PBT (US$m) (4. addresses potentially large but underdeveloped OTC markets (eg.9) 1.2 0.300/t.9 7.6) (0.2 48.8) (5.0 2.1) (1. Given positive EU regulatory opinion for the constituent drug (2008) and submission of the updated regulatory dossier. is a development stage mining concern with two licences in Kazakhstan. Further development has been constrained by its cash position.4) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Charles Gibson Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 66. Gold production at the Koskuduk heap leach plant is ongoing with a Company description Frontier Mining. CSD500 has a good chance of generating significant revenues: Futura's high-teen royalties should push it into profit from 2011.2 Price performance % Actual Relative* 1m 4. with cathode capacity planned of over 20.0) EPS (p) (3.9) PBT (£m) (2.4 1171. We value FML on an EV/resource multiple at 12pps.8 EBITDA (US$m) (4.5 EBITDA (£m) (2.

Edison Insight

Sector: Oil & Gas Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 0.9p £10m 5.9 203.0 AIM

Gasol

(GAS)

INVESTMENT SUMMARY Gasol's strategy is to continue pursuing liquefaction projects for stranded gas in West Africa and to investigate gas-to-power opportunities regionally. The rationale for the latter reflects the ready availability of gas supplies in the Gulf of Guinea, relatively low power generating capacity per capita in the region and the widespread use of high-cost oil products in power generation in West Africa. Gasol is developing a business plan to pursue the gas-to-power strategy. We intend to update our valuation and investment summary once this has been agreed. INDUSTRY OUTLOOK Gasol's original strategy of basing LNG projects around stranded gas assets in the Gulf of Guinea has been reconsidered in light of weak LNG prices and natural gas prices in mature

Company description
Gasol is an African-focused gas independent. The company’s prime focus is on the monetisation of gas reserves in Sub-Sahara Africa by its aggregation, liquefaction and shipment to high-value markets worldwide.

markets. Weakness reflects a combination of soft economic activity, the coming on-stream of major LNG projects and the surge in shale gas availability in the US.

Y/E Feb / Mar Price performance % Actual Relative* 1m (7.5) (6.8) 3m (15.9) (50.3) 12m (63.0) (66.6) 2009A 2010A 2011E 2012E

Revenue (£m) 0.0 0.0 0.0 N/A

EBITDA (£m) (6.4) (4.5) (4.9) N/A

PBT (£m) (6.4) (5.1) (5.3) N/A

EPS (p) (1.0) (0.5) (0.5) N/A

P/E (x) N/A N/A N/A N/A

P/CF (x) N/A N/A N/A N/A

* % Relative to local index

Analyst Ian McLelland

Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 33.5p £29m 5.9 N/A AIM

GB Group

(GBG)

INVESTMENT SUMMARY Last month, GB announced its FY11 interim results were in line with our increased estimate on the back of the October trading update. DataSolutions is seeing good repeat revenues and increasing demand for its services, resulting in revenue up 20% y-o-y and improved profitability. DataAuthentication is showing a good recovery from the recession-linked loss of clients last year, and is continuing to win new business as clients move from manual to electronic methods of ID verification. We initiated a (untaxed) 2.7p FY12 EPS estimate, which reflects significant economies of scale. INDUSTRY OUTLOOK Growth in internet trading, regulatory pressure and the need for money-laundering checks, age

Company description
GB Group has complementary identity management offerings of verification, capture, maintenance and analysis enabling companies to identify and understand their customers.

checks and anti-fraud checks are behind growing interest in increasingly complex and comprehensive verification of personal data. The encouragement of the FSA and the cost and payback attractions mean the shift to making these checks electronically is accelerating.

Y/E Mar Price performance % Actual Relative* Analyst Martin Lister 1m (4.3) (3.5) 3m 30.1 14.2 12m 76.3 59.3 2009A 2010A 2011E 2012E

Revenue (£m) 23.8 22.2 24.4 26.8

EBITDA (£m) 2.0 1.8 2.2 2.9

PBT (£m) 1.8 1.3 1.6 2.4

EPS (p) 2.2 1.8 1.9 2.8

P/E (x) 15.2 18.6 17.6 12.0

P/CF (x) 27.1 11.4 16.9 10.0

* % Relative to local index

60

2 December 2010

Edison Insight

Sector: Mining Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 4.1p £23m 12.5 52.0 AIM

GMA Resources
INVESTMENT SUMMARY

(GMA)

Output of 7,259oz Au in Q310 represented a strong turnaround at GMA, after the successful re-commissioning of the Tirek CIL plant at Amesmessa. Production of 1,933oz from the CIL plant in September alone contributed to overall output of 3,059oz - 2% above management's target. Future forecasts are predicated on production of 3,000oz pm at an average cost of US$535/oz in H210, falling to US$425/oz thereafter and at a gold price of US$1,223/oz in FY10, followed by US$1,350/oz thereafter. The installation of an additional 600-800ktpa CIL plant is also under consideration. INDUSTRY OUTLOOK Of the 76 anomalies identified by Earthscan as being prospective in H110, seven will be

Company description
GMA Resources is involved in gold mining, exploration and mine development in Algeria.

pursued with a drilling campaign, while results from GMA's 162 hole RC drilling campaign are expected in December. Given the density, grade and continuity of its veins, it is conceivable that GMA’s land position represents a new world-class gold camp akin to Kirkland Lake or Ashanti, with which it shares many characteristics. Y/E Dec Revenue (£m) 7.8 20.4 22.2 30.4 EBITDA (£m) (0.9) 1.4 7.6 19.1 PBT (£m) (6.5) (5.6) 0.4 11.7 EPS (p) (1.8) (0.5) 0.0 0.9 P/E (x) N/A N/A N/A 4.6 P/CF (x) N/A 138.6 1.5 1.2

Price performance % Actual Relative* 1m 47.3 48.5 3m 217.3 192.5 12m 0.0 (9.6) 2008A 2009A 2010E 2011E

* % Relative to local index

Analyst Charles Gibson

Sector: Mining Price: A$0.34 Market cap: A$270m Forecast net debt (A$m) 94.1 Forecast gearing ratio (%) 113.0 Market ASX Share price graph (A$)

Gold One

(GDO)

INVESTMENT SUMMARY After processing 86kt at Modder East (ME) in Q310, GDO is ramping up production at a rate of c +20kt per quarter to reach 150koz pa in FY12. GDO is spinning off its Megamine asset into Goliath Gold while, at Ventersburg, a scoping study indicates an operation producing 157koz per year at a cost of US$379/oz over 11 years for capex of ZAR1.9bn. PFSs at Ventersburg and Megamine are scheduled in Q111 and 2012. Meanwhile, drilling at ME has confirmed the extension of the high grade shoreline. Updated resource statements at ME and Ventersburg are due in December 2010. INDUSTRY OUTLOOK FY11 estimates assume US$1,350/oz Au and ZAR7.20/USD. At US$1,177/oz and

Company description
Formed from the takeover of Aflease by BMA Gold in 2009, Gold One is an emerging mid-tier gold producer with significant assets in the Witwatersrand basin and growing ones outside.

ZAR7.3114/US$ a sum of the parts analysis values GDO at 63.99pps (inc Ventersburg) to which an immediate 3.82Acps needs to be added for GDO's interest in Goliath Gold (potentially rising 11-fold).

Y/E Dec Price performance % Actual Relative* 1m 3.1 4.6 3m 17.5 12.5 12m 6.3 7.2 2008A 2009A 2010E 2011E

Revenue (A$m) 9.3 8.9 91.2 168.0

EBITDA (A$m) 1.8 (18.3) 27.1 86.7

PBT (A$m) (6.0) (30.8) 9.6 59.9

EPS (fd) (c) (1.2) (4.0) 0.6 3.6

P/E (x) N/A N/A 56.7 9.4

P/CF (x) N/A N/A 8.9 3.4

* % Relative to local index

Analyst Charles Gibson

2 December 2010

61

Edison Insight

Sector: Mining Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 12.8p £14m 1.9 N/A AIM

Goldplat

(GDP)

INVESTMENT SUMMARY Having built a profitable base recovering 21koz Au pa at less than US$800/oz from other companies' residual mining materials, Goldplat is now in the process of acquiring conventional, high-grade assets to increase its production to 100koz pa. Most recently, this has involved it buying a 90% interest in the 29 sq km Banka Lease in Ghana (containing 200koz non-JORC resources) for US$1.5m. It has also announced a deal whereby Golden Star (Wassa) will process c 4,000t of its Ghanaian material to produce c 3-4,000oz Au pa. In the meantime, the company continues to progress its application for Kilimapesa to enter commercial production. INDUSTRY OUTLOOK In Burkina Faso, drilling at Nyieme has returned grades up to 19.1g/t and confirmed the

Company description
Goldplat is a gold producer focused on Africa with three primary assets: Goldplat Recovery (Pty) - South African gold recovery plant; Gold Recovery Ghana – Ghanaian gold recovery plant; and Kilimapesa Gold - mining project in Kenya.

extension of the quartz payshoots in accordance with the company's geological model. Nyieme will now be the subject of an extensive exploration programme. NB, our forecasts are conducted at a long-term gold price of US$1,350/oz and a cable rate of US$1.65/£.

Y/E Jun 2009A 2010A 2011E 2012E

Price performance % Actual Relative* 1m (7.3) (6.5) 3m 34.2 13.0 12m 4.1 (5.9)

Revenue (£m) 11.1 10.7 18.8 23.9

EBITDA (£m) 2.0 2.4 4.3 8.3

PBT (£m) 2.0 2.3 4.0 7.9

EPS (p) 1.32 1.40 2.35 5.92

P/E (x) 9.7 9.1 5.4 2.2

P/CF (x) 9.2 10.0 4.4 2.4

* % Relative to local index

Analyst Charles Gibson

Sector: Oil & Gas Price: 367.0p Market cap: £446m Forecast net cash (US$m) 72.5 Forecast gearing ratio (%) N/A Market AIM Share price graph (p)

Gulfsands Petroleum
INVESTMENT SUMMARY

(GPX)

Gulfsands continues to offer the investor upside through its extensive drilling programme in Syria. October brought news of the KHE-18 delineation well, indicating its large Khurbet East field extends in a more northerly direction than previously thought. It is now drilling Zahraa-1 on a sole-risk basis, while the Twaiba-1 well is temporarily delayed due to rig damage (not on GPX's account). Tunisia remains a longer-term focus where the Chorbane prospect is GPX's key foothold. The Lambouka-1 well drilled in August has proven inconclusive and has been suspended pending a future sidetrack. INDUSTRY OUTLOOK The recent analyst visit to Syria gave us an opportunity to get an update on Gulfsands’ key

Company description
Gulfsands Petroleum is involved in the production, exploration and development of oil and gas reserves in the US, Syria and Iraq. It recently agreed to acquire working interest positions in two exploration permits in Tunisia and Southern Italy.

Syrian operations. Low-cost production continues to provide strong cash flow and, with management confirming better well performance than expected, a reserves review in early 2011 points to a potential reserves upgrade.

Y/E Dec 2008A 2009A 2010E 2011E

Price performance % Actual Relative* 1m 12.5 13.4 3m 26.1 26.6 12m 58.2 43.0

Revenue (US$m) 53.6 84.4 115.5 138.4

EBITDA (US$m) 7.9 47.3 69.6 94.7

PBT (US$m) (0.9) 33.7 50.4 73.1

EPS (c) 0.9 28.3 41.3 60.0

P/E (x) 651.7 20.7 14.2 9.8

P/CF (x) 40.1 16.8 9.7 7.6

* % Relative to local index

Analyst Ian McLelland

62

2 December 2010

0 155.8 EPS (fd) (p) 2. BMW/Mini and Lotus.8) (3. hopefully. which Company description GWP is a UK pharmaceutical company focused on development of cannabinoids. Nevertheless. the appointment of a new high-profile CEO from outside the industry suggests a potentially exciting immediate future.6 P/E (x) 0. INDUSTRY OUTLOOK City sentiment towards the motor distribution sector remains cautious.3 * % Relative to local index Analyst Lala Gregorek Sector: General Retailers Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 92. INDUSTRY OUTLOOK GW Pharmaceuticals is a leader in the field of cannabinoids (there are >70 in cannabis).7 26. indications from most leading groups suggest they will deliver profits progress in both 2010 and 2011.4) (4.0 EBITDA (£m) 2. fatty liver disease.0 26. SMMT forecasts on new vehicle registrations are still looking optimistic.0p £22m 1.5 125.8 N/A 22. Bugatti and Alfa Romeo.4 P/CF (x) N/A 1.0 6.1 5. Sativex's UK commercial launch appears to be going well and the launch in Spain is on track for early 2011. This review should be completed early next year and.1 3. oral cannabinoids next year.4 17.5 3m 10. Its lead product.1 3m 1. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 144. Lamborghini.2 3.8 0.4) 4. including the possible investment of the substantial liquid funds.0 N/A FULL HR Owen (HRO) INVESTMENT SUMMARY October's cautiously optimistic IMS reinforced the growing optimism about profits recovery.5 (4.8 0.8) 12m 15.8 5. and 3) the expansion of its R&D pipeline.0 129.0 3. and is in development for cancer pain. 2) the execution of Phase III studies in cancer pain.9 Price performance % Actual Relative* 1m 1. Y/E Sep 2009A 2010A 2011E 2012E Revenue (£m) 24. Rolls-Royce.1 30.0p £136m 5. H R Owen is conducting a strategic business review.7 EBITDA (£m) 2.2 10.8 52.7) PBT (£m) 1.5 129.8 0.8 N/A AIM GW Pharmaceuticals INVESTMENT SUMMARY (GWP) GW Pharmaceuticals' FY10 results marked an important transition with the investment case now centred on: 1) the roll out of Sativex in Europe.4 1. Spain. has been approved in some countries for the treatment of neuropathic pain and spasticity associated with MS.3) 1.6 129.4 148. anti-psychotic-induced dyslipidaemia and a yet-to-be-determined inflammatory indication.4 PBT (£m) 0. published with the preliminary results announcement in spring 2011.5 (19. We estimate that Sativex will achieve 5-10% in the indications that it has been approved (spasticity in MS [UK. New Zealand] and neuropathic pain in MS [Canada only]).4 4. build their downstream activities. The first of two Phase III studies in cancer pain is now under way and GW plans to initiate four Phase II studies with new. These will be in ulcerative colitis.2 (2.3 P/E (x) 36. as fears about recession are seen to have greater prominence than the positive action taken by retailers to Company description Following major restructuring.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 105.7 2. It also operates aftersales franchises for Audi. More significantly.2 12m 68. Maserati.1 5.3 0.9 (1.6 (1.3 9. Ferrari.5 * % Relative to local index Analyst Nigel Harrison 2 December 2010 63 .8 P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 8. but used car values have recently started to drift downwards. Canada. HR Owen principally comprises its luxury cars business involving franchises for Bentley. have the potential to treat a broad range of indications and to become novel pharmaceutical products. Sativex.4) EPS (p) 125.

2 2.5p £80m 85.5 N/A N/A N/A Price performance % Actual Relative* 1m (8.2 28.0 0.7) (2.6) * % Relative to local index Analyst Roger Johnston Sector: Alternative Energy Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 23.4) (2. PBT down 64% and EPS down 78%. INDUSTRY OUTLOOK Since 2004. With the debt covenants amended. Odyssey.6 Price performance % Actual Relative* 1m (4.5 EBITDA (£m) 53.7) (7.4 N/A AIM Helius Energy INVESTMENT SUMMARY (HEGY) We expect Helius to be able to capitalise on the significant growth in the market for biomass generation.5 EPS (p) 18.9) 3m (5.3 P/CF (x) 1.5) 3m 39.2) (3.9) (18.1) 12m (57.4) (2. Helius currently has three other announced projects in its pipeline and we believe the market has failed to reflect this in the company's current valuation. Hampson has built up the leading player in the fragmented composite tooling market through acquisitions.6 (4.5) PBT (£m) 30.6 N/A N/A N/A P/CF (x) 0. This market is set to grow significantly once production of the Company description Hampson is the largest manufacturer of composite tooling and assembly systems for global aerospace. these operational difficulties resulted in trading profit declining by 50%. The UK has a significant requirement for renewable energy to meet the twin challenges of reducing greenhouse gas emissions and ensuring security of energy supply.5) (61.0 0. The experienced management team has shown that it can create value for shareholders by developing biomass projects as demonstrated by the sale of its Stallingborough project to RWE in 2008 for £41m (£28m cash + £13m earn-out). It manufactures highly engineered components and assemblies for airframe and engine applications using advanced lightweight materials. B787 and A350 truly start and we believe that Hampson was unlucky with timing rather than strategic direction.0 (52. we expect biomass generation to play a significant role in helping the UK meet these challenges.4 189.4) (3.6 24.6 0.4 (4.1) EPS (p) 42. Our base case valuation of Helius suggests the company could be worth 74p/share.6 32.Edison Insight Sector: Aerospace & Defence Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 28.0) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Graeme Moyse 64 2 December 2010 .5 37.9 20.3 170.0 3.7) P/E (x) 0. left the group over-exposed to the high debt levels and delays in this high value capital spend once the financial crisis hit and programmes moved to the right. We believe at current levels the market is valuing only the cash on the balance sheet and the Stallingborough earn-out.8) (3.4 36.9 12.4 5.4) (2.0 EBITDA (£m) 31.8p £21m 10. owns and builds biomass generation projects in the UK. INDUSTRY OUTLOOK Company description Helius Energy identifies.7 8.8 2. largely as expected following the earlier profit warning. While revenues increased by 4%. Y/E Sep Revenue (£m) 0.4) (19.4 P/E (x) 1. develops.5 PBT (£m) 37. Y/E Mar 2009A 2010A 2011E 2012E Revenue (£m) 256.6 178.2) 12m (10. new CEO Norman Jordan's task is to focus on shaping the business for the opportunities ahead and in creating a performance culture.0 FULL Hampson Industries INVESTMENT SUMMARY (HAMP) Hampson's interims were affected by the later than-anticipated recovery in demand for composites tooling at its largest tooling facility. As a proven technology.4 5.6 3. The acquisitions.5 10.5 2.7 (3. however.

15 P/E (x) 7.3 5. While investment in growth is set to curb H2 profit.0 EBITDA (£m) 42.4 5.0 40.5 51.8 352. Hightex is also positioning itself to secure the next wave of contract wins and management has flagged the prospect newsflow here before the year end.1 4.0 660.4 31. as is the resumption of dividend growth.6 4. the strong pick-up on economic recovery in key markets continues to be broadly Company description Hogg Robinson is a major global player in corporate travel services.72 7.3p £105m 66. split 28% US.6 12m (11.0 370.3 326.0 55.4 2.0) (19. The key market sectors are sporting Company description Hightex. INDUSTRY OUTLOOK Management estimates that the target membrane market (excluding China) is currently worth €150-200m.5 9.0 FULL Hogg Robinson Group INVESTMENT SUMMARY (HRG) Bumper interim results confirmed HRG’s ability to leverage off its much-reduced cost base as activity recovered.6 2. Y/E Dec Price performance % Actual Relative* 1m (4.3 44.1 * % Relative to local index Analyst Toby Thorrington Sector: Support Services Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 34.5 3.1 4. According to IATA.1 5. stadia/arenas.8 PBT (£m) 24.9 2.4p £14m 6. operating worldwide.0 30. while a 12% gain in business travel in September shows August weakness to have been a blip.2 15.0 EPS (c) (2. encouraging.6) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Richard Finch 2 December 2010 65 . which is fast approaching. designs and installs large area architectural tensile polymer membrane structures for roofs and facades. It would seem that this recovery can be maintained during Q4. Price: Market cap: Forecast net cash (€m) Forecast gearing ratio (%) Market Share price graph (p) 7.7) 2008A 2009A 2010E 2011E Revenue (€m) 16.8) (16.48 P/E (x) N/A 17. with a market share of around 30%.8 P/CF (x) N/A N/A 6. a 10% year-on-year rise in international traffic in October sustained the trend rate of growth since the low point of mid-2009.4m.Edison Insight Sector: Construction & Blding Mat.7 28. retail.50 0. governmental.0 EPS (fd) (p) 4.5) 1. This increased level of activity was achieved without putting undue strain on working capital and the period-end net cash position was effectively unchanged at €4.8) (4.5 PBT (€m) (2. 22% Europe and 50% ROW. INDUSTRY OUTLOOK Although HRG’s mainly managed travel income prevents close correlation with air travel volumes.1 2. entertainment and leisure. commercial.46) 0.3) 1.0 33.2 N/A AIM Hightex (HTIG) INVESTMENT SUMMARY Group revenue and operating profit both increased materially in H1 as Hightex moved forward on its three high-profile sport stadium projects.2 Price performance % Actual Relative* 1m 14.8 P/CF (x) 1. We estimate that the stadia/arenas segment is the largest.95 1. Y/E Mar Revenue (£m) 351.33 6.1 3m 15.2 20. Successful re-negotiation of long-term bank facilities is a welcome complement to continued effective cash management (reduced seasonal H1 outflow).8) 12m (7.1) 3m 1.67 6.7 (12.3 9.1 5. transportation.3 EBITDA (€m) (2. increasingly favourable market conditions should still underpin full-year returns ahead of expectations (we are raising our PBT forecast by c 10%).

primarily ATM.Edison Insight Sector: Media & Entertainment Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 33.9) (5.2 N/A EBITDA (£m) (0.4) N/A PBT (US$m) (19. Y/E Sep Revenue (£m) 2.3) (19. Although the banking sector remains under the spotlight both politically and economically. a successful launch of the new methanol-based product will provide not only validation of IdaTech's product range.3 2008A 2009A 2010E 2011E * % Relative to local index Sector: Electrical Equipment Price: Market cap: Forecast net debt (US$m) Forecast gearing ratio (%) Market Share price graph (p) 60. Y/E Dec Price performance % Actual Relative* 1m 0. the key to validating Idatech's commercial offering will be the launch of its methanol-based product due in December. there is high media sales growth potential for i-design to move into sustainable profitability. In our view.revenues in H2 were significantly higher than H1 and the loss for the year was better than our estimates. With lower costs.0 AIM IdaTech (IDA) INVESTMENT SUMMARY IdaTech's recent acquisition of the GenSys LPG fuel cell system.1 N/A EBITDA (US$m) (19.6) (1.1 2.8) (7. We are encouraged by the expansion of the group’s atmAd licence estate (most recently c 500 YourCash ATMs in the UK and Holland). The company’s atmAd ‘available for third-party advertising’ estate (once the recent additions are implemented) totals c 9.6 3m 144. as this expands further.0p £5m 0. from Plug Power.0 284.0) (46.3) 12m (24. Prelims are scheduled to be reported this month.8 3m 0.2) N/A EPS (c) (38.1) (0. INDUSTRY OUTLOOK Company description IdaTech develops fuel cells technologies and related applications.4) 2008A 2009A 2010E 2011E Revenue (US$m) 5.9) N/A PBT (£m) (0.0) N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Graeme Moyse 66 2 December 2010 .4 2.0) N/A EPS (p) (3.4 109. software and services. However.900.0) (36.0p £31m 54.9 6.1) (1. Through its technology. INDUSTRY OUTLOOK Company description i-design is a specialist provider of self service devices.75m. convenient. network owners are increasingly looking for alternative ways to generate revenues from their ATMs and advertisers are always searching for new avenues to reach customers for the most effective impact.1) (24.1) (31. up from 5. the new fuel cell system should be able to compete with back-up diesel generators and batteries on a first-cost basis.0 12m 37. extends the company's capabilities into the prime power market.7) N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* Analyst Martin Lister 1m 43. IdaTech seeks to address the growing demand for clean.5 44.2) (21. FY10 year-end cash is expected to be c £0. IdaTech has patented fuel reforming and processing technology that is market leading.6) (21.6 5.600 at FY09 year-end.0 0. It has integrated this capability with fuel cell stacks to make a working system for use in stationary and portable electric power generation.7 N/A AIM i-design (IDG) INVESTMENT SUMMARY i-design's FY10 year-end trading update was positive .0 (11. dependable and scalable sources of power.5 24.5) (1. but could help clarify the company's financial position and augment efforts to raise fresh equity capital in the coming 12 months.

This indicates a possible Phase III start Q411-H112 depending on trial outcomes.4 10.0 2008A 2009A 2010E 2011E * % Relative to local index Analyst Mark Thomas Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 86. Cash outflow was £2. is licensed to Cephalon and is in Phase IIb development for treating systemic lupus erythematosus.8 16. possibly very valuable. A Lilly drug. An NDA is projected for 2014.7) 12m (11.8) * % Relative to local index 2 December 2010 67 .5 PBT (€m) 13.8) (5.5m. largely held as US dollars.6 Price performance % Actual Relative* 1m 1.2 4. Company description ImmuPharma is a UK drug development company.7) P/E (x) 13.Edison Insight Sector: Financials Price: €1. greater Company description IFG provides financial services comprising a pension administration and personal advisory business operating in Ireland and the UK.4 126.8 (5.9 7. Phase IIb trials in four cancers may start in 2011. An update on the cancer product IPP-204106 (N6L) shows steady Phase IIa development progress with six enrolled patients and a move to the second dose level.32 Market cap: €164m Forecast net debt (€m) 22. INDUSTRY OUTLOOK The UK SIPP market should have mid-teens growth with an ageing population. Lupuzor.4 (4. An interesting.2 29.5 8.8 42. Irish Stock Exchange Share price graph (€) IFG Group (IFG) INVESTMENT SUMMARY IFG has re-focused a disparate group of financial services companies into a business centred in double-digit growth markets.4 6. Material earnings growth will come from the James Hay integration (positive management presentation on 17 November).5) PBT (£m) 5.2 P/CF (x) 7.9) (6. Cephalon hopes to start a Phase III on the basis of a 12-week interim analysis of the Phase IIb.3 EBITDA (€m) 20. and international corporate and trustee administration services.6 (4. A residual Irish operation offers some potential as that economy recovers. The trustee and savings is driven by regulatory and tax management opportunities and some competition is reducing as they face conflicts of interest. There is a possible drag on growth of tax restraint on the highest earners affecting bespoke SIPPs. and IFG expects to take market share.4) 10.29 19. self-provision.6 3m 14.2 21.5 8.6 6. LY2127399 is about to start a 1.5m and cash of £20m.3) 3m 21.1 22.0 N/A AIM ImmuPharma INVESTMENT SUMMARY (IMM) H1 results showed minimal revenues with expenses of £2.0 Market FULL.1 5.28 P/E (x) 5. It is the largest provider of UK bespoke SIPPs and has a profitable fee-based UK IFA operation.0 10.140 patient Phase II study. International operations offer trustee and corporate services where CAGR growth for 2000-09 was 21%.5 12m 10.9 17.0 (1.4) EPS (p) 6.1 0. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 0. Lupuzor may have Phase IIb data in 2011.0 N/A N/A P/CF (x) 11.0 9. Y/E Dec Revenue (€m) 105.6 15.0 0. observation is that nanoparticles formed from N6L and glycosaminoglycan are potentially ten-fold more effective in killing cancer cells. INDUSTRY OUTLOOK Lupuzor addresses a market that could be worth over $1bn.0 EBITDA (£m) (4.3) (19. Its lead product.75 21.2 7.5 141.9 N/A N/A Price performance % Actual Relative* Analyst John Savin 1m (7.4 Forecast gearing ratio (%) 23.0) (6. cancer and pain.25 18. but is unlikely to be material in group terms.1 94. and higher tax rates encouraging tax-efficient saving.5 2.8) (5. the advisory meeting is 16 November.1 EPS (c) 24. The 9 December Benlysta PDUFA date could allow sales from early 2011.5p £71m 14. with a pipeline of products targeting immune system disorders.0 6.

0 12m 173.0 P/CF (x) 26.8 16.1 77. through driving the need to improve Company description Innovation Group is one of the leading solution providers to the global insurance industry through the development of a flexible combination of business process outsourcing. supply chain management and technology solutions.9 8.8 0. The shares have moved to a premium rating but upgrade potential still remains and the model is geared. Developments in CPV solar cells and solid state lighting are earlier stage but could also yield significant incremental revenue streams. we feel that Innovation is an becoming increasingly interesting turnaround play. Y/E Sep 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (1.5p £126m 26.1 8.3 5.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 13.1 11.9 155.3 9.1 11.8) (1.0 6.3 25. the entry of consumer brands and comparison engines is supporting the shift towards BPO.6 13.9 P/E (x) 27. INDUSTRY OUTLOOK We are cautious over semiconductor demand into Q4 and 2011.8 Revenue (£m) 139. but the strength of the smart Company description IQE has established itself as a one-stop shop for the compound semiconductor wafer needs of the world’s leading semiconductor device manufacturers. Further conversion of proof of concept trials into contracts could prompt upgrades. Innovation's revenue model is predominantly tied to claims volumes so financial performance is influenced by economic activity levels. flexibility and efficiency.0) 3m 28.3 EBITDA (£m) 8.5 38.7 68.3 7.5 3m 87. Y/E Dec Price performance % Actual Relative* 1m 21.8 15.5p £239m 4.8 31.5 52.9 139.6 22.9 160.5 147.6 24.4 0.5 P/E (x) 58.5 1.0 13.6 6. INDUSTRY OUTLOOK While growth of the global insurance industry is marginal.8 15.2 2008A 2009A 2010E 2011E Revenue (£m) 60.9 173.4 15.5 33.0 0.9 EPS (fd) (p) 0. The shift towards a BPO model is nearing completion and should make for a much more robust financial profile than in days gone by.7 * % Relative to local index Analyst Dan Ridsdale 68 2 December 2010 .0 P/CF (x) 5. Broader recognition of IQE’s market-leader position and growth opportunities should now support a premium valuation.2 16.2 1.4 3.7 N/A AIM IQE (IQE) INVESTMENT SUMMARY The acquisition of Galaxy should open up new opportunities in defence while further cementing IQE's position as the leading and most diverse supplier of compound semiconductor wafers globally.4 12m 19.2 EBITDA (£m) 12. With both estimates and valuation looking undemanding. The raising of £20m will align IQE’s balance sheet with industry demands and could help open up further growth and market share opportunities.4 PBT (£m) 10.2 20.6 1.2 * % Relative to local index Analyst Dan Ridsdale Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 46. phone and tablet adoption cycles are undeniable.0 N/A FULL Innovation Group INVESTMENT SUMMARY (TIG) The major outsourcing deal with Enterprise Rent-A-Car is expected to generate £25m over five years and adds a good level of underpinning to our 2012 estimates.3 7.1 73.9 26.5 EPS (fd) (p) 0. The opportunity in optical networking (eg Lightpeak) looks significant and is drawing closer.6 PBT (£m) 3.

6) EPS (c) (0.1 EBITDA (£m) 3.Edison Insight Sector: Mining Price: US$0.000lbs of lead.6) PBT (US$m) (0.6) (3.2 9.3 10.8 PBT (£m) 3. The portfolio showed a sales decline in H111 vs H210.0 5. these average about 2ft wide. leading to anticipated high growth in FY12.0 0.1) (0.5p £30m 6.8 4.6moz of silver. It aims to grow organically and through product and company acquisitions.7 3.1 EPS (p) 13. Nevertheless.5m if an acquisition needed additional cash.0 AIM IS Pharma (ISPH) INVESTMENT SUMMARY Two successive capital raisings totalling £16m give IS Pharma a strengthened and simplified balance sheet.7Moz of gold.2 14.07 Market cap: US$6m Forecast net debt (US$m) 3. hardrock target focused on exploring extensions of known veins.2 14. We expect a low initial dividend of 0. sampling and drilling.9 6.0 0.7oz/t Ag and 1.7 9.18oz/t Au. Episil is now launched in the UK and EU roll out will occur over 2011. located ~90 miles south of Wells. With £6. Nevada.6 3m 32. cash flows will be strong and freed to invest in growth. probably due to stocking effects in the last FY.8p/share paid in mid-2011.7 12m (7.8 4. A dividend will be paid mid-2011.5 4.6 7. Together the projects have the potential to host between 2. Y/E Mar Price performance % Actual Relative* Analyst John Savin 1m 1.8 9. The cash pile.0 P/CF (x) 7.421/oz achieved earlier this month.0 EBITDA (US$m) (0.6) 2008A 2009A 2010E 2011E Revenue (US$m) 0.3 * % Relative to local index 2 December 2010 69 . Y/E Aug Price performance % Actual Relative* 1m (9.0 0.3) (4.3m of contingent liabilities paid off. with the capacity and intention to make focused acquisitions. The bank loan is £4.6) 12m (91.0 (3.5m and could be extended by £2.0 18. is available for growth-enhancing acquisitions as indicated by management.1) (83.0) (91.9) (10.3 4.2 3. Expected H2 sales growth is driven by Variquel in new EU markets.3Moz and 10.6) (3.3 P/E (x) 6.1 Forecast gearing ratio (%) 127.3 7.1) (5.0 (3. The project appears to have strong anomalous gold and silver mineralization.450oz of gold. US.6) 2009A 2010A 2011E 2012E Revenue (£m) 12.5 9. Gold has retraced 3% since its record-high nominal price of over US$1. The Cherry Creek project is an underground.7 17. Historically. the Cherry Creek District has produced 32.0 Market OTC Share price graph (US$) Ironwood Gold INVESTMENT SUMMARY (IROG) Ironwood Gold has entered into a Letter of Intent to acquire 100% of 20 unpatented lode claims that make up the 36-mile square Cherry Creek property. INDUSTRY OUTLOOK Company description IS Pharma is a speciality pharmaceutical and medical devices firm focused on the specialist hospital sector. estimated at c £15m.7) (16.8 2.000lbs of copper and 832. 1. we expect it to outperform industrial metals as the latter are beset by demand-side concerns. Ironwood Gold has plans to undertake a programme of mapping. Samples from the veins have returned assays of up to 0.1) 3m (38. At surface. 144.4) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Michael Starke Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 83.1) 0. making a 1% yield and costing c £400k.1 9.1) 0. INDUSTRY OUTLOOK Company description Ironwood Gold is a US-listed gold exploration company with three projects in Nevada.

4 4.4 101.0 Market IS Share price graph (TRY) Is Yatirim (ISMEN) INVESTMENT SUMMARY ISY has reported Q3 results.1 3m 17. We expect to update our forecasts once we get sight of the 2011 work programme.5 101.6 157. on a 2010 P/E of 5.8 98. Interest and trading income improved from the weak Q2 levels and brokerage and asset management progressed steadily.5%. development and production assets in the UK North Sea. public finances and increasing confidence that a lasting transformation in the country's economic prospects". Opal and Polly.4x.1 12m 43.8 13.9 Forecast gearing ratio (%) N/A Market AIM Share price graph (p) Ithaca Energy INVESTMENT SUMMARY (IAE) Ithaca announced its Q310 financial results in November.4 5. Shares currently trade in line with CoreNAV at 138p that we expect has 30p of additional upside as IAE derisks its development portfolio. However. The 2011 work programme is now key to determining share price potential. first oil from Athena.3 EBITDA (US$m) (6.5 42.7 P/CF (x) N/A 12.0p Market cap: £366m Forecast net cash (US$m) 213.1 4.0 11. With the prospects for Q4 looking positive. INDUSTRY OUTLOOK Ratings agency Fitch revised its outlook on Turkey long-term from stable to positive. appraisal of the enhanced Stella area and development of the UK gas basin assets.4 3. investment advisory services and portfolio management services. Y/E Dec Price performance % Actual Relative* Analyst Maana Ruia 1m 6. affirming it as BB+ and saying "the revision. improving Company description Is Yatirim Menkul Degerler offers brokerage.2 EPS (c) (20. it noted the key issue was whether Turkey could grow without excessive deficits.7 3m 28.3 116.. Although corporate finance had a seasonally weak Q3.6 19.6) 2008A 2009A 2010E 2011E Revenue (TRYm) N/A N/A N/A N/A EBITDA (TRYm) N/A N/A N/A N/A PBT (TRYm) 52. Company description Ithaca Energy is a Canadian independent oil and gas company with exploration.9% of GDP) by year end.6 (1.3 (12. INDUSTRY OUTLOOK IAE is building a reputation in the North Sea as a cost-efficient marginal field E&P operator. reflects Turkey’s strong economic recovery.8 11. corporate finance.9 P/CF (x) N/A N/A N/A N/A * % Relative to local index Sector: Oil & Gas Price: 143. This does not include exploration upside available from Garnet.2 PBT (US$m) (12.9 127.7 14.3 157.4 44.1 102.3) 4. The company also advises on IPOs.0) 37. Shrewd acquisitions coupled with an exciting portfolio under development point to a positive outlook.5 Price performance % Actual Relative* 1m 10. Operational and financial performance remains firmly on track with no surprises from previous announcements. we think the stock is attractively valued.4 EPS (Kr) 37.7 5.4 57. we expect a record-breaking year for this division as pipeline deals complete before year end. With significant funds available we await details of an extensive programme that will include incremental production upgrades from Beatrice.6 P/E (x) N/A 47.3) 12m 184.2m YTD and shareholders' equity up 12% y-o-y.3x and a yield of 5.7) (6.1 40.Edison Insight Sector: Investment Companies Price: TRY2.40 Market cap: TRY480m Forecast net debt (TRYm) 0 Forecast gearing ratio (%) 0.. Fitch forecast a current account deficit of $44bn (5.9) 50.2 2008A 2009A 2010E 2011E * % Relative to local index Analyst Ian McLelland 70 2 December 2010 .6 17.6 P/E (x) 6.5 164. with net profit of TRY46.2 5. 2010 P/BV of 1. Y/E Dec Revenue (US$m) 2.

9 5.3 9.0 EPS (fd) (p) 18. K3 has become MS's biggest Dynamics partner in the UK and the provision of solutions with a growing proportion of K3's own IP differentiates it from other IT service companies and resellers.8p £31m 3.1 3m 34.6 8. the major profit improvement project with Mexican refinery group Pemex Refinancion (worth $42m over 30 months) should add substantial underpinning to our 2011 estimates.8 PBT (£m) 5.0 6. although the FY10 result will hinge upon the timing of new business coming in. and other processing industries worldwide.9 EBITDA (£m) 7.7 P/CF (x) 4.3 EPS (p) 7.3 6.0 5.2 26.0 9.6 56.3 8.3 Price performance % Actual Relative* 1m 3.7 56.4 N/A AIM KBC Advanced Technologies INVESTMENT SUMMARY (KBC) Overall trading conditions appear to have improved since H1. a UK managed services and IT solutions provider (revenues split roughly 50/50 between the two businesses).2 P/CF (x) 4.2 23.8 58. The enterprise resource planning market for SMEs is consolidating.5 31.1 12m 72.3 2. INDUSTRY OUTLOOK Company description K3 provides Microsoft-based supply chain management solutions to SMEs in the retail and manufacturing sectors. The deal effectively doubles the size of K3’s Managed Services business and adds c 260 customers (mainly using Microsoft Dynamics and Sage) to its existing 1.5 6.1 8.0 14.6 2008A 2009A 2010E 2011E Revenue (£m) 52.1 5.0 AIM K3 Business Technology Group INVESTMENT SUMMARY (KBT) K3 has acquired Panacea.8 5. We estimate that the deal will be earnings enhancing.2 * % Relative to local index 2 December 2010 71 .1 26.4 5.0p £38m 11.3 24. Y/E Dec / Jun Revenue (£m) 39.2 6. Looking towards next year. and will drive growth in recurring revenues.8 5. particularly licensing deals for Petro-SIM V4.2 12m 40.0 5.4 23.8 6. While the current uncertain economic environment will result in a decline in capital investment work.8 53.8 52. focus as clients seek improvements in flat or negative refining margins. 2010 data shown here is for 18 months.6 52. Y/E Dec / Jun Price performance % Actual Relative* Analyst Dan Ridsdale 1m 1.5 59.0 2009A 2010A 2011E 2012E * % Relative to local index Analyst Katherine Thompson Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 56. adding 3% to FY11 and 9% to FY12 normalised EPS.3 3m 26.3 4.1 6.7 EBITDA (£m) 6.7 12. On 2011 estimates the rating still looks very undemanding. INDUSTRY OUTLOOK KBC is an independent provider of consultancy services and software tools to the energy and refining industry. and evidence suggests MS Dynamics is growing market share during the current downturn.5 6. K3 has paid £2.9 P/E (x) 8.4 PBT (£m) 6.Edison Insight Sector: Technology Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 148.0 7. petrochemical.2m in cash.3 7.4 10.5 4.1 P/E (x) 8.500 customer base. funded by the company's revolving credit facility. We see significant potential for K3 to sell its application-hosting services into Panacea’s customer base.8 10.5 10.6 6. to some degree this will be offset by a swing towards an operational Company description KBC is a leading independent consulting and technology group delivering competitive advantage to owners and operators in the oil refining.

4 12. this is the first of many such announcements we expect to see.3 8. call volumes among domestic customers continue their secular decline. Both receive high support from the UK and Irish regulatory regimes.3 * % Relative to local index Sector: Construction & Blding Mat.5 6. disposal. The October 2010 approval of the Renewable Heat Incentive (similar to a feed-in tariff) is a further sign of commitment to the sector.1) 12m (66.5 44. INDUSTRY OUTLOOK Kedco is using two tried-and-tested technologies for converting biomass into energy: gasification and anaerobic digestion (AD) in the form of dry fermentation.0p £263m 98.6 3.2 75.3 40.1 3.3 3m 0.2) N/A N/A EPS (c) N/A N/A N/A N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index 72 2 December 2010 .9) 2009A 2010A 2011E 2012E Revenue (€m) 5.2 4. management can now focus its attention increasingly on delivering organic growth to the business.0 6.3 7.9 9.9m of project finance facilities from Ulster Bank for the Newry project. It helps companies throughout the UK and Ireland to convert waste into clean energy. suggesting comfortable upside potential. Y/E Mar Price performance % Actual Relative* Analyst Alex Gunz 1m 3. Y/E Jun Price performance % Actual Relative* Analyst Neil Shah 1m 41.6) N/A N/A PBT (€m) (5. Second.2 42.2 EBITDA (£m) 65. Price: Market cap: Forecast net debt (€m) Forecast gearing ratio (%) Market Share price graph (€) €0. and internet and telecommunications services to selected consumer markets.1 405. Confidence in the outlook is shown by the company’s dividend policy.4 2009A 2010A 2011E 2012E Revenue (£m) 472.4% dividend yield.3) (3. within the UK. Growth is being driven by corporate cost-savings plans and an increasing appetite for simple and flexible solutions.0 FULL KCOM Group INVESTMENT SUMMARY (KCOM) With KCOM’s two-year transformation plan complete.0 N/A N/A EBITDA (€m) (4.Edison Insight Sector: Technology Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 51.0 (29.3) 12m 24.8 EPS (fd) (p) 7. INDUSTRY OUTLOOK Two trends are occurring within the UK fixed-line telecoms industry. Our revised estimates imply a DCF valuation for KCOM of 64p. First.8 396.7) (69. services market continues to expand. Kedco hopes to be able to complete work on certain pre-conditions and sign terms for the facility in early 2011.2 P/E (x) 7.7 42.8 3m 12. there remains strong growth potential on the corporate side.5 9. supported by a 6. The next update is expected at the AGM on 17 December.7 (5.8 74.1 69.0 3.0 308.3 412. which encourages waste producers to seek alternative methods of Company description Kedco is a leading bioscience energy company taking a professional approach to green energy production. as the managed Company description KCOM Group provides a range of integrated IT and communications services to businesses. driven by a range of competing services. pension issues clarified and debt refinanced.06 €13m N/A N/A AIM Kedco (KED) INVESTMENT SUMMARY On 3 November 2010 Kedco announced it had secured £9.1) (1.8 PBT (£m) 32.2 P/CF (x) 4. Disposal of waste also entails a cost under the EU Landfill directive.8 5.

4 0.5) PBT (SEKm) (13.6) (5.6) (17.6 14.7) (281.7 N/A N/A N/A * % Relative to local index Analyst Michael Starke Sector: Food & Drink Price: Market cap: Forecast net cash (US$m) Forecast gearing ratio (%) Market Share price graph (p) 7.6) (10.4 0.6 35.8m (c US$9. As expected.3m).2 Forecast gearing ratio (%) N/A Market NASDAQ OMX First North Share price graph (p) Kopylovskoye INVESTMENT SUMMARY (KOPY) In mid-November. it is also considering a secondary listing.5 0.0 EBITDA (US$m) (56. Kopylovskoye announced plans to raise up to SEK64. The rich arable land in Ukraine combined with low local costs offer the opportunity to produce crops to satisfy the expanding demands of the worlds food and bio-fuels industries. Nevertheless.7) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A 18. However.8m (c US$5.9 PBT (US$m) (57.4) EPS (öre) (2.0) 3m (21. indications from the Crimea suggest that a satisfactory price is feasible and the combination of this and the final harvest numbers mean the full-year number should be achievable.5) (9. Together these cover 225km2 and have C1.2) (442.8) (10. Currently listed in Stockholm.4) 12m 7.2) (16. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (17.8) (4.Edison Insight Sector: Mining Price: 23.9) P/E (x) N/A N/A N/A N/A P/CF (x) 1633.5 (2.6 3. C2 and P1 reserves/resources of 2.5) (5.0Moz.9) (1.1p £31m 6.9) (14.1) (20. Rapeseed yields were in line with expectations.4) (0. Winter planting has also been in line with the expected expansion during the current year.8) 2008A 2009A 2010E 2011E Revenue (US$m) 10. Shareholders taking up their rights will also be entitled to a warrant (exercisable at SEK25 in May next year) for every two new shares. The funds raised will be applied to the company’s portfolio of exploration projects in the Bodaibo region of Russia.1) EPS (c) (29.6 28. INDUSTRY OUTLOOK Company description Landkom International is involved in arable farming in Ukraine.8 N/A AIM Landkom (LKI) INVESTMENT SUMMARY The first interim results announcement under the new management team confirms that its changes are beginning to have an effect – costs are being contained and solid prices have already been achieved for the majority of the winter rapeseed crop.4 EBITDA (SEKm) (11.8) (3.1) (11. Y/E Oct Price performance % Actual Relative* Analyst Guy Bell 1m (1.421/oz achieved earlier this month.8) 3m N/A N/A 12m N/A N/A Revenue (SEKm) 0. where it is currently focused on converting its Russian reserves and resources into JORC. INDUSTRY OUTLOOK Company description Kopylovskoye is a gold exploration company focused on the development of its six licences in Russia.3m). the Landkom wheat harvest was badly affected.3p Market cap: £89m Forecast net cash (SEKm) 12. Gold has retraced 3% since its record-high nominal price of over US$1. we expect it to outperform industrial metals as the latter are beset by demand-side concerns.2 * % Relative to local index 2 December 2010 73 . Gross proceeds of the warrant are expected to raise up to SEK36. by way of a rights issue comprising four new shares at SEK22 for every five shares held.4) (27.9) 0.5) (9.7) (1. The first results of this are expected in early 2011. outperforming the rain-damaged yields of much of the Ukrainian arable sector.

This is up 44% on the comparable period. There are producing assets in Spain. H209 growth vs H110 was steadier at 5%. The stock remains low valued selling on about $1/boe of the potential resources in the shallow plays.1 N/A AIM Leni Gas & Oil INVESTMENT SUMMARY (LGO) LGO has a very active field development and rehabilitation programme.2 3.2) 2.2 0. We believe this is very much on track and that production is gathering momentum in the closing months of 2010. INDUSTRY OUTLOOK Leni's strategy emphasises low-risk development opportunities in proven production provinces Company description Leni Gas & Oil is an E&P junior focused on development opportunities in low political risk countries. A liver transplant transportation unit is under development.8 1. Y/E Dec Price performance % Actual Relative* 1m (15.0 0. LifePort units are already used by 45 of the 56 US organ procurement organisations but for c 26% of US deceased donor kidneys. Lifeline experienced a major market shift in 2009 as it moved to commercial pricing. Lifeline has a high share of the organ static preservation market with its SPS-1 solution.7 0.1 EPS (p) 0.9 EBITDA (£m) 0.2 N/A N/A P/E (x) N/A 20. Appraisal drilling of the potential deep oil formation at the same location is a possibility by late 2011.8 35. Trinidad and the US GoM and an exploration project offshore Malta.9 PBT (£m) 0. Other papers have shown overall cost savings.0 6.6) 3.8 10.1m.3 24. and increase the availability.1 6.5p £17m N/A N/A AIM Lifeline Scientific INVESTMENT SUMMARY (LSI) Lifeline’s interim results showed H1 revenue at $11.1 12m (16. The deep plays identified earlier in the year offer possible exciting exploration upside medium term. Spain. INDUSTRY OUTLOOK The 2009 clinical study showed improved clinical outcomes from use of LifePort.1 2.8 183.2 P/E (x) N/A N/A 7.4m in product sales.3) 18.3 N/A N/A EBITDA (US$m) (4. Higher use rates Company description Lifeline is a Chicago-based global medical technology company.5 12m 213.3 18. including 15 new units sold.7) 2008A 2009A 2010E 2011E Revenue (£m) 2. It has developed innovative proprietary technologies to improve the quality.3 30.0 N/A N/A P/CF (x) N/A 38.9 * % Relative to local index Analyst Peter Dupont Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (US$m) Forecast gearing ratio (%) Market Share price graph (p) 227. of vital organs.2) 3.3 N/A N/A PBT (US$m) (4. rather than frontier exploration. A potential joint-venture has recently been announced to appraise the shale gas play at Ayoluengo. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* Analyst John Savin 1m 13.0 43.Edison Insight Sector: Oil & Gas Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 3.6 N/A N/A * % Relative to local index 74 2 December 2010 .7 3m 35.0 P/CF (x) N/A 16.8 14. tissues and cells for transplantation and medical research.0) (14. with $10.0 0.1 (0. should steadily boost growth.3) 3m 48.6 Revenue (US$m) 8.0 N/A N/A EPS (c) (29. there may be up to $25m of additional US potential.7) (24.1p £23m 0. The trend should strengthen markedly in 2011/12. EU reimbursement is set at national levels and should generate higher sales levels from 2012. Further growth is expected from the EU (country by country) and from 2011 in Brazil and China. The strategy applied by Leni can perhaps be best described as a 'vulture' approach and is broadly analogous to that applied by a number of E&P concerns such as Apache in the North Sea.4 3.

9 5. INDUSTRY OUTLOOK Company description Lombard Medical Technologies is developing a range of cardiovascular devices.3) N/A N/A PBT (£m) (11. so we would expect to see slightly more volatile performances from them.6) N/A N/A EPS (p) (6. Transfer of stent graft production from the Didcot to Prestwick facility is expected to produce significant ongoing efficiencies. the impact on suppliers like Lincat is unclear and instability in the eurozone sustains uncertainty.8 32.4 66.0p £36m 7.5 N/A AIM Lincat (LCT) INVESTMENT SUMMARY A good set of interim results compared to a depressed period shows the positive management action that boosted the second half of 2009 has continued to bear fruit.4) 12m (15.5 EBITDA (£m) 6.4 P/E (x) 8. These will affect the other two subsidiaries most. particularly in the public sector.0p £21m N/A N/A AIM Lombard Medical Technologies INVESTMENT SUMMARY (LMT) Near-term value at Lombard focuses on timely completion of the Aorfix PMA submission.8) N/A N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (0. While Cook is the global market share leader.9 38.4 PBT (£m) 5. continues to exploit its ‘value’ proposition but uncertainties remain in the economy as a whole.4 N/A N/A EBITDA (£m) (10.0) (7.Edison Insight Sector: Engineering Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 650. INDUSTRY OUTLOOK Company description Lincat manufactures and supplies commercial catering equipment for professional kitchens. but believe it prudent to remain reasonably cautious for now. the underlying reality is still unclear.9 75.3) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Robin Davison 2 December 2010 75 .2 6. The scale of cuts by the new government is now in the open.6 3m 10.2 2008A 2009A 2010E 2011E Revenue (£m) 32.2 8.5 * % Relative to local index Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 1. Lincat Ltd.1 (17. Y/E Dec Revenue (£m) 2. Most recent reports showed that 111 out of 144 patients had reached the 12-month follow-up stage.0 2.9) 12m 52. Y/E Dec Price performance % Actual Relative* Analyst Guy Bell 1m 2. principally the Aorfix stent graft system for the treatment of abdominal aortic aneurysm (AAA). Module four was recently submitted according to schedule and the sixth and final module.8) (7.9 6.0m loan facility payable through a recently signed Japanese distribution agreement for the device.8 3. However.3 33. The core business.8 5.1) (23.0 70.3 3m 9. clinical data.5 4.9 9. Medtronic is thought to control around 50% of the US market and has been eroding Gore’s dominance there.3 5.9 5.5m instalment of a $5. FDA approval would trigger the first $2.3 5.1 5.6 P/CF (x) 4.8 9. Lombard's commercialisation strategy is currently focused on growing the share in five key European markets.9 30.7 EPS (p) 73. but any material boost is only likely to be seen over the medium term.5) 0.6 (1. is due in H111. On the strength of the latest results we increased our estimates marginally. The ongoing weakness of the pound continues to be helpful. Lombard will compete to achieve further penetration in $1bn global AAA market on the basis of its high angle approval for Aorfix.8) (0. Despite official figures that the UK is now out of the recession.

the group is moving towards profitability. With impressive recent revenue growth.5) (1.7) (0.1 5. Y/E Dec Revenue (£m) 1776.9) 3m 8.0 34. EBITDA of £9.1 9.7 31. With FY revenues up 20% to £107. particularly in agriculture. but also profitably.6 (7. It focuses on servicing Western investment and African business by investing in emerging sectors across Africa. indications from most leading groups suggest they will deliver profits progress in both 2010 and 2011. In addition.7 (2. Nevertheless.3p £190m N/A N/A AIM Lonrho (LONR) INVESTMENT SUMMARY Lonrho announced its Q4 update on 2 November and provided a number of highlights that show the progress the business has made.5 43. Lookers has a clear strategy for earnings growth in a mature market and strong balance sheet providing the funds to take the group forward.Edison Insight Sector: Financials Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 16.0 51.0 3m 47.4 49.4 4.3) 12m 2. continues to achieve impressive results.0 1749. management reinforced the progress being achieved in the current year. Management is ambitious and the group is set to grow strongly over the medium term. The group's specialist aftermarket business.0 28.4 P/E (x) 12. with investment in downstream activities delivering volume gains at sustained margins.3) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Nigel Harrison 76 2 December 2010 .0 12m 58.0 FULL Lookers (LOOK) INVESTMENT SUMMARY At a recent investor day.9) (7.2 8.9 6.0 EBITDA (£m) 42. build their downstream activities.0 1770.7m.3p £227m 63.9 53.1) N/A N/A EPS (p) (8. The Motor division continues to build after the setback in 2008. Y/E Sep 2008A 2009A 2010E 2011E Revenue (£m) 43.6 8. but used car values have recently started to drift downwards. creating hubs of business through key investments. Lonrho has delivered not only growth.6) (6. as fears about recession are seen to have greater prominence than the positive action taken by retailers to Company description Lookers is one of the leading UK motor vehicle distributors operating 111 outlets covering 28 marques.4 10.5 EPS (fd) (p) 4.3 31. although capital will be required to meet these objectives.3 P/CF (x) 5. we feel 2011 is set to signal further substantial improvement.5m vs a loss of £4. five divisions that spread both operational and geopolitical risk. Operating in 17 countries.3 * % Relative to local index Analyst Roger Johnston Sector: General Retailers Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 59. the company comprises Company description Lonrho is a pan-African company with a diverse portfolio of investments.5m.4m and a reported PBT of £0.5 PBT (£m) 14. which provides a unique differentiation.0 1800.0 Price performance % Actual Relative* 1m (1.2 4.9 N/A N/A EBITDA (£m) (36. five-year guaranteed convertible bond to be used to repay existing debt.7 7. INDUSTRY OUTLOOK City sentiment towards the motor distribution sector remains cautious. INDUSTRY OUTLOOK Lonrho is a play on African development. SMMT forecasts on new vehicle registrations are still looking optimistic.0 33.8 5. with the proceeds of the successful $70m.6) N/A N/A PBT (£m) (36.3) N/A N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 3. provide working capital and accelerate the growth of the business. Short-term growth drivers involve expansion plans focusing on developing tried and proven businesses across the continent.1 90.

INDUSTRY OUTLOOK Company description LSL Property Services is one of the UK’s leading residential property services companies and second biggest estate agency chain.0 AIM Low & Bonar INVESTMENT SUMMARY (LWB) As the October IMS demonstrated.1 5.5 158. derived from a flagged 10% return on sales and an implied revenue uplift in excess of GDP growth. above their six-month average.2) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Roger Leboff 2 December 2010 77 .4 3.1 P/CF (x) 17.4 17.0 FULL LSL Property Services INVESTMENT SUMMARY (LSL) A recent IMS. reflecting tougher requirements for first-time buyers' deposits.0 EPS (p) 7.0p £124m 90.1 12m 29. while October's acquisition of Advance Mortgage Funding adds to its mortgage and insurance distribution capacity. LSL has also built on market-leading positions in counter cyclical areas such as asset management and lettings.9 23.2 42.2 20.0 5. With sector diversity.5 P/E (x) 15.7 5. a resumption of dividend growth.7 39.2 23. These new contracted and counter-cyclical revenue streams enhance LSL's resilience to a difficult market.6 Price performance % Actual Relative* 1m (2.4 56.2 211. Remortgages were however.0 EBITDA (£m) 20.8 9. with broad expectations of slippage in house prices during 2011. Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 43.0) (6.4 5. with new products and markets are also expected to be key drivers.6) (29. having reinstated an interim payment.4 P/CF (x) 1. We expect to see progress at all levels in future years.2 29.6 EPS (p) 14.8 329.7) 3m (14.7 35.8 * % Relative to local index Analyst Toby Thorrington Sector: Property Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 214.9 7.3 20.5 4.Edison Insight Sector: Construction & Blding Mat.0) 12m (21.4 7. It provides a broad range of services to corporate (mortgage lenders) and retail clients.7 19. The level of mortgage approvals hit a 19-month low in October.7 32.5 345.5) (1.0 0. confirmed that the group is on track to meet full-year forecasts despite market weakness. some of this will come from the cycle and company initiatives Company description Low & Bonar produces yarns and fabrics for a variety of end markets of end markets by combining polymers with specialty additives and pigments.0 225.5 PBT (£m) 14. Turnover was up 33% in the first 10 months of FY10.2 7. Low & Bonar has delivered a healthy recovery in revenue in the year to date.8 PBT (£m) 16.3) (31. Y/E Nov 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (7. Surveying and agency both increased market share.5 29. The outlook for the UK housing market remains weak.3) 3m 10.4 10.3 27.5p £223m 0.2 34.0 EBITDA (£m) 41. INDUSTRY OUTLOOK Management aims to double earnings within five years representing organic growth of c 15% pa. 17% like-for-like.5 36.6 8.3 16.1 10. It operates as two divisions: Performance Technical Textiles (70% FY09 revenues) and Technical Coated Fabrics (30%).3 26. with revenue growth and margin expansion feeding through to a decent earnings uplift and.8 P/E (x) 5.6 8. Y/E Dec Revenue (£m) 162. with an improvement in operating margin expected to come through in due course.9 Revenue (£m) 335. covering the four months to end October.7 2.2 304. while HEAL branches are expected to be profitable in H2.

6 26. positioning for cloud computing.3 9. temporary and permanent staff.3 26.6 8. INDUSTRY OUTLOOK We expect overall IT spending in the UK to improve modestly in 2010.0p £52m 5.2 6.7 11.6 5.9 6. removing an area of potential concern.8 3m 15.4 (16. professional and outsourcing recruitment groups.9 4.1 PBT (£m) 11.3) 12m (14.4 290.2 (8.4 8.8 5.3 EPS (p) 20. but reiterated that the additional investment in headcount will lead to a greater H2 weighting to profits.8 10.3) 12m 1.6) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Richard Jeans 78 2 December 2010 . expanding its facilities in India and renegotiating the group’s banking facilities.6 51.0 AIM Matchtech Group INVESTMENT SUMMARY (MTEC) Matchtech’s AGM statement indicated no change to full-year numbers. Y/E May Revenue (£m) 56.9 41. The company released an in-line AGM trading update and also announced a significant contract win with Addison Lee .0) (22.1 (24.Edison Insight Sector: Support Services Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 221.3) * % Relative to local index Analyst Fiona Orford-Williams Sector: Technology Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 87.1 Price performance % Actual Relative* 1m 0. Y/E Jul 2009A 2010A 2011E 2012E Revenue (£m) 269. Vacancies are also on a downward trend of weakening growth. and covered. with the full benefits coming through in FY11.8 P/CF (x) 3.0 53. given the historic Company description Maxima is an IT business systems and managed services company.0 3m 15.1 EBITDA (£m) 12.5p £22m 9.2 13.London's largest minicab service .0 0.0 AIM Maxima Holdings INVESTMENT SUMMARY (MXM) Maxima has undergone substantial change over the last 18 months with the new management team significantly refocusing the group. remain in good demand. However.4 P/E (x) 6.0 52.9 6.0 3.8 4.1 6.6 264.3 12.3 9. as well as a diverse customer spread and a broad platform.0 P/E (x) 4.0 P/CF (x) 5.3 7.6 Price performance % Actual Relative* 1m 4.2 13. the shares continue to trade on a modest single-digit P/E. INDUSTRY OUTLOOK October's REC/KPMG Report on Jobs showed the weakest growth in 14 months for both Company description Matchtech Group has grown into one of the UK's leading technical.5 5.5 4.3 7. The key projects of the QE class aircraft carriers and CrossRail all survived the government's CSR.9 311.6 PBT (£m) 6.4 8.3 EPS (p) 34. such as many of those supplied by Matchtech. yield. In spite of the significant operational improvements and debt reduction. political uncertainties and the likely ongoing deferral of investment decisions in the short term.0 20. Split into four business units. relationship to GDP. There has been good progress in expanding the group’s horizons in professional services/ education. Public sector redundancies are starting to step up and confidence is fragile.6 3.3 8.2 5.7 31. permanent staff appointments and temporary/contract staff billings.8 EBITDA (£m) 8. but qualified candidates with scarcer skill sets.5 7.to implement a business intelligence solution based on SAP BusinessObjects Edge technology. The valuation is at the bottom of the range of peers and the shares carry a premium.5 15. Maxima has a high bias to managed services (maintenance and service revenues) rather than new IT spend. each a solutions specialist in its area of recruitment in providing contract.

6 Price performance % Actual Relative* Analyst Mick Cooper 1m N/A N/A 3m N/A N/A 12m N/A N/A * % Relative to local index 2 December 2010 79 .6x is at a discount to the average of its three principal international peers (Lycopodium.6 5. and advanced types of bone cement.0p Market cap: £47m Forecast net cash (US$m) 11.1 (36.20 €28m 1. Its most important product range are the spinal devices from K2M. it is concluding studies on eight projects. we estimate that it will recoup approximately half of its H1 loss in H2. and it has accelerated its growth this year with sales up 60% during H110. although it should be able to sustain its momentum.1m in 2009.6 21.0) 8.1 14.3 11.1 3. base metals.8 N/A 12. political pressure and technical innovations. plates and screws to repair bone and spine fractures. In the meantime.3 4.1 9.8x. however (Repsa and Kalagadi). Its portfolio includes knee and hip implants.0 N/A MAB Medcom Tech INVESTMENT SUMMARY (MED) Medcom Tech is a rapidly growing orthopaedic device distributor based in Iberia. on which basis MDM's Y2 EV/EBITDA ratio of 7. The Spanish government's austerity measures have reduced Medcom Tech's rate of growth.0 3m 22. MDM has been hit by a strong rand. Ausenco and Outotec) of 7.8 10.3 EBITDA (US$m) 10.5) 2009A 2010A 2011E 2012E Revenue (US$m) 35. Our forecasts assume the award of the Goldfields project from August 2011.0 * % Relative to local index Analyst Charles Gibson Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (€m) Forecast gearing ratio (%) Market Share price graph (€) €3.1 P/E (x) 9. Given its two project wins to date in FY11. Revenues have increased at a CAGR of 49% since 2003 reaching €10.8 4.2) 16. The company is scheduled to announce its results on 3 December.9 10. it has entered into an alliance with GR Engineering Services in Perth to target the c 400 projects in Africa controlled by Australian companies.1 P/E (x) 45. Y/E Dec / Mar Price performance % Actual Relative* 1m (0.0 EPS (c) 7. INDUSTRY OUTLOOK Company description Medcom Tech distributes a wide range of innovative orthopaedic products across Spain and Portugal.7) 8. including Goldfields’ giant ZAR8bn tailings re-treatment project at Driefontein.7 13.1 27.5 35.Edison Insight Sector: Mining Price: 127.7 PBT (€m) 0.8 EPS (c) 21.5 EBITDA (€m) 1. In addition.6 4.4 N/A 130. and supplementing its portfolio with innovative orthopaedic products. We had been expecting it to grow at c 5% pa.0 32.4 PBT (US$m) 11.6 P/CF (x) 7. but it will now probably decline slightly because of austerity measures.1 2. The Spanish orthopaedic market was estimated to be worth €350m in 2008. Its portfolio includes knee and hip implants.0 (2. Y/E Dec 2008A 2009A 2010E 2011E Revenue (€m) 6.7 20. plates and screws to repair bone and spine fractures.7 2. In addition. industrial metals and diamond sectors. INDUSTRY OUTLOOK Company description MDM Engineering is a metallurgical engineering company established in February 2006.8) 0.0 P/CF (x) N/A N/A N/A 15.3) (32.1 11.2) 12m (25. It undertakes mineral resources projects of varying size and concentrates on the gold. This growth has been driven primarily by the company hiring new sales reps across Iberia. when we estimate that it will report a loss.3 (7.0 4.0 24.9 33.2 (3. more cross-selling.2 Forecast gearing ratio (%) N/A Market AIM Share price graph (p) MDM Engineering INVESTMENT SUMMARY (MDM) Industry-wide project delays and deferments have resulted in an intensely competitive environment among contractors. The growth drivers offsetting budget constraints are the ageing population.2 14.

0 238. Results for FY10 are due 8 December 2010.6% year-to-date. GPs should be clarified when the healthcare bill is published. with a new focus on greater efficiency within the NHS.0 EPS (p) 26. the key to a resumption of growth is a return of the high margin civil aftermarket Company description Meggitt is a global manufacturer of aerospace equipment. All-in NAV per share at 71.6 48.5 93. Y/E Dec Revenue (£m) 1163.3p Market cap: £2354m Forecast net debt (£m) 813. Its end markets are civil aerospace (43%).0 17.4 EPS (fd) (p) 1.0 340. A March 2010 BMA report stated that 60% of GPs still work from unsuitable premises.5p and the dividend yield at 7.9 P/CF (x) 8.2 31.3 13. while the new scrip dividend option is also positive.3 10.1) (17.8 4.88%.1 5.4 23. we believe Meggitt is well positioned to benefit from the upturn.3 25.1 28.6 Price performance % Actual Relative* 1m (3. at a net initial yield of 5.0 12. with 75% unhappy with their premises.3% is attractive. INDUSTRY OUTLOOK The government's Comprehensive Spending Review confirmed real increases in healthcare spending in each year of the current parliament. business.0 7.0 PBT (£m) 1. INDUSTRY OUTLOOK In our view.7 13.0 265.2 9.4 11.8 10.9) 12m (9.6 4.4p reflected a fall in the mark-to-market benefit of its £100m.1 7.2 12m 42. with high barriers to entry and high aftermarket content to secure long-term profitable revenue streams. With Meggitt’s internal assumptions based on 1% air traffic growth.4 3m 26.0 352. 30-year fixed rate debt. in line with recent declines in long-term interest rates.3 P/CF (x) 24.0 Market FULL Share price graph (p) Meggitt (MGGT) INVESTMENT SUMMARY Meggitt's 19 November investor day highlighted the resilience of the business based on a strategy to target markets in extreme environments.3 7.3 EBITDA (£m) 4.0 1213.1 P/E (x) 51.3) 3m 1.2 Price performance % Actual Relative* 1m 3.0 1151.0 PBT (£m) 243. The detail of new budget responsibility for Company description The MedicX Fund is a specialist investor in primary healthcare property in the United Kingdom.4 2008A 2009A 2010E 2011E * % Relative to local index Analyst Roger Johnston 80 2 December 2010 .1 1. With R&D maintained during the downturn and a number of new contracts that will support long-term revenue growth. Y/E Sep Revenue (£m) 8. The Q4 DCF valuation was 91.4 2.0 FULL MedicX Fund Limited INVESTMENT SUMMARY (MXF) MedicX reported a £211m end Q4 portfolio valuation which. we feel there is room for upgrades with current traffic growth up 3.3 6.3 28.0 Forecast gearing ratio (%) 65.5 25.0 234. military (43%) and energy & other (14%).1 (12. sensing and defence systems.3 P/E (x) 12.3 3. but the outlook remains positive for investment in primary care facilities.3 13.0 326.9) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Roger Leboff Sector: Aerospace & Defence Price: 337.3p £103m 85. which accounts for 30% of revenues.0 EBITDA (£m) 341. Management has also used the recent downturn to accelerate its cost-reduction and transformation programme that has seen savings of £24m pa so far and a run-rate of £55m set for the end of 2010.1 7. was virtually unchanged over the quarter.Edison Insight Sector: Property Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 72.3 11.5 2.4 1.0) (2.0 1156. H2 should also see improved military revenues with orders now released in the US.

the indication agreed with the CHMP.8 85.4 2.1) (1.4 (0. INDUSTRY OUTLOOK The UK capital goods market has changed materially in recent years. Another adjuvant indication could be prostate cancer.3) (0.5 PBT (£m) 2.5 Price performance % Actual Relative* 1m 6. and an expected shift in EU indication from bone to breast.8 1. but worldwide consumption continues to rise. Markers (VEGF) show that low-dose weekly ZA impacts tumour growth.0 5. with the more successful Company description Molins is a specialist engineering group supplying processing and packaging machinery.6) (5.0 EPS (fd) (p) 10.2 3m 5.3 10.5 83. In 2009.9 P/CF (x) N/A 1. pharmaceutical and FMCG industries.3 3.1) (0.7 5. a 1.1) PBT (€m) (5. to adjuvant early-stage breast cancer therapy. patients. when several orders were either cancelled or postponed and we have recently lifted our estimates.1) (1.5p £12m 3.3 4.9 P/E (x) 5.0 EBITDA (£m) 6.1 2008A 2009A 2010E 2011E * % Relative to local index Sector: Engineering Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 58. showed that zoledronic acid (ZA) reduced risk of progression by 36%. including Molins.4 7.5 N/A FULL Molins (MLIN) INVESTMENT SUMMARY Molins has raised the quality of its earnings by switching its business emphasis towards solving customers' engineering problems and supplying spare parts and specialist services.6 Forecast gearing ratio (%) N/A Market Irish Stock Exchange Share price graph (€) Merrion Pharma INVESTMENT SUMMARY (3MP) An FDA review has switched Orazol’s development plan in the US from bone metastases. Its lead projects are Orazol.3) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Nigel Harrison 2 December 2010 81 .6 6.5 3. ideally by mid-2011.4 (22. insulin and GLP-1 (in collaboration with Novo Nordisk).6 2.5) (3.4 1.6) 12m 10.800 patient study. ZA might help immune attacks on cancer stem cells.170 women died. and scientific services to the global tobacco. Management responded positively to difficulties encountered in early 2010. INDUSTRY OUTLOOK ABCSG-12.5 7. Y/E Dec Revenue (€m) 1. have transferred their manufacturing operations to lower-cost countries in an attempt to maintain competitiveness.4 9.4) 0. 254.0) (3. survival is over 98% with localised disease which is c 60% of cases. The recent restructuring shows every sign of delivering improved returns over the medium term.6 8.7) EPS (c) (0.Edison Insight Sector: Pharma & Healthcare Price: €3.5 EBITDA (€m) (5.3) (1. If approved.3 6.1) (0.27 Market cap: €56m Forecast net cash (€m) 0. Many companies.6) 3m (18. some 40. This opens the way to a serious Orazol deal.0) 12m (4.650 US women were diagnosed with breast cancer. businesses anticipating and responding to specific customer problems.0 6.3) (9. The Z-FAST and Zo-FAST studies showed that ZA plus hormone therapy increased bone density in cancer Company description Merrion is an Irish company that uses technology acquired from Elan to reformulate injectable drugs into oral formulations. This would be a new and unique indication and a better market position than for only bone metastasis.0 88.2) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* Analyst John Savin 1m (6.6) (2. Y/E Dec Revenue (£m) 91. The tobacco products industry is under political pressure in many developed markets. many patients could use Orazol for five years. we remain optimistic that management can deliver recovery in 2011.2 6. with a sound balance sheet showing net cash.

5) (3.2 5. supported by Monitise's technology and DeviceFidelity's NFC-based MicroSD card.6) 12m (36.2 8. Further growth is likely from the use of mobile phones for retail payments.0 12.7) (8.7 EBITDA (£m) (11.7 48.7 3.3 21. INDUSTRY OUTLOOK Company description Monitise provides a mass market technology platform that enables banks.0) (1.8) EPS (p) (3.0) (14.0) 3m (3.7) 3m (28.4) PBT (£m) (11.4 6.8) (13.8) (9.2) (9. Q3 results (15 November) were behind budget and the 2010 EBITDA target looks very demanding.0 10. new properties take time to build while old library sales are suffering in weak TV markets.10 Market cap: €22m Forecast net debt (€m) 9.0 24.4) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (8. consequently.4 2.2 Price performance % Actual Relative* 1m (20.2) 12m 64.0p £147m 30.9) (24.0 10.0 Forecast gearing ratio (%) 44.1) (24.1 N/A AIM Monitise (MONI) INVESTMENT SUMMARY Monitise announced the formation of the Mobile Money Network joint venture. including a recent multi-territory broadcast deal with Turner for 'Puppy in My Pocket'. while Best Buy Europe and Charles Dunstone hold the remaining 60%.0 Market Milan Stock Exchange Share price graph (€) Mondo TV (MTVI) INVESTMENT SUMMARY Mondo TV is making good operational progress.1) (1.2) (13. in which it holds a 40% stake. handset-based services such as mobile banking continue to show strong growth. the UK reaching cash break even and the launch of the first Monitise-enabled Visa service (and. It also licenses and merchandises its rights through home video.3) (14.6 88.0) (2. INDUSTRY OUTLOOK Company description Mondo TV is a leading Italian producer and distributor of animated TV series and feature-length cartoons. Y/E Jun Revenue (£m) 2.0 EBITDA (€m) 0. so we have left our estimates unchanged ahead of any year-end trading update. Management has not yet published revised budgets.8 2.Edison Insight Sector: Media & Entertainment Price: €5.5) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Jane Anscombe Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 21. with programme budgets under considerable pressure. multimedia productions and publishing.3) (30.6 P/E (x) N/A N/A 13. Mondo's story has always been about generating significant new licensing revenue streams in 2011/12 and we remain optimistic that the group has significant growth potential on a two-year view. working with established toy manufacturers as well as broadcasters. The broadcast market remains very difficult.9 EPS (c) (265. Major milestones to watch for in FY11 are the launch of the Monitise service in Hong Kong and India. With the number of mobile phone connections topping five billion globally. mobile banking in the UK is showing fast adoption.5) (23. successful animations and children's characters have long-lasting global appeal and Mondo TV is now trying to grow its licensing and merchandising revenue streams. with over three million users. The network will launch in 2011 and will enable mobile marketing and payments. For example. transaction revenues). Y/E Dec Revenue (€m) 38.1) 1. card schemes and other financial providers to offer mobile banking and payment services.3 19. However.7 6. music.4) (14.9 2009A 2010A 2011E 2012E * % Relative to local index Analyst Katherine Thompson 82 2 December 2010 . US Bank has started a trial contactless payment service.8 P/CF (x) N/A 3. a pilot launch in China.5 PBT (€m) (18. However.1) 38.

Edison Insight

Sector: Oil & Gas Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 347.8p £305m 100.1 N/A AIM

Nautical Petroleum
INVESTMENT SUMMARY

(NPE)

NPE announced that Celtic Oil Limited who did not participate in the Kraken exploration side track have opted to buy back into the Kraken side track by paying their share of their costs. Exploration of the greater Cather area remains on hold with the Galaxy II jack up rig remaining in Dundee harbour awaiting a weather window. Importantly, Nautical incurs no costs until the rig moves to location. INDUSTRY OUTLOOK To reflect the strong start to Q4 and dollar weakness we have raised our 2010 and 2011 WTI forecasts from $77.6/barrel to $78.0/barrel and $77.0/barrel to $79.3/barrel, respectively.

Company description
Nautical Petroleum was established in 2005 to secure, develop and add value to heavy oil discoveries, initially on the UKCS and continental Europe.

Y/E Jun Price performance % Actual Relative* 1m 1.4 2.2 3m 128.0 516.5 12m 479.6 423.8 2009A 2010A 2011E 2012E

Revenue (£m) 0.0 0.1 0.1 0.1

EBITDA (£m) (1.1) (1.8) (5.0) (5.0)

PBT (£m) (0.1) (1.8) (4.9) (5.0)

EPS (p) 1.0 (2.6) (5.5) (5.4)

P/E (x) 347.8 N/A N/A N/A

P/CF (x) N/A N/A N/A N/A

* % Relative to local index

Analyst Ian McLelland

Sector: Pharma & Healthcare Price: DKK88.00 Market cap: DKK2161m Forecast net cash (DKKm) 288.0 Forecast gearing ratio (%) N/A Market OMX Share price graph (DKK)

NeuroSearch
INVESTMENT SUMMARY

(NEUR)

The Phase II HART study of Huntexil in Huntington’s disease showed some good evidence of efficacy but only a trend, rather than statistical significance, on its primary endpoint. Since the prior MermaiHD study produced a similar result, we presume regulators will require a second Phase III study. The question is whether this has to be conducted pre- or post-approval. Regulatory feedback should be known by Q111. NeuroSearch should be able to fund such a Phase III study if it has to be conducted before filing, but this would delay approval by two years, to late 2013. INDUSTRY OUTLOOK Lundbeck/Biovail’s Xenazine (tetrabenazine) is the only approved drug for Huntingdon's,

Company description
NeuroSearch is a Scandinavian biopharmaceutical company. Its core business covers the development of novel drugs, based on a broad and well-established drug discovery platform focusing on ion channels and CNS disorders.

indicated for treatment of chorea (involuntary movement). Tesofensine licensing is interlinked with the fate of three competing anti-obesity drugs, Vivus's Qnexa, Orexigen's Contrave and Arena's lorcaserin, which are filed with the FDA.

Y/E Dec 2008A 2009A 2010E 2011E

Price performance % Actual Relative* 1m (9.3) (11.1) 3m (0.6) (8.9) 12m 23.9 (5.6)

Revenue (DKKm) 66.8 84.6 70.0 49.2

EBITDA (DKKm) (324.7) (307.4) (302.9) (269.0)

PBT (DKKm) (390.8) (298.4) (328.4) (294.5)

EPS (DKK) (22.86) (14.52) (12.17) (9.71)

P/E (x) N/A N/A N/A N/A

P/CF (x) N/A N/A N/A N/A

* % Relative to local index

Analyst Lala Gregorek

2 December 2010

83

Edison Insight

Sector: Mining Price: C$5.75 Market cap: C$1123m Forecast net cash (US$m) 4.3 Forecast gearing ratio (%) N/A Market TSX Share price graph (C$)

Nevsun Resources
INVESTMENT SUMMARY

(NSU)

Nevsun's shares have risen from their C$3.75 price in July as the company has consistently met milestone targets. It has now commenced commissioning (both within time and within budget) with a view to pouring first gold in the current quarter and entering commercial production in Q111. Initial mining will focus on an enriched gold-silver cap of the orebody at a unit cost of c US$230/oz until 2012. Subsequent mining will see the inclusion of revenues from copper and then zinc. Continued execution of the Bisha mine plan will, we estimate, result in Nevsun's earning in excess of C$1 per share at long-term metals prices of US$1,177/oz Au, US$17.36/oz Ag, US$6,500/t Cu and US$2,300/t Zn (and before allowing for a planned 20-40% increase in production during the copper phase from 2013).

Company description
Nevsun Resources is developing the Bisha Au-Ag-Cu-Zn volcanic massive sulphide deposit in western Eritrea. The company expects production from the project in 2011. Nevsun is debt free.

INDUSTRY OUTLOOK Nevsun has commenced an 8,000m drill programme to increase resources. Over the life of Bisha's operations, the breakdown of Nevsun's revenue by metal is: gold (6%), silver (7%), copper (27%) and zinc (60%). Y/E Dec Revenue (US$m) 0.0 0.0 0.0 559.6 EBITDA (US$m) (8.1) (5.5) (11.0) 389.1 PBT (US$m) (7.2) (5.0) (9.4) 375.4 EPS (c) (5.6) (3.9) (3.9) 108.8 P/E (x) N/A N/A N/A 5.2 P/CF (x) N/A N/A N/A 3.2

Price performance % Actual Relative* 1m 9.1 7.3 3m 23.4 67.2 12m 86.7 65.6 2008A 2009A 2010E 2011E

* % Relative to local index

Analyst Charles Gibson

Sector: Support Services Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 1.7p £8m N/A N/A AIM

Newmark Security
INVESTMENT SUMMARY

(NWT)

Newmark reported in line FY10 results: Asset Protection had a strong year, while the Electronic division was affected by the current economic climate. Fortunes are likely to reverse in FY11; Asset Protection revenues are unlikely to grow, whereas Electronic should benefit from renewed customer confidence. A stronger economy and the roll-out of SATEON should drive growth in FY12. The recent move into the cash-in-transit business expands Safetell's product line and could positively affect FY11/12 earnings if the Loomis trial is successful. INDUSTRY OUTLOOK The demand for Safetell’s security screens is typically driven by risk assessments or branch remodelling. Public sector cost-cutting is likely to dampen demand for Safetell products in

Company description
Newmark Security is a leading provider of electronic and physical security systems that focus on personal security and the safety of assets.

FY11. Grosvenor benefits from the need for businesses and public sector organisations to track assets and monitor employee time and attendance.

Y/E Apr Price performance % Actual Relative* 1m 3.0 3.8 3m 1.5 (15.1) 12m 15.3 4.2 2009A 2010A 2011E 2012E

Revenue (£m) 13.0 13.8 N/A N/A

EBITDA (£m) 2.0 2.3 N/A N/A

PBT (£m) 1.4 1.7 N/A N/A

EPS (fd) (p) 0.27 0.32 N/A N/A

P/E (x) 6.3 5.3 N/A N/A

P/CF (x) 2.9 4.2 N/A N/A

* % Relative to local index

Analyst Katherine Thompson

84

2 December 2010

Edison Insight

Sector: Media & Entertainment Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 74.0p £41m 0.6 2.0 AIM

Next Fifteen Communications
INVESTMENT SUMMARY

(NFC)

Next Fifteen released its FY10 prelims in mid-October. Revenues came in higher than our estimate and pre-tax profit was in line. Adjusted diluted EPS of 7.5p was 0.3p less than our estimate due to higher than-expected dilutive shares. The group said it is seeing an improvement in trading conditions, particularly in North America and Asia; we raised our FY11 estimate for revenue and pre-tax and maintained our diluted EPS estimate 8.4p. While tech and consumer PR remains the backbone of the business, the acquisition of Blueshirt, a US corporate and financial PR agency, and the recently formed digital consultancy, Beyond, are likely to become important areas for the group’s future growth. INDUSTRY OUTLOOK

Company description
Next Fifteen Communications is an international PR consultancy group with world-leading and autonomous PR and marketing subsidiaries predominately addressing the high-tech industry.

The PR industry is ideally placed to protect and enhance clients’ products and businesses and is benefiting from changing client demands, particularly in respect of social media. Chime reported in November that its PR division is expected to show its strongest divisional organic growth in H210. Y/E Jul Revenue (£m) 65.4 72.3 80.6 N/A EBITDA (£m) 7.3 8.9 10.7 N/A PBT (£m) 5.2 6.6 8.0 N/A EPS (fd) (p) 6.5 7.5 8.4 N/A P/E (x) 11.4 9.9 8.8 N/A P/CF (x) 6.2 6.1 4.3 N/A

Price performance % Actual Relative* Analyst Martin Lister 1m (3.3) (2.5) 3m 15.6 (1.4) 12m 14.3 3.3 2009A 2010A 2011E 2012E

* % Relative to local index

Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (US$m) Forecast gearing ratio (%) Market Share price graph (p) 0.1p £4m 1.9 124.0 AIM

NextGen Sciences
INVESTMENT SUMMARY

(NGG)

NextGen reported group interim revenue of $708,831 compared to $807,769 in 2009. The core business remains its CRO offering of biomarker discovery, assay development and biomarker qualification services; however, renewed strategy focuses on the introduction of customised ‘assay panels’ in defined therapeutic areas. A cerebrospinal assay panel was successfully produced earlier this year. NextGen is currently developing a plasma protein assay panel targeting the Oncology market. Such assay panels allow NextGen more control over the targeted proteins and potentially greater follow on revenue. INDUSTRY OUTLOOK Potential applications for biomarkers include the analysis of disease mechanisms and the

Company description
NextGen Group provides biomarker services to the pharma industry. It is using advanced analysis techniques to develop a portfolio of robust assays for biomarkers to be used in testing clinical samples for drug development and diagnostics.

facilitation of a more cost-effective drug discovery process. Growth of the business is dictated by pharmaceutical and biotech R&D budgets, likely to experience sustained near-term pressure. The biomarker market's estimated value is $21bn by 2013.

Y/E Dec 2008A 2009A 2010E 2011E

Price performance % Actual Relative* 1m (7.7) (7.0) 3m (7.7) (49.3) 12m (45.5) (50.7)

Revenue (US$m) 1.2 1.2 1.2 N/A

EBITDA (US$m) (2.2) (4.1) (2.5) N/A

PBT (US$m) (2.8) (4.5) (2.8) N/A

EPS (c) (0.16) (0.11) (0.06) N/A

P/E (x) N/A N/A N/A N/A

P/CF (x) N/A N/A N/A N/A

* % Relative to local index

Analyst Robin Davison

2 December 2010

85

7) (0.3m draw down from its £25m Equity Financing Facility with Darwin Strategic.0 0. EOG Resources.5bn to R8. Key companies recently moving into the area include Unit Corporation. INDUSTRY OUTLOOK We remain cautiously optimistic about the current outlook following recent positive US Company description Nkwe Platinum is a platinum group metals (PGM) development company with two main projects.3p £47m N/A N/A AIM Nighthawk Energy INVESTMENT SUMMARY (HAWK) Nighthawk has recently announced a £3.7) (10. we believe platinum prices will continue to recovery in early to mid-2011 as auto producers restock ahead of forecast increases in vehicle production in 2012.6 N/A * % Relative to local index Analyst Michael Starke 86 2 December 2010 .8) EPS (c) (4. automotive sales.7 3m (42.6) (1.6) N/A N/A PBT (US$m) (2.Edison Insight Sector: Oil & Gas Price: Market cap: Forecast net debt (US$m) Forecast gearing ratio (%) Market Share price graph (p) 13.2) (69.9) (9.5 37.9Moz (3PGM+Au). Nighthawk has referred to growing interest by oil companies in leasing land in the vicinity of the Jolly Ranch property. INDUSTRY OUTLOOK Company description Nighthawk Energy is involved in the development. one of which is the subject of a detailed bankable feasibility study. Nkwe announced the preliminary feasibility of a 240-400ktpm underground mine with operating costs between $435/oz and 535/oz and capex of R6.4) (66.3 (23.5) (1.4) N/A N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* Analyst Peter Dupont 1m 1. Xstrata’s decision will be based on the viability of the projects.6) 12m 36.6) (4.3) 3m 6.1 N/A N/A EBITDA (US$m) (2. Additionally.5 2.4) (37. appraisal and production of hydrocarbons.1) (1.4) (4.6 Revenue (A$m) 1. Sundance Energy and McElvain Oil&Gas. Xstrata's platinum division is expected to make a recommendation to its board on whether to exercise its option to acquire 50% of one or both of Nkwe’s projects.50 Market cap: A$283m Forecast net debt (A$m) 38.6 0. Garatau (74%) and Tubatse (optioned stake of 74%) which have total resources of 68. Early this year. the key items of newsflow are likely to surround the strategic business review currently under way and the Jolly Ranch reserves and resource assessment. The funds will be focused on the Jolly Ranch shale oil project and will be used mainly for well completion and re-completion work and ongoing technical analysis. Y/E Jun Revenue (US$m) 0.0) 2009A 2010A 2011E 2012E * % Relative to local index Sector: Mining Price: A$0. Y/E Jun 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m (18. The challenge at Jolly Ranch remains to find the most effective method to unlock the complex shale formations on the property.5) (17.7) (5. Xstrata has an option to acquire 50% of both projects.4) (42. Near term. Newfield has commenced drilling of late.0 EBITDA (A$m) (12.0 Market ASX Share price graph (A$) Nkwe Platinum INVESTMENT SUMMARY (NKP) Nkwe had cash of A$4.9) (9. Nighthawk remains a unique AIM play on shale oil. The main issue now is the time and cost required to commercialise Jolly Ranch. with the area of focus being onshore US.3) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A 76.7 0. Before then.3bn.9m as of 30 September 2010 excluding US$5m in receivables and Xstrata's US$10m option fee due before the end of the year.3) PBT (A$m) (12.4) N/A N/A EPS (c) (0.6 Forecast gearing ratio (%) 7.7) 12m (62.9 2. Furthermore.

rather than IgG. subject to farm-out.9 N/A AIM Omega Diagnostics INVESTMENT SUMMARY (ODX) Omega is undertaking a transforming acquisition of the IVD testing business of German allergy specialist AllergoPharma for €6m (c £5m) (inc property). NOP also announced in November the spudding of the Markwells Wood-1 well in the UK Weald Basin.0 (19.0 10. exploration and asset trading company with a political exposure limited to countries in the European Union.250boepd. The major Company description Omega is a UK-based company focused on developing and marketing in-vitro diagnostic products in infectious and autoimmune diseases and for food intolerance.0 2.8 EPS (p) 3. The new subsidiary will remain in Hamburg.1m until March 2012 into automated systems.8 (2.1 N/A N/A EBITDA (€m) 2. interpretation of West of Sicily seismic is ongoing. INDUSTRY OUTLOOK Company description Northern Petroleum is an oil and gas production.7 1.7 1.9) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Ian McLelland Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 17. 600 allergen range. offset by management estimates of £475k in extra profits.4) (57. Its tests are now manual and on semi-automated open systems.3 5. The company is well funded with zero debt. Allergy will be based on three products: an existing general IgE test.4 6.6 8. development.6 P/E (x) 5.5 Price performance % Actual Relative* Analyst John Savin 1m (6.0 12.9 10.1) 3m 3. Y/E Mar Revenue (£m) 5.6 P/CF (x) 3. In Italy.1) (35.6 3m 18. a new Genarryt allergy screen and detailed new automated tests based on the Immunodiagnostic Systems iSys platform to find the exact allergy.7 17.2 PBT (£m) 0.8) 12m (29. The move into allergy testing from food intolerance allows entry to a £250m global market.0 5. we will update our forecasts once it is completed. development and production assets.8) (6.8 N/A N/A Price performance % Actual Relative* 1m 16.7 (3.3) N/A N/A PBT (€m) 2.5 0. Wijk en Aalburg. Half-year revenues were £3. the clinical basis of allergy.0) N/A N/A EPS (c) 1. is due onstream in Q111.2 8. up 53%.6 N/A N/A N/A P/CF (x) 1150.5 (2.2 2.Edison Insight Sector: Oil & Gas Price: Market cap: Forecast net debt (€m) Forecast gearing ratio (%) Market Share price graph (p) 105. the stock appears good value with an EV/2P of less than $1/boe compared with European peers in the $10/boe range.9 0.9 15.6 0. and tedious to replicate.3m.7 1.9) 2009A 2010A 2011E 2012E * % Relative to local index 2 December 2010 87 . NOP operates in stable Western European countries where there is very low political risk. benefit is its valuable. INDUSTRY OUTLOOK AllergoPharma tests for IgE. the basis of presumed food intolerance. In the Netherlands a fourth new gas field.0p £97m N/A N/A AIM Northern Petroleum INVESTMENT SUMMARY (NOP) Northern continues to develop its core Netherlands and Italian portfolio of exploration. Omega will invest £2.9 1.5 20. Y/E Dec Revenue (€m) 7. up 15% with adjusted profit at £403k. Our forecasts are currently under review but with P2 reserves in excess of 100mmboe.6) N/A N/A P/E (x) 81.5 EBITDA (£m) 0.9 73.0 (42. as is preparation for drilling its next well in country at La Tosca.0) 12m (53. This is a significant move as it demonstrates its commitment to develop the UK assets unless it achieves fair value for them through a sale.0p £4m 0. raising expected production across the company to more than 2. Intolerance tests account for over 40% of revenues.

Distribution agreements and the acquisition of Opto (an Australian design and distribution company) should yield good growth but probably not till H211 and into FY12. Instruments are leased at $24k per year and may generate additional per-use revenues over a typical 36-month contract.9 9. This will give a substantial but unpredictable boost to 2011 accounts.0 EBITDA (C$m) (17.6) (26. INDUSTRY OUTLOOK Company description Oncolytics Biotech is a Canadian biotechnology company focused on developing Reolysin.4) (22.0 * % Relative to local index 88 2 December 2010 .6) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Wang Chong Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (US$m) Forecast gearing ratio (%) Market Share price graph (p) 131. However.6 3m 56.6 36. aided by a cosmetic $8.9 12m 53.9 50. Y/E Dec Price performance % Actual Relative* 1m (5.1) (28.2) (16.7) (16. this gives a better EBITDA estimate that the surface accounts and was much better than the -$23m in FY09.0 (4. cashflows are unaltered.6 N/A N/A P/CF (x) 3. The drug is in a pivotal FDA and MHRA Phase III head and neck cancer trial in combination with paclitaxel and carboplatin. abnormalities are either benign or very rare. Vendor finance provides capital. Y/E Sep 2009A 2010A 2011E 2012E Revenue (US$m) 97.Edison Insight Sector: Pharma & Healthcare Price: C$4.4) (22. TSX Share price graph (C$) Oncolytics Biotech INVESTMENT SUMMARY (ONC) Oncolytics has recently raised C$28.0p £92m N/A N/A FULL Optos (OPTS) INVESTMENT SUMMARY Prelim 2010 results showed revenues rose to $106m from $97m.0) PBT (C$m) (18. including BioVex.6 24.2 N/A N/A Price performance % Actual Relative* Analyst John Savin 1m 23. OptoMap had a 30% greater capability for detecting retinal lesions than traditional exams in patients under 65. for the treatment of a wide variety of human cancers. which will form the basis for regulatory submissions in both US and European markets.1) EPS (c) (41.1) (18.3 N/A N/A PBT (US$m) 2.0 0. Reolysin. including in colorectal cancer where Reolysin has demonstrated anti-tumour activity in a small open-label clinical trial.0) (18.1m accounting change in that c 130 systems are now treated as finance leases bringing forward revenues. Interim data from the trial is expected in Q111 and the final results in mid-2012. Cashflow before vendor financing was -$13m.2 33. Oncolytics’ current rivals are the companies developing oncology products in the same therapeutic areas.0 0.1) (6.67 Market cap: C$317m Forecast net cash (C$m) 34.1 Forecast gearing ratio (%) N/A Market NASDAQ.3 2008A 2009A 2010E 2011E Revenue (C$m) 0.9 3. but there are some interesting viral oncolytic companies. Optos is moving the right direction but accounting complexity remains.5 13. Promising interim data could also attract a major pharmaceutical licensing partner.9) (33.3 N/A N/A EBITDA (US$m) 43. INDUSTRY OUTLOOK An Optomap scan can detect 44% more abnormalities than cheaper cameras. a pharmaceutical formulation of oncolytic reovirus. Genelux and Viralytics.7 N/A N/A P/E (x) 348. Reolysin is also being developed for a range of other cancers.6) 3m 50.8m to maintain its clinical programme with its lead product.4) 12m 47.6 21.6 49. An Icelandic study on 573 patients aged 72 or older found 56% with AMD-related peripheral changes using OptoMap.0 0. suggesting a new era in cancer treatment.2 106. Jennerex.3 N/A N/A EPS (c) 0. many Company description Optos uses a leasing model to place its wide-field laser retinal imaging systems with optometrists.

1) N/A PBT (£m) (0.1) (53.1) 3m 27.03) (154.02) (117.80 Market cap: US$276m Forecast net cash (US$m) 32. Orexigen has a second anti-obesity fixed dose combination.0) EPS (c) (259.2 Forecast gearing ratio (%) N/A Market NASDAQ Share price graph (US$) Orexigen Therapeutics INVESTMENT SUMMARY (OREX) Orexigen essentially offers a pure-play investment geared to the success of Contrave (naltrexone + bupropion).1 EBITDA (US$m) (88. its main project. an AIM-listed mining investment company.9 3m 103.1) N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 27.Edison Insight Sector: Mining Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 6.1) N/A EPS (p) (0.1 0. INDUSTRY OUTLOOK Company description Orexigen Therapeutics is a biopharmaceutical company focused on developing pharmaceutical product candidates for treating obesity.6 12m 120. Obesity drugs have attracted increased scrutiny from regulators.8) (51.7) 12m (17.3) (50. The August floods in Pakistan did not directly affect the project area but the wider impacts of flood damage on the economy cannot yet be Company description Oracle Coalfields plc is a coal exploration and development company. Canada and Mexico). Side effects include high rate of birth defects.1 0. higher risk of kidney stones and suicide. which is due to be completed in 2011.4bn tonnes of lignite coal and is located in southern Pakistan’s Thar coalfield.2) (0. has total measured resources (JORC) of 1.9p £13m 1. Y/E Dec Revenue (£m) 0.0 0.2) 2008A 2009A 2010E 2011E Revenue (US$m) 0.6) (60.2) (0. Contrave is partnered with Takeda (US. and plans to use some of the proceeds to fund the BFS and ESIA at its Block VI lignite coal project for which its license was recently extended. with Orexigen retaining US co-promotion rights.2) (0.9 28. which have the potential to unlock the value of its coal assets in Pakistan.0 0.8 2008A 2009A 2010E 2011E * % Relative to local index Analyst Warren Johnstone Sector: Pharma & Healthcare Price: US$5. Oracle has commissioned a group of independent consulting companies to carry out the components of the BFS. The money was raised through a share subscription at 5.1 0.8) PBT (US$m) (87. particularly in view of the high risk profile of the class.0 N/A EBITDA (£m) (0. quantified.2) (0. Empatic (zonisamide + bupropion. INDUSTRY OUTLOOK The Pakistan government continues to support the development of the Thar coalfield as part of its strategy to meet growing domestic demand for low-cost energy.1m raised in June. one of three late-stage obesity projects currently under regulatory review in the US.2) (0. The FDA has announced that the Advisory Committee Review of Orexigen's Contrave will take place on 7 December this year.62) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Robin Davison 2 December 2010 89 .2) (0.2 (0.5p per share by Regency Mines. with PDUFA date confirmed for 31 January 2011.7 80. The company has raised a further £1m over and above the £1. Y/E Dec Price performance % Actual Relative* 1m 0.7) (23.0) (54.95) (111. which is Phase III-ready but effectively on hold until Contrave is approved).2 N/A PLUS Oracle Coalfields INVESTMENT SUMMARY (ORCP) Oracle Coalfields has entered into deals with the Karachi Electric Supply Company (KESC) and Lucky Cement.5 (1.0 98. The company remains focused on moving ahead with its NDA for Contrave.5) (61. Block VI.

Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 9.7m) beyond Q112 to the next major catalyst. Y/E Dec Price performance % Actual Relative* 1m (2. An associated upfront payment should secure current funds (c £13.5 2008A 2009A 2010E 2011E Revenue (€m) 3.9) (0.5 EBITDA (€m) (12. It develops drugs for diseases or interventions for which there is substantial unmet medical need. Only 5% of patients who experience a stroke are eligible for therapy by the time they reach hospital.9) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Lala Gregorek Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (€m) Forecast gearing ratio (%) Market Share price graph (€) €2.60 €65m 6. Phase III studies of desmoeplase are due to read out in Q311/mid-2012 and there is considerable upside associated with success.8) (9.2) (9.1 EBITDA (£m) (7.8) 12m (22.1) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Lala Gregorek 90 2 December 2010 . but ocular disease is an area of unmet need.5) (7.8) 0.8) (13.5) (6.3) (52.8 10. Gene therapy can correct dysfunctional cells and/or create endogenous therapeutic protein factories. possibly in H111. has the potential to widen the treatment window to up to nine hours (the current treatment alteplase is only indicated for use up to three hours from symptom onset).1 12. with cash into 2012 and €40m of pre-commercialisation milestones payable from 2012 by Lundbeck in connection with successful development of desmoteplase. because of the low hypothetical probability assumed in valuation models.2 1. and first-in-man studies for two ocular programmes are due to start in the next six months (Retinostat's IND has been approved.2) (6. The key near-term catalyst remains partnering of ProSavin.3) (0. putting it in an excellent position to secure an ex-Japan licensing deal.7 N/A N/A P/CF (x) N/A 56.4) (15. Data from the third cohort (2x dose with new admin technique) is due around year-end. Neurologix's Phase II PD therapy NLX-101 uses a similar approach.7 N/A N/A Price performance % Actual Relative* 1m (7. Paion is well funded.4 19.3) PBT (€m) (12.5) PBT (£m) (6.9) P/E (x) N/A 31. the potential exercise of Sanofi’s option to license one or more ocular programmes. and StarGen's will be filed by end-2010).3) (9.8) EPS (c) (59.3 (0.4) EPS (p) (0.0 12m 23.4) (38.7) (8. It is focusing its efforts on two clinical programmes: ProSavin and TroVax.6) (0.4) (29.5 N/A FULL Oxford BioMedica INVESTMENT SUMMARY (OXB) Oxford BioMedica has started its Phase II TroVax prostate cancer trial.6) 3m (0. TroVax mesothelioma and ovarian cancer trials. triggering double-digit million-dollar milestones.5) (36.6 N/A FRA Paion (PA8) INVESTMENT SUMMARY Paion reported a positive outcome to its Phase IIb trial of ultra short-acting IV anaesthetic/sedative remimazolam. with a presence in the UK.2) (5.5p £52m 14.5 1. INDUSTRY OUTLOOK Company description Oxford BioMedica is a UK company with a leading position in cancer immunotherapy and gene-based products.9 1.5 4. INDUSTRY OUTLOOK Desmoteplase is one of very few R&D programmes addressing acute ischaemic stroke and Company description Paion is a biopharmaceutical company based in Germany.1 17.6) 3m 34.3) (6.2) (7.7) (12. Y/E Dec Revenue (£m) 18. US approval of Dendreon's prostate cancer vaccine Provenge bodes well for cancer vaccines. further clinical data may trigger conclusion of this.

7 4.3 P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (8. We note Risk Solutions is a lumpy business with long sales cycles and Patsystems other units are performing well.7 N/A EBITDA (US$m) 108.6 10. The ability to offer a one-stop solution for exchanges helped Patsystems win its latest two exchange deals.8 (20. At a share price of HKD1.2 19.4m (vs a profit $74.3 670. Hence.6 EBITDA (£m) 3. Company description Patsystems delivers tailored solutions.3g/t in Q310).7) 12m 10. Further. INDUSTRY OUTLOOK Performance in H2 should be ameliorated by higher grades and lower unit costs. we estimate POG's interest in its non-gold division (IRC) Company description Petropavlovsk's principal assets are in the Amur region of Russia.11 (or £1.2 (8.5 N/A AIM Patsystems INVESTMENT SUMMARY (PTS) In a trading update.6m in H109).25).4 3. The company was founded in 1994 and listed on AIM in 2002.8 1.0 5. Patsytems said several Risk Solutions deals have been deferred to FY11 or cancelled.1 * % Relative to local index Analyst Richard Jeans Sector: Mining Price: 1058.9 PBT (£m) 3.46.0 Market FULL Share price graph (p) Petropavlovsk INVESTMENT SUMMARY (POG) After nine months of travails. Patsystems still expects to conclude a Risk Informer deployment with a global investment bank in FY10.6 N/A PBT (US$m) 58.8p £48m 12.9 2. and pressures to shift OTC derivatives to regulated exchanges may also boost the industry.3) 3m 6.7 4.7 472.5 3.0) (7.1) (20. built from modular components. POG's production guidance for the full year is now 510-530.7 N/A P/E (x) 34.8 13.3 13. on which basis.0p Market cap: £1988m Forecast net debt (US$m) 207. Pioneer's second and third lines ramp-ups have exceeded expectations and Albyn will now be brought into operation in H211 at twice the previously envisaged rate of production.6) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Charles Gibson 2 December 2010 91 . is worth c $2.0g/t in Q409 and 1. Pioneer and Malomir. INDUSTRY OUTLOOK Demand in emerging markets is offsetting the subdued environment in western economies.0 N/A Price performance % Actual Relative* 1m 7. The group has seen strong interest in its XConnect ASP hosting solution and. This is achievable as long as its Pioneer mine can process ore at a grade of c 3.0 7. comprising the Pokrovskiy mine and associated operations. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 19. we estimate that it should report EPS in excess of US$2 (£1.1 P/E (x) 14. POG reported an H1 loss of $55.15Moz in FY15.32 per POG share). albeit after US$35.8 8.1 201.222/oz. adjusted FY10 profits would be in line with FY09.6 Forecast gearing ratio (%) 14.2 55.0 17.9 26. the Argentinian commodities exchange. Nevertheless. Its risk solutions also benefit from strong drivers. POG's output is projected to peak at c 1.7 N/A EPS (c) 49. Longer term.2) 12m (12.5 215.1 23.4g/t or above (vs 5.000oz (vs 306. We are reviewing our forecasts.600oz at the nine-month stage).7 198.4 N/A P/CF (x) 22.4 6.3 EPS (p) 1. Solutions range from plug-and-play modules to complete high-performance trading systems. Y/E Dec Revenue (US$m) 381. Our FY10 numbers currently assume a gold price of US$1.2 139. to enhance derivatives trading performance and trade processing.8 0.2 30.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 25.8 6.6 22.4m of exceptional losses.9 3m 3. having recently signed an exchange deal with MATba. The outlook benefits from the expected launch of more exchanges and trading platforms.7 98. another is expected to be concluded by year end.

3 (51.5) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 4.5 N/A AMS Pharming Group INVESTMENT SUMMARY (PHARM) Formal EU marketing authorisation for Ruconest finally arrived on 28 October.9m of bonds have been repaid.3 N/A FULL Phytopharm INVESTMENT SUMMARY (PYM) Phytopharm’s investment case critically depends on the success and timely execution of its Parkinson's disease Phase II proof-of-concept study of Cogane.1) (17.0) (7.0) (27. Ruconest is now EU approved and will be marketed by sobi and Esteve. The September US deal with Santarus will provide a further $5m on BLA filing. a £150m market.6 0.4) (47.7 doses per week.6) (31. This makes Pharming the first company with a commercially viable transgenic product to reach the market.9) (2. This study in c 400 patients has been initiated and the company expects the results from the trial to be reported by the end of 2012.5) (26.2) EPS (c) (28. identified as a result of research into medicinal plants.0 EBITDA (£m) (3.9) (7.1) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Robin Davison 92 2 December 2010 .and brain-derived neurotrophic factors). Kidney transplant trials could start soon. GDNF is known to promote neurite out-growth but it has not been successfully delivered to the brain to date (as a protein it cannot be given orally and also does not readily cross the BBB). INDUSTRY OUTLOOK Company description Pharming has focused on Ruconest/Rhucin for angioedema.0) (9. Just as welcome is the €5m Swedish Orphan Biovitrum (SOBi) milestone. The company is reviewing the rest of its assets following the appointment of Tim Sharpington as CEO in June.7 EBITDA (€m) (27.6m.7 1.3) (2.7p £27m 21. Kalbitor US sales in Q3 fell to $2. a rare hereditary disease.21 €75m 8.4) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* Analyst John Savin 1m (15. Y/E Dec 2008A 2009A 2010E 2011E Revenue (€m) 0.3) (16. The DNage 51% owned subsidiary is being divested. especially as €10.0) (3. expression of neurotrophic factors (ie GNDF and BNDF.2) (9.4) (4.3) EPS (p) (4.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (€m) Forecast gearing ratio (%) Market Share price graph (€) €0.1 0.4) 12m (41. We expect initial US trials of Rhucin in antibody-mediated rejection to start soon. indicating stocking orders in Q2 but also showing low patient use: 246 patients have Kalbitor available.2) 3m 31. Finland and Germany. EU approval allows a 2010 launch by SOBi in the UK.3 3m (15.2) (5.8) PBT (€m) (25.4) 12m (58.2) (61. Some stock orders and royalties should be received.0) (7.5) (20.1 7.9 0. INDUSTRY OUTLOOK Cogane is an orally-active drug that crosses the blood-brain barrier (BBB) and modulates Company description Phytopharm is a UK pharmaceutical firm focused on the development of pharmaceuticals and functional foods. expected in December.9) (25.5 5.2) (3. and will provide an update on its pipeline in due course.3) (14. Santarus will co-fund them. Y/E Sep Revenue (£m) 2. respectively glial. there now seem to be c 550 US patients each taking 1.8) * % Relative to local index Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 7.3 10.1) (18. Sweden. Phytopharm intends to use the study results to secure a corporate partnership to exploit Cogane in Parkinson’s and potentially other neurodegenerative conditions. Cinryze could be EU marketed from May 2011.5) PBT (£m) (3. Dyax filed an EU MAA for Kalbitor in July so could be EU marketed from H211.

4p £32m 43.6 14.9 11.06p) subject to shareholder approval. A new £25m 10-year facility adds firepower for acquisitions in line with an investment-driven growth strategy. More detail should be available with publication of the healthcare bill. six bingo clubs and four family entertainment centres (seaside arcades).4) 3m 6. healthcare spending.34) (0.4 N/A PBT (£m) (1.3 27. PCTs and other NHS entities backed by the UK government.0 23.1 N/A EPS (p) (1.4 3m 59.0 EPS (p) 13. but stable investment yields and rental growth averaging 3. Meanwhile.2 2008A 2009A 2010E 2011E Revenue (£m) 19.0p £200m 266.2) (2. ie purchases in the open market. The long-awaited consultation to increase permitted 'B3' machine stakes and numbers is now underway and should. which should underpin demand for purpose-built premises.5 17.8 19. (from £1 to £2.2 PBT (£m) 4.3m (28.36) 0.9 16. which will improve game play and provide greater differentiation from 'C' machines) and to increase the number permitted (hopefully to 20% of the total. but Beacon cost savings (£2m annualised) will increasingly flow through to margins.3 (3.7) 1.26 N/A P/E (x) N/A N/A 32.3 168.Edison Insight Sector: Travel & Leisure Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 8.4 7. Trading remains tough.0 FULL Primary Health Properties INVESTMENT SUMMARY (PHP) There were no additions to the portfolio in Q3.2 P/E (x) 24.0 16.9 37.1 18.3 9.5 2.5 11. will have benefited underlying NAV.2 25.5 (8. and higher VAT/NI from 1 January will be unhelpful.4) 12m 13. INDUSTRY OUTLOOK On 2 November the DCMS announced proposals to increase the stakes on 'B3' machines Company description Praesepe's strategy is to build a diversified gaming group in the UK and Europe.1) 1.6x EV/EBITDA looks very reasonable.4 12m 1. high street trading remains very tough.4 29.7 * % Relative to local index Analyst Roger Leboff 2 December 2010 93 . Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 4. It currently operates 84 adult gaming centres (AGCs) including the Crystal Rooms in London. Management remains confident that it will continue to secure suitable assets. The sites should deliver economies of scale and the 4.0 AIM Praesepe (PRA) INVESTMENT SUMMARY Praesepe is acquiring 14 more gaming centres from Nobles for £2.7 21.0 112.1 5. Y/E Jun / Dec Price performance % Actual Relative* 1m (3. materially boost revenues from mid-2011.3 19. July's White Paper 'Equity and Excellence: Liberating the NHS' proposed that GPs take an enhanced role in providing NHS services. let to GPs. slightly ahead of the interims in August.6 P/CF (x) 6.3 N/A P/CF (x) N/A 32.1 12.5m new shares issued to the vendors at 8. rather than via an owned development pipeline.6 7. The consultation will run to 25 January and there may also be an EU review period.8 8.23% pa during the period. but the yield remains attractive with further dividend growth supported by rental growth.5 EBITDA (£m) 15. The shares have performed well since the mid-year. if implemented. INDUSTRY OUTLOOK The government's Comprehensive Spending Review confirmed its commitment to maintained Company description PHP invests in primary healthcare property.3) * % Relative to local index Analyst Jane Anscombe Sector: Property Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 319.6) (0.2 N/A Price performance % Actual Relative* 1m 13.3 17. This tenant profile provides an exceptionally secure revenue outlook.5 N/A EBITDA (£m) (1.1 2. with various possible alternatives).1 6.

6 EBITDA (£m) (15.7 116.7) (2.2) (23. Company description ProMetic Life Sciences is a biopharmaceutical business.9) PBT (£m) (19. ProMetic's Q3 cash of C$1. but Onsolis was approved in 2009 on this basis.0 91.4 24.0) 12m (47.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (C$m) Forecast gearing ratio (%) Market Share price graph (C$) C$0.8) (10.0 N/A * % Relative to local index Analyst Lala Gregorek 94 2 December 2010 .0 FULL ProStrakan INVESTMENT SUMMARY (PSK) ProStrakan shares started recovering after September's announcement of a further delay to US Abstral approval. which bring pharmaceutical products to market. confirmation of a three-month Sancuso stock shortage and the CEO's departure.0) PBT (C$m) (16.3m provides funding into 2011.0) EPS (p) (7. Y/E Dec Revenue (C$m) 10. which had an earlier approach rejected.0 TSX ProMetic Life Sciences INVESTMENT SUMMARY (PLI) ProMetic revised its 2010 financial guidance at its Q3 results. Following its recent strategic regional partnering deal with Allist Pharmaceuticals for development of novel drugs PBI-1402 and PBI-4419 for the Chinese market.7) (1. INDUSTRY OUTLOOK Company description ProStrakan Group plc is a European specialty pharmaceutical company.1) (0.3) (2.2) Revenue (£m) 56. and the company is focused on cost control and progressing potential strategic deal discussions which should bring in cash.1 79. revealing that revenues would be affected by a delay to an order for prion reduction resin by partner Octapharma into 2011.9) (3. It is unclear whether a full bid for the company will eventually be made by Norgine or another company. ProMetic is confident of securing further deals (in either its protein technologies or therapeutics businesses) before the year-end.5) 3m 23.4) (5.5) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A 40.4) (3. comprised of a group of companies focused on developing technologies.6) (19.9) (8. increasing the expected FY net loss to C$8m.2 12m (10. so 2010 is proving to be tougher than expected.3 112.5) (1.2 13.6) (6.6 3m 13. with a developing US franchise. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m 17. They rose again sharply following the announcement in November that Norgine had acquired 12. In the meantime. The Sancuso shortage will have a £5m negative impact on FY10 operating profit and the FY11 impact is harder to assess. the Grifols acquisition of Talecris. significant challenges remain for the US business.1) EPS (c) (5.7) (3. The FDA is taking a cautious view on abuse/misuse potential and off-label use of rapid-acting fentanyl drugs.6) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (22.5 (1.5p £175m 19.7 18. Marketed drugs Actiq and Fentora do not have a risk mitigation and evaluation strategy (REMS) yet.4) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Lala Gregorek Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 86.1) (2. and safety concerns with Affymax/Takeda's Hematide.1 1.9) (5.1) (7.0) (3. The impact of this delay is a C$4m decrease in H210 revenues. INDUSTRY OUTLOOK Competitive developments include suspension of commercialisation plans for Amorfix's vCJD blood test.10 C$37m 9.6% of the shares.5) (53.5) (6.6) (2. It is engaged in the development and commercialisation of prescription medicines for the treatment of unmet therapeutic needs in major markets.1 EBITDA (C$m) (13.6 20.8 74.

0 174.0p £138m 40.3 0.1) (8.9) (3.5p £87m 44.4 * % Relative to local index 2 December 2010 95 .9 P/CF (x) 124. Y/E Nov Price performance % Actual Relative* 1m 31. which are used by field workers and in supply chain and logistics functions.3 23. INDUSTRY OUTLOOK Through acquisition.7 0.8 12.2 4.4 EPS (fd) (p) 3.6) (9.7 32. These plans revolve around the move towards a modular product architecture and leveraging a network of partners to drive product innovation.8 12m 37.7 24.1) (12. with the most advanced in Phase II.5 4.1 12.0 9.9 0.8) (10.1 3.1bn but is estimated by Company description Psion designs and sells ruggedized mobile computers.0 1. Further evidence that the financial recovery is coming through should be a catalyst for upside especially given the potential for margin expansion beyond our 6.1 P/E (x) 27. with a longer-term goal of becoming a fully integrated company.7% 2012 estimate. These deals and the research agreement (CRADA) for naluzotan provide evidence of execution on one aspect of Proximagen’s strategy – funding of clinical development through collaborations where appropriate.6 3. Proximagen still has the means to continue building its pipeline through additional M&A.9 N/A AIM Proximagen Group INVESTMENT SUMMARY (PRX) Proximagen has partnered both clinical assets obtained via the February acquisition of Minster Pharmaceuticals.3 185.6 2008A 2009A 2010E 2011E Revenue (£m) 199.1) (19.7 PBT (£m) 7.3) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Lala Gregorek Sector: Electrical Equipment Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 98.4) (16.1 2. The first modular products are being brought to market.4 170. the channel partner network has been significantly strengthened and the H1 uptick in order book and pipeline suggests a change in momentum is due.3) (3. With £51m of cash at H110.1 20. but plans to expand this substantially.6) EPS (p) (11.3 51. The dividend yield and lowly EV/sales ratio should afford a reasonable amount of downside protection.2 49. It seeks to create value through consolidation and has a medium-term objective of becoming self funding.5 2008A 2009A 2010E 2011E Revenue (£m) 0.0 N/A FULL Psion (PON) INVESTMENT SUMMARY The reconstruction of Psion now looks to have reached a stage whereby the company is well placed to move forward.3 15.1 12m 14.9) (12.5 7. Y/E Dec Price performance % Actual Relative* Analyst Dan Ridsdale 1m 2.8 3m 42. Psion holds c 7% market share.0 8.6 2.0 65. A novation agreement with Ligand Pharmaceuticals adds a preclinical CXCR4 receptor programme to the pipeline.2 EBITDA (£m) (3.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 151.6 17.9 3m 4.2 EBITDA (£m) 11. VDC to be growing at 8-10% per year.7) PBT (£m) (2. INDUSTRY OUTLOOK The market for rugged mobile computers is estimated to be worth $2. programmes across CNS. The share price has significantly appreciated since lows of 60p in July. Proximagen's pipeline has diversified from five preclinical assets to 14 Company description Proximagen is a UK biotech company specialising in the development of treatments for central nervous system disorders.

5) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Roger Johnston 96 2 December 2010 . predominantly due to the rapid delivery of Q-NET (vehicle survivability product).7m. That stability and a covered 9. Revenues were ahead of our expectations.9 11. with 4% in prospect for FY10.4 115. with MoD R&D in decline and now fully competitive. We are moving to a more neutral stance on the business with a revised SOTP fair value of 115p. one of the industry's leading operators.1 9.6 9.3 16.9 14.5 8.6 (11. confirmed the government's commitment to healthcare spending.3 4.5) * % Relative to local index Analyst Roger Leboff Sector: Aerospace & Defence Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 116.4 1710. we do recognise the progress made in restructuring and the impressive focus on cash generation.3 5.2 9.5 8. defence and security markets. we remain concerned about visibility.6 PBT (£m) 5. At the mid-year the portfolio was 100% let with no voids and a 22-year weighted average unexpired lease term.1 13.1p £767m 309.5 EBITDA (£m) 15.0 AIM Public Service Properties Invest.6 8.2 85. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 19.0 4.4 8.0 FULL QinetiQ Group INVESTMENT SUMMARY (QQ. services and solutions to customers in the aerospace.7 110. although we anticipate margins to remain subdued.7 EPS (fd) (p) 15. INDUSTRY OUTLOOK 44% of QinetiQ’s revenues come from the UK and is underpinned to some extent by some Company description QinetiQ Group provides technical advice. With the 'predictable' service revenues coming in beneath our expectations. which make up the majority of the value of its portfolio.9 59.6 15.5) 12m (27. INVESTMENT SUMMARY (PSPI) The interims were typically steady. Y/E Mar Revenue (£m) 1617.5) (34.0) 12m 5. PSPI has planned and fully funded investment to enhance the quality and defensive positioning of the portfolio. The US appears to have stabilised from last year's delays.4) (1.0 P/CF (x) 4. accounting for most of the 6% organic growth. April’s £24m open offer kick-started a programme to enlarge and upgrade specific properties.) QinetiQ’s interim results lived up to the UK government’s assertion that we live in an "age of uncertainty". primarily in the UK and US. However.3 PBT (£m) 130.6) 3m 1.Edison Insight Sector: Property Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 72.6 21.5 P/E (x) 7.6 16. for the benefit of both tenant operational performance and portfolio valuations.4 (4.6 EBITDA (£m) 185.0 10. INDUSTRY OUTLOOK The care sector outlook is underpinned by demographics and the October spending review Company description Public Service Properties Investments Limited is a specialist real estate investment and financing company.4 4.8% average growth up to the end of June. QinetiQ has seen a rapid fall in profitability and order delays have plagued the wider business.8 P/E (x) 10.7 (4.4 8.3 11.4 171. however.1 155.1 7.3 20.2 P/CF (x) 4.6 3. Cash rents increased by 4% to £8.5 3.3 10.4 174.5 3m 8.0 112.3 1625. good long-term contracts such as the LTPA.4 1737.9 Price performance % Actual Relative* 1m 8. The UK portfolio is let entirely to European Care.4 22. also increasing its weighting in areas such as dementia care and mental illness.6 Price performance % Actual Relative* 1m (2. annual rent reviews in the UK produced 3. Its main focus until recently has been on the expansion of its UK portfolio of care homes.9 EPS (p) 7.6 8.6% prospective yield justifies an improved rating for the shares.0p £74m 135.

at $14.2 1. INDUSTRY OUTLOOK Book sales in the US continued to be weak in September. Y/E Dec Revenue (£m) 112. giving us confidence that profits are back on a growth trend. this covers a wide range of Company description Quarto is an international book publisher specialising in illustrated non-fiction books. Given its modest scale. though.4 6.3 7.0 P/CF (x) 1.8 0. but there are some opportunities in niche markets and in run-off debt.4 EBITDA (£m) 22. However. these are available across market conditions.0 26. as purchasers of reinsurance receivables and as consultants for the insurance market.2 Price performance % Actual Relative* 1m 5. Approval for further syndicate and servicing deals have also been announced. not on black box theory.0 (20.2 3m 9.8 PBT (£m) 8.0 FULL Quarto (QRT) INVESTMENT SUMMARY Quarto’s Q3 update described a good performance. experience and Amazon’s Q3 statement described print and digital sales both being ahead. The total yield of around 8% is very attractive and will be nearly twice covered by earnings in 2010.5 26. R&Q has leveraged its intellectual capital by buying run-off portfolios and servicing businesses building growth opportunities in assisting new entrants to the Lloyd’s market. R&Q has developed a range of new income streams with opportunities for both organic and acquisitive growth. Barnes & Noble's forecast is for consumer book sales to grow from $23bn in 2010 to $27bn in 2013.2 P/E (x) 5.5 1. despite mixed trading conditions in its key US and UK markets.5) * % Relative to local index Analyst Mark Thomas 2 December 2010 97 .8 3m 0.Edison Insight Sector: Media & Entertainment Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 137.8 7.7 106.5bn.9 11. Forecasts are conservative and.8 22.9 36. the rating remains miserly. Reports from the Frankfurt Book Fair.0 PBT (£m) 7.3) 9.6 P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 0.8 28.6 P/E (x) 8.9 110. Worries about the balance sheet are over done and management is indicating that deals are back on the agenda.3 8. The deals completed on 1 November should enhance full-year earnings by 10%. indicated it being one of the most successful for publishers for several years. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 30. Its proven success relies on its staff's skills in managing claims and re-insurance.0 0.3 5. US and Bermuda as owners and managers of insurance companies in run-off.8 (0. It publishes under imprints owned by the group in the US. Quarto among them.6 107.0p £49m N/A N/A AIM Randall & Quilter Investment Hld INVESTMENT SUMMARY (RQIH) Randall & Quilter Investment Holdings (R&Q) provides professional services to the insurance market. though. this anticipates print sales falling by $2bn over the period and digital/e-books growing by $6bn.9) 12m (15.0 27. Europe. down 12. INDUSTRY OUTLOOK Company description RQIH is a holding and investment company.3 EPS (p) 10.0 37. As ever.8 23. UK and Australia.2 5.0 7.1%.8 10.3 EPS (fd) (p) 26.3) (23.8 0.3 183. despite the better performance.2 1. and creates books that are licensed to other publishers worldwide.6 32.4 7. eBooks continue to gain share as penetration of reading devices builds. Run-off portfolio prices remain high.7 6.9 7. It conducts business in the UK.0 EBITDA (£m) 8.0p £28m 47.4 7. the live market and corporates’ self-insurance vehicles (captives).4 N/A 9. giving a running total for the year-to-date of -9%.0 12m 22.0 22.3 5.0 2008A 2009A 2010E 2011E * % Relative to local index Analyst Fiona Orford-Williams Sector: Financials Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 91.

7 5.1 3m 8.27 P/E (x) N/A N/A 145. The share price remains largely underpinned by the producing assets in Texas. thereby generating a potential pre-tax dividend distribution to Red Rock of C$10. RRR has made a £1. Kansai has announced that it intends to sell its interest in Mid-Migori (plus other assets). where the re-development of the El Limon mine is progressing ahead of schedule.5 0. Jupiter Mines has confirmed its acquisition of a 49.9) (4.11 0. Georgia and West Texas.12) (0.9m Company description Listed on AIM in July 2005.4 Forecast gearing ratio (%) N/A Market AIM.1 2008A 2009A 2010E 2011E * % Relative to local index Analyst Peter Dupont Sector: Mining Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 16. and more recently by some highly positive news concerning the potential scale of the fold-thrust play in Georgia.0) (0. located in the autonomous Puntland region of North East Somalia.75% Mn) and setting itself an exploration target of 400Mt of JORC resources at its Mt Ida magnetite prospect by the year's end (ex an overall 1.9 EBITDA (A$m) (3.3p Market cap: £74m Forecast net cash (A$m) 7. In Kenya. 20% stakes in two onshore basins.3bn tonne target at 30-40% Fe).3 0. In the meantime. In the UK.8) (6.9% interest in the Tshipi manganese project as well as increasing its resources by 145Mt (at 31.0 12m 188.7 2.0 Revenue (£m) 1.7 864.7) (6.7 43.most recently by increasing its exposure to MFP in Columbia. which are believed to be analogues of large hydrocarbon basins in the Yemen.2) (0. uranium and gold. Red Rock Resources is now a combination of a junior gold explorer and a mineral property investment company focused on the discovery and development of iron ore. Y/E Jun Revenue (A$m) 0.5 59.6 1.2 47. from a C$0. The stock has been driven by some savvy investments in production and development assets in Texas and Trinidad.4) (6.6 1. Nogal and Dharoor. reflecting the very active exploration and development programme. with full production expected from the end of this month (albeit at lower than average grades). INDUSTRY OUTLOOK Red Rock's principle commodity exposures are to gold.2 0.5) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 10.2) (0. We believe the potential for further positive newsflow in the coming months is excellent. Based on an RPS study.9) (4.9 161.2) (5.7 * % Relative to local index Analyst Charles Gibson 98 2 December 2010 . INDUSTRY OUTLOOK Range has potentially high impact exploration interests in Puntland-Somalia.Edison Insight Sector: Oil & Gas Price: 6.2) EPS (c) (3.0 3m 553. They comprise Company description Range Resources has a portfolio of early to advanced stage prospective exploration licences. ASX Share price graph (p) Range Resources INVESTMENT SUMMARY (RRL) Range has been one of the key junior E&P success stories of 2010.1 646.0 157. iron ore and uranium.0p £108m 0.2) PBT (A$m) (3.9 EBITDA (£m) (0.8 EPS (p) (0.2) (2.3 P/CF (x) N/A N/A 52. Y/E Jun 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m 155. raised $25m in recent months and also farmed-out some of its equity to Lion Energy and Red Emperor Resources.1 N/A AIM Red Rock Resources INVESTMENT SUMMARY (RRR) Red Rock continues to advance its lead projects . the recoverable reserves here are put at 613mm barrels gross. TSX-V listed Africa Oil. manganese.24) 0.6) (1.2 11.8) 1.1-1.8) 1.8 PBT (£m) (0.5m investment. primarily in Australia and Africa.5m investment in Ascot Mining.5 12m 966. The operator of the projects.1 2.

Edison Insight

Sector: Engineering Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 133.5p £40m 6.7 N/A AIM

Redhall Group
INVESTMENT SUMMARY

(RHL)

With Redhall's attempted acquisition of Mount Engineering trumped by the surprise bid from Cooper Industries, management will ensure the focus on the core business. The October trading statement highlighted that performance remains in line with management expectations, ahead of last year. Divisional trends remain as at the interims, with Energy & Defence strong and continued volume and margin pressure in the Process division. While there is some uncertainty surrounding government spending, we feel Redhall remains in a healthy position for the future. Prelims are due 2 December. INDUSTRY OUTLOOK While recovery in process industries will be determined by the economy, newsflow in Redhall's

Company description
Redhall Group operates seven niche engineering service businesses. Its main markets are: nuclear, oil and gas, food, defence, safety and security, and transport infrastructure.

other end-markets remains positive, with the MoD committing to build all seven Astute boats in the SDSR. We also feel that the UK's budget highlighted further emphasis on the green agenda and the longer-term opportunity in nuclear aligns specifically with Redhall's core business model. Y/E Sep Revenue (£m) 86.7 129.0 141.3 148.5 EBITDA (£m) 5.0 6.9 7.7 8.4 PBT (£m) 4.6 6.5 7.0 7.6 EPS (p) 15.4 16.0 16.6 17.9 P/E (x) 8.7 8.3 8.0 7.5 P/CF (x) 4.9 8.1 7.6 5.0

Price performance % Actual Relative* 1m 3.5 4.3 3m (0.4) (18.9) 12m (2.2) (11.6) 2008A 2009A 2010E 2011E

* % Relative to local index

Analyst Roger Johnston

Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 1.3p £1m 0.0 N/A AIM

ReGen Therapeutics
INVESTMENT SUMMARY

(RGT)

ReGen reported half-year revenue of £134k compared with £9k in 2009, with gross margin of 66%. The company increased geographical penetration, launching Colostrinin in India (its largest market to date) during the period. Commercialisation of the product is under way through licensee Eczacibasi for the Turkish market. The outlook is dependent on the ability of ReGen's US licensee Metagenics, which is working to cement the profile of Colostrinin in potentially the most valuable market. No official timeline for the re-launch has been defined. ReGen has also initiated market research in China to assess the potential there. The company is still dependent on external fund-raising, although it targets profitability towards Q410. INDUSTRY OUTLOOK

Company description
ReGen Therapeutics is a UK biotech company focused on the development of products for the prevention and treatment of diseases associated with ageing, particularly neurodegenerative disorders.

Colostrinin is a nutritional supplement used to support healthy brain ageing and cognition in humans. It is currently marketed in UK, Poland, Turkey, Cyprus, Australia and India.

Y/E Dec Price performance % Actual Relative* 1m 11.1 12.0 3m (23.1) (59.7) 12m (61.5) (65.2) 2008A 2009A 2010E 2011E

Revenue (£m) 0.1 0.1 0.5 N/A

EBITDA (£m) (1.2) (0.4) (0.5) N/A

PBT (£m) (1.4) (0.7) (0.6) N/A

EPS (p) (11.5) (2.4) (1.1) N/A

P/E (x) N/A N/A N/A N/A

P/CF (x) N/A N/A N/A N/A

* % Relative to local index

Analyst Robin Davison

2 December 2010

99

Edison Insight

Sector: Alternative Energy Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 45.3p £47m 3.2 N/A AIM

Renewable Energy
INVESTMENT SUMMARY

(WIND)

REG has a strong balance sheet and is well placed to exploit the growth opportunities that we see in the market for onshore wind. We forecast that REG will increase its operational wind capacity to over 41MW in the current financial year (2010/11), and to almost 60MW in 2011/12. However, REG’s current market valuation appears to reflect only balance sheet cash and operational assets at less than new build cost. We believe this approach undervalues REG’s current assets. Based on our evaluation of its existing assets and project pipeline, we believe REG could be worth c 78p/share. INDUSTRY OUTLOOK The UK is facing the twin challenges of reducing greenhouse gas emissions and ensuring

Company description
Renewable Energy Generation’s core business is the development and operation of onshore wind farms in the UK.

continuity of energy supply. As a proven technology, with stable long-term cash flows and benefiting from attractive incentives, wind farms provide a financeable method of meeting these challenges. We believe that, as a result, the market for UK wind energy will continue to grow rapidly. Y/E Jun Revenue (£m) 5.6 6.2 13.7 15.7 EBITDA (£m) 3.9 (0.6) 4.0 5.3 PBT (£m) (1.9) (2.4) 0.7 (0.6) EPS (p) (1.5) (1.8) 0.7 (0.5) P/E (x) N/A N/A 64.7 N/A P/CF (x) N/A N/A 6.4 18.9

Price performance % Actual Relative* 1m (8.6) (7.9) 3m 9.0 (15.6) 12m (30.9) (37.6) 2009A 2010A 2011E 2012E

* % Relative to local index

Analyst Graeme Moyse

Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 47.0p £89m 50.1 N/A FULL

Renovo

(RNVO)

INVESTMENT SUMMARY Renovo has successfully completed its first clinical trial with Juvista Paediatric and the best dosing of adult Juvista has been confirmed. The former is important for the potential product life-cycle management of Juvista; the latter should strengthen any regulatory submission. However, the potential value of these results is totally dependent on a positive outcome to the first European Phase III study, REVISE, the results of which are due in H111. We remain optimistic about the REVISE study and believe that its results and subsequent potential licensing deals will lead to a re-rating of the shares. INDUSTRY OUTLOOK Juvista is a first-in-class scar revision product. It will initially be targeted for use in the one

Company description
Renovo is a biopharmaceutical product company and is a leader in the discovery and development of drugs to improve the appearance of scars and enhance wound healing.

million scar revision procedures carried out in the US and Europe each year, with the aim of being used more broadly in the estimated 42 million surgical procedures performed per year in each of these regions. We estimate that it will achieve peak sales of $1.0bn.

Y/E Sep Price performance % Actual Relative* 1m 51.6 52.8 3m 123.8 68.3 12m 82.5 65.0 2008A 2009A 2010E 2011E

Revenue (£m) 7.6 5.1 14.7 14.3

EBITDA (£m) (19.8) (21.5) (6.8) (6.6)

PBT (£m) (15.2) (19.7) (6.5) (6.5)

EPS (p) (6.4) (9.1) (2.4) (2.2)

P/E (x) N/A N/A N/A N/A

P/CF (x) N/A N/A N/A N/A

* % Relative to local index

Analyst Mick Cooper

100

2 December 2010

Edison Insight

Sector: Oil & Gas Price: Market cap: Forecast net debt (US$m) Forecast gearing ratio (%) Market Share price graph (p) 315.8p £815m 9.9 11.0 AIM

Rockhopper Exploration
INVESTMENT SUMMARY

(RKH)

Rockhopper is currently participating in the drilling of the Rachel North prospect (RKH 7.5% WI) to evaluate oil bearing sands encountered in the recent Rachel sidetrack well. The Rachel wells are also critical in determining if there is a regional seal and indication that there is a much bigger oil play than just Sea Lion. The Ocean Guardian rig is due to return to RKH in early 2011 to drill an appraisal well on Sea Lion and a further two firm and five option wells. The Sea Lion appraisal well is critical in resolving the complex sands that delayed RKH from providing updated resource numbers for its Sea Lion discovery in October. INDUSTRY OUTLOOK The oil discovery in the Falklands is positive not only for the Falkland oil explorers, but the

Company description
Rockhopper Exploration is an oil and gas exploration company focused on the North Falkland Basin in the southern Atlantic.

industry as a whole. The £206m placing days after the CPR announcement is testament to investors' trust in RKH management. Diligent financial management has also been demonstrated with the sharing of 3D seismic costs recently announced with Desire.

Y/E Mar Price performance % Actual Relative* 1m 5.3 6.1 3m 1.4 21.7 12m 479.4 423.6 2009A 2010A 2011E 2012E

Revenue (US$m) 0.0 0.0 0.0 0.0

EBITDA (US$m) (2.5) (4.3) (4.0) (4.0)

PBT (US$m) (2.7) (5.1) (4.7) (4.7)

EPS (c) (2.8) (2.4) (2.0) (2.0)

P/E (x) N/A N/A N/A N/A

P/CF (x) N/A N/A N/A N/A

* % Relative to local index

Analyst Ian McLelland

Sector: Aerospace & Defence Price: 616.5p Market cap: £11539m Forecast net cash (£m) 1146.0 Forecast gearing ratio (%) N/A Market FULL Share price graph (p)

Rolls-Royce Group
INVESTMENT SUMMARY

(RR.)

Following the Trent 900 incident on the Qantas A380, the last month has demonstrated that Rolls-Royce can cope both operationally and financially with the potential fall-out from the engine failure. Rolls has identified the failure method and, following a thorough inspection process, has instigated a plan to replace the appropriate module on the necessary engines. The IMS highlighted that this will affect operating profit and bring growth down from 4-5% in 2010, while average cash will be in line with previous guidance. We have adjusted our forecasts accordingly, reducing them by 3% in 2010 and we have taken a slightly more cautious view on 2011. INDUSTRY OUTLOOK

Company description
Rolls-Royce is a global power systems business with activities in Civil Aerospace, Defence, Marine and Energy. The business supplies both original equipment (51%) and aftermarket services (49%).

With the business well balanced across civil aerospace, defence, marine and energy markets, RR's long-term future is driven by the recovery in the economic climate. With civil air traffic recovering, new aircraft build rates set to increase from 2011 and global defence expenditure relatively stable, we view the outlook as encouraging. Y/E Dec Revenue (£m) 9147.0 10108.0 10795.0 11423.0 EBITDA (£m) 1127.0 1177.0 1226.0 1367.0 PBT (£m) 880.0 915.0 946.0 1082.0 EPS (p) 36.7 39.7 38.4 43.7 P/E (x) 16.8 15.5 16.1 14.1 P/CF (x) 9.7 10.9 9.3 8.8

Price performance % Actual Relative* 1m (2.4) (1.6) 3m 11.4 (2.3) 12m 32.9 20.1 2008A 2009A 2010E 2011E

* % Relative to local index

Analyst Roger Johnston

2 December 2010

101

8) (42. highlighting its strengthening position in the high-value military and satellite phone markets. The wireless market is forecast to show volume growth in CY10 and penetration of GPS in handsets is forecast to continue as smartphones continue to gain share.5 33. putting RPC well on the way to achieving FY estimates.9) N/A N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (13.6) (8.1 719.5 9.8 4.6 12m 28.6) (38. The company is in ongoing discussions to target the high-volume handset and camera markets.1 79. Despite material price increases.0 44.4 EBITDA (£m) 69.3 P/CF (x) 2.Edison Insight Sector: Basic Industries Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 276.4 88.7) N/A N/A PBT (£m) (2.8 EPS (p) 16.8) N/A N/A EPS (p) (1. Y/E Mar Revenue (£m) 769. An H1 update indicated that around a quarter of the product portfolio is enjoying decent volume growth YTD. INDUSTRY OUTLOOK The recent antenna issues with the iPhone4 have focused attention on the impact of the human body on radio and hence phone performance.1 41. This appears driven by plastic's fundamental innovation potential and is a trend we expect to continue. It has manufacturing sites across Europe and is c 60% exposed to the food industry and related sectors. INDUSTRY OUTLOOK Industry data suggests global polymer supply is coming online at the fastest rate in over five Company description RPC Group manufactures rigid plastic packaging containers and related products for a diverse range of industries.3) (12.4 Price performance % Actual Relative* 1m (9. with regulation the biggest risk.4) 12m (31. Good defensive growth story with financial strength to enhance the rate of progress in due course.7) 3m (27. profitability should be similar/modestly better than H2 last year.4 3.2) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Katherine Thompson 102 2 December 2010 .0 83.4) (0.5 29.1 PBT (£m) 23.5 39. Interims due 30 November.9 2009A 2010A 2011E 2012E * % Relative to local index Analyst Toby Thorrington Sector: Electrical Equipment Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 1.1 8.0 FULL RPC Group INVESTMENT SUMMARY (RPC) RPC is poised between the tail-end of its business improvement programme and a more forceful growth profile to be defined by the cycle and/or the application of balance sheet strength. mobile satellite communication and camera customers and announced a new joint development project with a US defence contractor.0 47.7 8.3 765. Demand for consumer GPS applications is returning to normal levels after a period of weakness. years.1 30. prices are expected to be depressed.8 2.8p £275m 80.8) (2.6p £5m N/A N/A AIM Sarantel Group INVESTMENT SUMMARY (SLG) Sarantel reported FY10 results on 22 November: revenues came in below our forecast but net losses were in line due to strong cost control. Plastic as a packaging material is the fastest growing of the high volume materials.8 9. Sarantel has recently reported production orders from military. wireless and handheld devices.8 3. well-designed antennas in handsets.9 740. and highlighted the need for Company description Sarantel develops and manufactures miniature filtering antennas for mobile.8) 3m 2. Y/E Sep Revenue (£m) 2.8) (1.3 15.2 P/E (x) 16.9 N/A N/A EBITDA (£m) (1. with the remainder flat. With demand weakening.

the Warrior upgrade programme.0 4. Defra.1 5. application support across these markets.1 PBT (£m) 0.5p £11m 3.2 7.6 7.7 1.0 13. government and media/ broadcast sectors. especially in pubs. The 925 amusement machines being acquired (in 277 leisure sites) should slot straight into its national distribution network.0 N/A AIM SciSys (SSY) INVESTMENT SUMMARY Following the governments spending review.1 41. INDUSTRY OUTLOOK SciSys is specialist provider of high value IT solutions with a focus on four vertical markets (space.0 42. is facing lengthy delays. Its fifth division provides Company description SciSys provides a range of professional services in support of the planning.0) 12m (13. many financially stretched.5 4.9 5. environment and media & broadcast).4) (6. the forthcoming VAT rise will not help consumer spending.5) (44.9 Price performance % Actual Relative* 1m (7.8 7.8 13.2) (9. However.4 3. INDUSTRY OUTLOOK The amusement machine industry continues to contract and government spending cuts and Company description Sceptre Leisure is the second largest supplier of amusement machines to the UK pub sector.8 7. the effect on SciSys' business remains unclear.the enterprise value of £8m looks modest for an international IT services group generating more than £40m of annual revenues. Y/E Apr Price performance % Actual Relative* 1m (10.0 PBT (£m) 1.7 3.2 P/CF (x) 0. The industry is fragmented with 570 small operators.Edison Insight Sector: Travel & Leisure Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 26.7 6. despite asset finance constraints.2 P/E (x) 9. market conditions remain very tough and interims (mid-December) are likely to be lower (World Cup and a dip in SWP rental rates).3 EBITDA (£m) 1. for which SciSys is part of a consortium bidding for the work.4 3. with many of the group’s public sector contracts in key priority areas where there is less scope for discretionary spending cuts and roughly half of group revenues now in Europe.0 88.4 3.6 1.8 EPS (fd) (p) 3.2m cash and shares). Recent growth has been led by the government and Media Broadcast divisions. It also supplies lottery vending machines and other gaming products to UK social clubs.3 2.2 42. but H2 will benefit from a major new contract with Punch Pub Company.9) (30.7 P/E (x) 7.5 2.8 44.1 EBITDA (£m) 13.0 P/CF (x) 7.8) (22. SciSys now has a more balanced portfolio.0 AIM Sceptre Leisure INVESTMENT SUMMARY (SCEL) Sceptre has just announced another bolt-on acquisition (for £1. had its budget cut by 30%.5p £15m 13.9 6.7 42.1) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Richard Jeans 2 December 2010 103 .5 7.8 1.6 1. development and use of computer systems primarily in the space. which includes the Environment Agency (one of SciSys's main customers).3 1.7) 12m (56. Sceptre has successfully increased market share in amusement machine supply.5 2.7) 3m (23.2 EPS (p) 3.8 41. We believe the impact of the spending cuts is more than reflected in the shares . government & defence.5 2.9) (61.2 * % Relative to local index Analyst Jane Anscombe Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 37.1 12.4 3. presenting earnings accretive acquisition opportunities that can be easily integrated into Sceptre's national depot infrastructure. Likewise. Meanwhile.5) 3m (18. Its rental assets are now cash generative and debt is declining rapidly. Y/E Dec Revenue (£m) 38.9 2.1) 2009A 2010A 2011E 2012E Revenue (£m) 39.7 2.

will form the core of Sea Energy’s business after the sale.4 P/E (x) N/A N/A 19.6 2009A 2010A 2011E 2012E * % Relative to local index Analyst Richard Jeans 104 2 December 2010 .0) (4. including road transport.3) (1.6) (6.2) (0.4) 12m (44.3) (8.1 Price performance % Actual Relative* 1m 3.0 0.0) (15.8) 12m 123.0 AIM SeaEnergy INVESTMENT SUMMARY (SEA) The disposal of Sea Energy Renewables Limited (SERL) is said to be progressing well and is expected to conclude by the year end.4 14. and an agreement with Nantong to develop and market steel structures for the offshore wind industry.3 0. healthcare (TrueField Analyzer). While the automotive fleet opportunity has been deferred by the weak US economy.6) PBT (£m) (3.8 N/A AIM Seeing Machines INVESTMENT SUMMARY (SEE) In November.6p £15m 4. Hence.5 P/CF (x) 70. which is for an existing client.0 0.2 8.4 N/A 12.0) (4.Edison Insight Sector: Alternative Energy Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 21. the underlying business continues to advance. INDUSTRY OUTLOOK SM has exposure to a number of industry sectors. and we believe the current valuation can be justified by the mining end-market alone. Company description Seeing Machines is a technology company focused on designing vision-based human machine interfaces. The marine services business.0 EBITDA (£m) (3. fitting out comfortably more than 200 haul trucks.3 1.7 10.6 4.7) (50.6) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Graeme Moyse Sector: Technology Price: Market cap: Forecast net cash (A$m) Forecast gearing ratio (%) Market Share price graph (p) 3. Y/E Jun Revenue (A$m) 4. We note SM’s core technology has wide applications.7 12. an Exclusivity Agreement with Amplemann for a bridging system.9 EPS (c) (0.0p £15m 5. SM announced a contract to install the DSS driver monitoring equipment in the haul truck fleet at a mine in Chile. Moray Firth and Beatrice sites.2) (44. Sea Energy also continues to develop its marine services business with a Letter of Intent signed with Ulstein for vessels. healthcare and computer gaming. The new contract. includes the fit-out of 32 haul trucks. Extending the loan facility with LC Capital Master Fund from £2m to £3.7) (5. is a UK-based company with a 25% stake in three of the largest scale offshore wind projects in Scotland. together with the legacy oil and gas assets. Aside from the sale.8m gives Sea Energy the financial flexibility to pursue this objective.9) (7.9 745. we regard the group's enterprise value of c £10m as modest.4 2. the mining sector deals have diversified the opportunity and we note the market size in both global road transport and mining operations is substantial.0 (4. INDUSTRY OUTLOOK The Offshore Valuation Group estimates that the UK has offshore resources to support up to 116GW of fixed and a further 350GW of floating wind farms. including automotive and mining (DSS). The majority partners are Scottish and Southern Energy and EDPR.5) (4.7) 1.7) 1.9 4. The latest deal takes the total publicly announced new DSS contracts that generate revenue in FY11 to six. Y/E Dec Price performance % Actual Relative* 1m (2.0 PBT (A$m) (0.5) (1.6) 3m (15.1 101. and computer gaming (faceAPI).5) (1.8 EBITDA (A$m) (0.6) (4. with progress reported at its Inch Cape.0 0.4 3m 16.1) 2008A 2009A 2010E 2011E Revenue (£m) 0.5) 0.3) EPS (p) (8. Company description SeaEnergy.

4 PBT (£m) 2.4%. Returning confidence in equity markets and customer acquisitions have helped. The Company description Sigma Capital is a specialist asset management and advisory group that focuses on three areas: venture capital (VC) fund management.0 14. continue to be difficult.9 (1. property investment management and university IP commercialisation (IPC).2 2.Edison Insight Sector: Financials Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 27. The retail market may also see a step change when the government 'popularises' its holdings in banks.1 15.4) 3m (29.0) (24.0) 12m (3.9 N/A AIM Sigma Capital INVESTMENT SUMMARY (SGM) Sigma’s FY10 interims showed that conditions in the group’s primary operations. The IPD monthly index of UK commercial property has risen in each of the past 12 months to October 2010 for a total return of 20. of which £2.1 19. The group has enhanced earnings by c 10% through the tender offer/buyback .0 14.7 EBITDA (£m) 1. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 12.8 2. There should be long-term market growth from the demographics of an ageing and higher net worth population. venture capital and property.2 2.8 (8.07 1.8 N/A EBITDA (£m) (0. Y/E Dec Revenue (£m) 4. sustainable/renewable energy sector is receiving considerable investor and government support.8 Price performance % Actual Relative* 1m (3.52 1.27m cash.8) 12m (40.5 16.4 P/CF (x) 33.42 P/E (x) 25.8) * % Relative to local index Analyst Mark Thomas Sector: Financials Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 9.4) (39.3 20.1m loss before tax included £0. although the rate of increase has begun to slow. attractive early-stage companies are still able to complete funding rounds.5) 3. It is positive that the property division strategy is moving to build a more recurring revenue base in FY11.7 EPS (p) 1.4 N/A N/A Price performance % Actual Relative* 1m (25.one of the multiple actions being taken to mitigate the lost income when the superbly executed hedge matures in November. retail buyers outnumbered sellers by over two to one in the commission free scheme.4 1.4) N/A EPS (fd) (p) (1. INDUSTRY OUTLOOK While the VC market is subject to the health of equity markets and the knock-on effect on exit strategies.8) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Martin Lister 2 December 2010 105 .9 (1.7) 0.02m is unencumbered. The shares trade on 19-21x 2010/11 P/E estimates. At the half-year end. The £1.1 17. many more years of above market growth.5) (12.0p £4m 2.5p £40m 11. INDUSTRY OUTLOOK Share plc still has a modest market share (6% excluding the benefit of the hedge).4 2. Q3 market share data saw particularly big gains.7 21.28 1.7 2. allowing for Company description Share plc owns The Share Centre and Sharefunds. The Share Centre is a self-select retail stockbroker that also offers share services for corporates and employees. The H1 revenues decline from services reflects the absence of set-up fees from new property partnerships.4) N/A PBT (£m) (0.9) N/A P/E (x) N/A 2.4 2.5 18. Encouragingly.7 3.0) (45.5) 0. Its record shows the model delivers strong operational gearing.8) 3m 3.4 N/A N/A P/CF (x) N/A 2.7 (2.3 N/A AIM Share plc (SHRE) INVESTMENT SUMMARY Share plc has continued its multi-year market share gains and saw customer relationship income up 20% (H110 on H109).5) (2. A high proportion of income is derived from stable fee and interest based revenues. the group had £3.7m of write downs.

by which time the company will know the extent of any potash present.4) N/A PBT (£m) (0.3) (1.0 N/A EBITDA (£m) (0.5 PBT (£m) 1. Company description Sirius Minerals is a diversified mining and exploration holding company with salt and potash interests in North America and Australia and initiatives in Compressed Air Energy Storage and Carbon Sequestration.3 N/A AIM Sirius Minerals INVESTMENT SUMMARY (SXX) Drilling commenced at the company's North Dakota project early last month. The result of the hole is critical to de-risking the development of any future Sirius potash operation in North Dakota. which will allow Sino-Agri to look into developing the Adavale project in Queensland. having made headway on gross margin improvement as indicated by its November IMS.9 4.0 P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 13.3) (1. it must align its costs with the industry average to compete with peers. We value Sirius Minerals on the basis of its NAV at 8. The marketing effort is focused on growing sales in key European markets. Y/E Mar Price performance % Actual Relative* 1m 12. appointing new management. It has undergone radical change in the last 12 months.9) 0.645 net mineral acres of exploration leases in North Dakota.0 15. It has also entered into a Memorandum of Understanding with Sino-Agri Mining Industry. Industry benefits from demographic growth trends and Sinclair has a mix of OTC and other more specialised brands.8) (1.9 14. It sells 45 products mostly in dermatology.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 30.6 EBITDA (£m) 2.8) (0.4) N/A EPS (p) (0. Australia.7 N/A FULL Sinclair Pharma INVESTMENT SUMMARY (SPH) Sinclair is at a turning point in its recovery.5) (1. INDUSTRY OUTLOOK Vancouver FOB muriate of potash currently costs US$320/t. The company aims to build European critical mass in the domains of dermatology and oral health.5) (1. rationalisation of SKUs. oral health and wound care.7 2009A 2010A 2011E 2012E Revenue (£m) 0.0) * % Relative to local index Analyst Mick Cooper Sector: Mining Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 8. Y/E Jun 2009A 2010A 2011E 2012E Revenue (£m) 30. product acquisitions and equity placing to repay debt.9) 0.6 32.0 (1.5) (20.8 36.8 12m (11. However. A further two exploration application licences have also been acquired in Western Australia. INDUSTRY OUTLOOK Company description Sinclair Pharma is a UK-based speciality company with direct marketing operations in France.5 (0.4 P/E (x) 20.3 13.0p.8 3m 14. There is also growth potential from line extensions.7 12m 28. Spain and Germany and distributors in c 85 countries.1) (1. Further improvements in underlying margins could be made by gradual rationalisation of production.0 0.4 27.8 (0.220 acres and now controls over 8.4) (0.0 0.8p £71m 0. Italy.4) (0. Drilling is expected to be completed by end-December.9 146.4 EPS (p) 1.0p £57m 0.5 N/A N/A 77. Sirius has acquired a further 1.2) N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Charles Gibson 106 2 December 2010 . The Flammazine acquisition enhances the wound-care franchise and provides a foot in the door of European hospitals.2 3m 93.5) 0. more focused marketing and a greater investment in its direct sales force.

Sirius's properties are aimed at Germany's SMEs.2 55.2 5. The shares are at a c 60% discount to NAV. better cost recovery from tenants and reduced voids. lower overheads.6 4.3 EBITDA (£m) 17. Period-end occupancy was 73% vs 71% a year earlier.4) (10. Latin American negotiations are ongoing and its Japanese partner.8 P/CF (x) 4.9 0.17/sqm vs 45.6 PBT (£m) 1.7) 2008A 2009A 2010E 2011E Revenue (£m) 62.Edison Insight Sector: Property Price: Market cap: Forecast net debt (€m) Forecast gearing ratio (%) Market Share price graph (€) €0. initiated two Phase III studies in November.7 7.83 0.1) 12m (60. the MAA is under review and approval is possible in mid-2011.4 45. leading to GDP growth forecasts of around 3% for the current year.000sqm of new leases in H1 signed at average €4.0 FULL SkyePharma INVESTMENT SUMMARY (SKP) SkyePharma’s near-term investment case hinges on the EU commercialisation of Flutiform.30 €91m 281.2 P/E (x) 3.1 65.4 135.2% second quarter growth on the back of resurgent export orders. Abbott has now returned the US rights. SkyePharma is investigating whether there is a commercially-viable way of developing Flutiform in the US.8 18.4 * % Relative to local index Analyst Robin Davison 2 December 2010 107 . There may be RoW opportunities. bringing clinical and life cycle management benefits.0 44. probably in 2012/13. after GSK's Advair and AstraZeneca’s Symbicort. This is combined with its ability to service and/or renegotiate/refinance certain debt obligations.0 16.3 12m 5.1 20.3 P/CF (x) 0.5 3m (8.5) (4. Flutiform remains the possible fourth combination ICS/LABA to reach the market in asthma. However.7 Price performance % Actual Relative* 1m (5.9 4.0 2.6 EPS (p) 11. Recent investment in sales and marketing initiatives are gaining traction.46 1.7 60.6 27. using its technologies to develop new formulations of established drugs.0 3.5 0. Interim results are due on 6 December.3 (4.2 26.0 134.5m. with 87.5p £9m 106. with benefits from overhead cuts and cost recovery offset by one-offs relating to the EGM and non-recurring write-downs of tenant debts post last year’s economic conditions.5 3. Merck & Co is due to launch Dulera after receiving FDA approval in June.8) 3m 20.7 1. INDUSTRY OUTLOOK Company description SkyePharma is a drug delivery specialist. ie 2.9) (64.9 59.7 20.9 0. Kyorin. assisted by domestic demand.8 0.000sqm in H109.2 6.8 EPS (c) 1.7 44.9 22. The local economy has produced the strongest eurozone performance.12 P/E (x) 21.8 23.9 55.9 1.4 36.9) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Roger Leboff Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 35.2 1. given a substantial requirement for pre-approval dosing studies and post-approval safety studies.5 0.5 7. INDUSTRY OUTLOOK Company description Sirius Real Estate is engaged in the investment in and development of commercial property to provide flexible workspace in Germany.0 0.1 PBT (€m) 4. We have cut our FY11e pre-tax profit forecast by £0. Y/E Mar Revenue (€m) 43. Y/E Dec Price performance % Actual Relative* 1m 3.40 0.5 EBITDA (€m) 18.0 AIM Sirius Real Estate INVESTMENT SUMMARY (SRE) The trading update showed progress on targeted occupancy and efficiency improvements.

2 10. Japanese approval of SOH-075 is also expected in a similar timeframe. Sportingbet continues to diversify. Sosei’s investment case is reliant on the successful development and registration of these assets. Our full-year estimates are unchanged.00 Market cap: ¥11438m Forecast net cash (¥m) 1558.0) (293.6 7.0) (262. Its main markets are in Europe and Australia. longer term.7) (26.Edison Insight Sector: Pharma & Healthcare Price: ¥97000.0 52.0 800. Economies of scale also suggest the sector is likely to see continuing M&A activity.9 9.1) (8. Y/E Jul Revenue (£m) 164.2 37. An increasing number of countries are planning to Company description Sportingbet is an online sports betting and gaming operator.5 PBT (£m) 31. rapid market growth should soon offset this.2 5.8) N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Lala Gregorek Sector: Travel & Leisure Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 59. including the Russian B2B deal with Liga Stavok announced mid-November. INDUSTRY OUTLOOK Company description Sosei Group Corporation is a Japan-based biopharma focused on R&D and drug re-profiling.5) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Jane Anscombe 108 2 December 2010 . The recent failure of preliminary talks with Unibet was a disappointment but we expect Sportingbet to continue to look at suitable earnings enhancing deals after its successful DoJ settlement.8) (2266. Y/E Mar Price performance % Actual Relative* 1m (3. with first top-line results from the NVA237 Phase III programme anticipated in calendar Q211.8) (13.5 35. Sosei’s acquisition of Activus Pharma in August has the potential to generate revenue via strategic partnerships/collaborations based on the nanoparticle drug formulation technology (APNT) or new pipeline candidates. It is active in licensing – both its proprietary programmes. Spain and Greece) and while this may produce a temporary dip in profits (due to tax and marketing costs).0) (262.2 6. Germany.8 P/CF (x) 15.0 215. Near term.6 6.3) (8.0 208.1 Price performance % Actual Relative* 1m (9.0) N/A EPS (¥) (19938. However.0 230.7 P/E (x) 9.5 9.0 40.0 EPS (fd) (p) 6. and external rights for the Japanese market.3) 3m (3.3 6.0 6.8) (1530.0 EBITDA (£m) 39.3 2009A 2010A 2011E 2012E Revenue (¥m) 153.0) 12m (18. which we believe has significant potential.0 919. Emergency contraceptive SOH-075 may provide further upside as Japanese approval is possible in Q111 (NDA filed Sept 2009).4 12m 15. as in Australia. Sosei currently generates over ¥130m pa from Norlevo (SOH-075) sold by Sandoz in Australia. In October 2006 it sold its US-facing business and stopped accepting bets from US residents.0) (294.7) 3m 33.7 46.0 N/A EBITDA (¥m) (2106.5 49. specifically regulate and license online gambling (including Denmark.1p £299m 36.4 8.0 N/A FULL Sportingbet INVESTMENT SUMMARY (SBT) Q1 results (24 November) showed further progress with EBITDA up 17% despite unexceptional sports margins.0) N/A PBT (¥m) (2067. INDUSTRY OUTLOOK Online sports-betting revenues are continuing to grow on the back of rising broadband penetration and greater consumer trust.4 8.0 Forecast gearing ratio (%) N/A Market JSE Share price graph (¥) Sosei Group INVESTMENT SUMMARY (4565:JP) Partner Novartis has confirmed that key value drivers NVA237 and QVA149 are on track to meet market expectations for launch (2012 and 2013 respectively).

4 EPS (c) 43.4) 12m 14.6 28. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m 4.0) 3m 6.1 * % Relative to local index Analyst Katherine Thompson Sector: Technology Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 117.9 7. as SQS works towards its medium-term aim to grow this to 50% of the business.7 13.1 7.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (€m) Forecast gearing ratio (%) Market Share price graph (p) 192.0p £52m 3. volatility and a Company description StatPro Group provides asset management software and asset pricing to the global investment industry.0p £71m 4.8 P/CF (x) 7.0 13.3 12.9 7.8 P/E (x) 5. In addition.9 PBT (€m) 13.5 PBT (£m) 4. The group remains on target for the full commercial launch of its new SaaS product.7 9.7) (3. in January. but the company expects FY10 earnings to be in line with expectations and FY11 to see revenue and margin growth.7 6.7 6.2) Revenue (€m) 142.9 134.7 EBITDA (£m) 6.4 (4.6 33.4 4.7 3.2 21.0 16. INDUSTRY OUTLOOK StatPro's products are targeted at the global wealth management industry.1 22.0 8.8 4. cost and regulatory pressures all require asset managers to maintain and upgrade their reporting and risk management systems.3 150. lower interest rate environment should help underpin retail demand for equities and bonds.5 14.9 (9.9 P/E (x) 16.3 11. We estimate Managed Services will make up nearly 9% of FY10 revenues (vs 3% in FY09).9 3m 7.8 P/CF (x) 3. failure rate of IT projects.2) 12m (2.6 8.8 8.0 Price performance % Actual Relative* 1m (3. with demand strength in both the traditional project-based business and managed testing services.9 5.8 6.7 EBITDA (€m) 17.4 10.1 159. partly reflecting that around 90% of testing is carried out in-house.8 9. The company also says it has continued to sign up new clients to its StatPro Seven hosted platform.0 34. While this target market has clearly suffered a fair amount of turmoil over the last two years.0 6.0 AIM StatPro Group INVESTMENT SUMMARY (SOG) In a short trading update in October. Market surveys suggest that around two-thirds of IT projects either fail or fall behind time and budget.0 8.8) (12. competitive. StatPro Revolution. we believe the potential for StatPro Revolution continues to be significantly underrated by the market.7 2008A 2009A 2010E 2011E * % Relative to local index Analyst Richard Jeans 2 December 2010 109 .7 N/A AIM SQS Software Quality Systems AG INVESTMENT SUMMARY (SQS) H110 results showed that SQS has returned to revenue growth.2 10. As the global market leader in independent testing. and therefore the longer-term industry growth profile.6 11.9 31.0 8. INDUSTRY OUTLOOK The fundamental driver behind the demand for independent software testing is the dismal Company description SQS is the largest independent provider of software testing and quality management services. Y/E Dec Revenue (£m) 27.0 EPS (p) 7. SQS is well placed to benefit.6 9. This is despite challenging market conditions. The majority of its revenues are derived from consultancy services to a client base including a long list of blue-chip customers.0 9. We have revised up our revenue forecasts while our earnings forecasts remain substantially unchanged.1 4. With the shares trading on c 12x our FY11 forecasts. Investment in headcount and infrastructure to support future growth hampered margins. StatPro announced that Q3 trading was in line with management’s expectations.

4) (1.3 12m 2. supported by asset developments.7 15.4 59. Stobart Ports (3%) and Stobart Air (1%). we have eased back our FY forecasts.8 P/E (x) 18.4 EPS (c) (5.0) 7. INDUSTRY OUTLOOK SuperGen is focused on the development of novel.0 5.7) 3m 39. cell signalling and DNA methyltransferase inhibitors for cancer indications.1 18.5) 3m 2.78 Market cap: US$168m Forecast net cash (US$m) 113. amuvatinib.2 9. Revenues were up 11% to £243.7 EBITDA (US$m) (1.2 16.7 516. usually first-in-class anticancers based on Company description SuperGen is a NASDAQ-listed biotech firm focused on the development of kinase. The study will test the drug in the first-line setting with standard platinum-based doublet chemotherapy and start to enrol patients later this year.5 2009A 2010A 2011E 2012E Revenue (£m) 431. with caution over government spending.2 EPS (p) 7.3 P/CF (x) 14.6 3.3 52.4 13.4m and normalised EPS up 16% to 4.0) 7.0 14. INDUSTRY OUTLOOK With food. underlying EAFFC up 26% to £17. drink and other resistant sectors amounting to 85% of goods carried.2) (0.1 PBT (US$m) (3.6 16. in small cell lung cancer (SCLC). we believe Stobart's multi-modal model is set to become increasingly attractive.1 12. VAT increases and higher finance charges.0 FULL Stobart Group INVESTMENT SUMMARY (STOB) Interims demonstrated Stobart’s ability to sustain growth through the recession despite changes in customer behaviour and with challenging conditions in areas such as Network Rail.3p.4 10.0 EBITDA (£m) 40.8 447. Positive results should be a significant value-creating event and provide the basis for a partnering deal.1 Forecast gearing ratio (%) N/A Market NASDAQ Share price graph (US$) SuperGen (SUPG) INVESTMENT SUMMARY SuperGen has confirmed plans to initiate a Phase II study with its DNA repair suppressor/multi-tyrosine kinase inhibitor.8 * % Relative to local index Analyst Robin Davison 110 2 December 2010 .1 28. Following the perceived failure of the Phase III study of Dacogen in elderly AML.8 15.9 38.9 14. including Eddie Stobart (road haulage. marketing partners Eisai and J&J remain committed to submitting registration applications based on secondary endpoint data.3 14. Y/E Feb Price performance % Actual Relative* 1m (1.8 (11.6 9.2 10. kinase. Y/E Dec Price performance % Actual Relative* 1m (1. Such compounds are attractive as licensing candidates to major pharmaceutical companies and can often be licensed at high values at a relative early stage. Stobart is Company description Stobart Group operates a multimodal transport business. Stobart Rail (14%).9 P/E (x) N/A 20.6 (4. With a greater focus on more environmental transportation and the creation of a Biomass JV.4 * % Relative to local index Analyst Roger Johnston Sector: Pharma & Healthcare Price: US$2. normalised PBT up 24% to £15. 82%).Edison Insight Sector: Support Services Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 143.4 41. pretty insensitive to the UK slowdown.0 558. cell signalling and DNA methyltransferase inhibitors.1 29.2) 2008A 2009A 2010E 2011E Revenue (US$m) 38. we believe that the strategic developments at London Southend Airport and the recent Biomass expansion support continued long-term growth. However.2 13.9 39.7 P/CF (x) N/A 32.8 22.2 7.1) 13.7 8.0m.6 32. Nevertheless.3 51.7m.1) 12m 14.3 52.2 PBT (£m) 23.2p £380m 91.3 10.

8) (15. INDUSTRY OUTLOOK TopoTarget's belinostat belongs to the class of drugs called histone deacetylase inhibitors Company description TopoTarget is a Danish drug development and marketing company focused on the field of oncology. belinostat.4) 0. INDUSTRY OUTLOOK Symphony's main activity is in overseas markets.0 16.2) 3m (4.5) (42. where environmental conditions and legislation are creating positive momentum. such as carrier bags.8 90.8) 14. belinostat has a favourable safety profile and could be the first HDACi approved for the treatment of solid tumours.5 17. Its lead product is belinostat and it has out-licensed its North American and India rights to Spectrum.2bn.9 1.3 Forecast gearing ratio (%) N/A Market OMX Share price graph (DKK) TopoTarget INVESTMENT SUMMARY (TOPO) TopoTarget's prospects are closely tied to those of its lead drug.6 0.0 12m 14. after a strong run that saw shares up 35% over the last six months.9 44.9 N/A P/CF (x) N/A 27. At its Q310 results. with 5. INVESTMENT SUMMARY (SYM) Symphony shares fell 10% over the last month.7) (26.5) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Mick Cooper 2 December 2010 111 .8 N/A P/E (x) 45.1) (142.0 AIM Symphony Environmental Tech.20) (0.68) (1. it also maintained its financial guidance for FY10.36) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (9.0 8.9 3.5) (7.3) (24.2) PBT (DKKm) (306.9 N/A EPS (p) 0. It is in a pivotal Phase II trial for peripheral T-cell lymphoma (PTCL) and could be approved in 2012. The d2w droplet logo can also be found on many magazine covers at UK newsagents.41) (0.0 128.Edison Insight Sector: Basic Industries Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 13.8) 3m (1. BASF recently moved out of the oxo-degradable market.3 (1.3) (50.4 7. which have considerable potential as oncology products because of their epigenetic effects. the company indicated that it was increasing its focus on belinostat and looking to out-license its other products.1) 12m 29.000 visitors getting samples and marketing material at the show.5p £16m 0.2) EPS (DKK) (4. (HDACi). Y/E Dec Revenue (DKKm) 43.9) (106. The company also sells oxo-biodegradable finished product.5) (11. The North American and Indian rights have been out-licensed to Spectrum Pharmaceuticals and belinostat could generate peak revenues of $1.9 16.35 Market cap: DKK444m Forecast net cash (DKKm) 202. leaving further market share opportunities for Symphony.1 N/A PBT (£m) (0.3 0. Two such drugs have been approved and nine others are in clinical development.6 EBITDA (DKKm) (192.8 2008A 2009A 2010E 2011E Revenue (£m) 5.8 0.3 N/A * % Relative to local index Sector: Pharma & Healthcare Price: DKK3. The drug is also being developed for cancer of unknown primary (CUP) and non-small cell lung cancer (NSCLC). However.1) 0. Y/E Dec Price performance % Actual Relative* Analyst Neil Shah 1m (8.4 N/A EBITDA (£m) (0. The company exhibited its d2w product at the K Show in Dusseldorf in October. Company description Symphony designs and globally markets a special formulated additive that makes polythene and polypropylene oxo-biodegradable. Products made with Symphony's d2w eco-compatible technology can be found in many large brands.6 17.

3) (1.0) (2. south Atlantic.3 3m 33. The first relates to securing a farm-in partner for the Ugandan interests with a view to undertaking a 2-D seismic survey in early 2011 and drilling a new well by mid-year.4) (12. despite consolidation. Namibia has clear company-maker potential for Tower. Y/E Dec Revenue (US$m) 0.0 0.8) PBT (US$m) (1.0 EBITDA (US$m) (1.6) 12m 75.5p £25m N/A N/A AIM Travelzest (TVZ) INVESTMENT SUMMARY Travelzest looks to be managing its restructuring successfully in uncertain conditions and without detriment to top-line growth.0) 3m (31.0p £42m 1. albeit in both cases with a currency boost.8 N/A N/A PBT (£m) 3. albeit tentative.1) (1.5 N/A N/A EBITDA (£m) 5. Processing is expected to be completed by early 2011. independent oil and gas exploration company with a regional focus on sub-Saharan Africa. sales at its North American operations.1 N/A N/A EPS (p) 6.4 N/A AIM Tower Resources INVESTMENT SUMMARY (TRP) Two key items of Tower newsflow are eagerly awaited. the charter market remains highly competitive.1) (0. UK tour operations were holding up well.2) (0.3) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 17.8 N/A N/A P/E (x) 2. fine weather and the World Cup. Arguably. In Canada.2) (0. In the half to April. Significantly. suggesting an improved full-year return.9 176.0 0.0 58.4 5.0 0.2) (1.8) EPS (c) (0.2 12m 65. which include a unified UK retail brand. FY11 should see the full benefit of new marketing and distribution strategies. We are reviewing our forecasts.0 N/A N/A P/CF (x) N/A 11. Company description Travelzest is an online travel group offering specialist travel programmes. Y/E Oct Revenue (£m) 44. there are positive implications. the driver of interim profit growth.9 4. More drilling success in the Falklands could stimulate interest in offshore Namibia plays. for Tower offshore Namibia. INDUSTRY OUTLOOK Rockhopper's Falklands discovery points to the prospectivity of source rocks laid down in the Company description Tower Resources plc is an AIM-listed.4 2008A 2009A 2010E 2011E * % Relative to local index Analyst Peter Dupont Sector: Travel & Leisure Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 17. were up 10%. which benefits Travelzest's agency business.3 5.3 49.8 3. The second potential event relates to the results of the 3-D survey offshore Namibia. with summer bookings at end-April 30% ahead. INDUSTRY OUTLOOK While Thomas Cook and TUI Travel have blamed a marked slowdown in UK summer 2010 trading on airspace closures.6) (18.3 41.Edison Insight Sector: Oil & Gas Price: Market cap: Forecast net cash (US$m) Forecast gearing ratio (%) Market Share price graph (p) 4. there is renewed concern that the massive capacity cuts of recent years may not deliver the long-term market stability envisaged at the time of the industry mergers.1 2008A 2009A 2010E 2011E * % Relative to local index Analyst Richard Finch 112 2 December 2010 . Early indications suggest the Namibian licence has three giant structures with strong indications of hydrocarbons.1) (2.5bn partly to finance exploration activity offshore Namibia. which could pave the way for a well by early 2012. London-based.0) (1.4 18.0 N/A N/A Price performance % Actual Relative* 1m (18. tighter consumer spending. the Brazilian junior HRT has recently raised $1.

0 9.0 26.5 PBT (£m) 18. with the property well on track for full occupation.4 11.4 3.Edison Insight Sector: Property Price: S$1.0) (13.6) (53. Peter Martin. A commitment to pay 2.5) (42.5p £33m 29.0 170.8) (15.9 Price performance % Actual Relative* Analyst Roger Leboff 1m 0.8 6.7) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Fiona Orford-Williams 2 December 2010 113 . Debt is in line.6 13. efficiency in service delivery and intelligent investment in technology remain key priorities given curtailed budgets. with refinancing completed in H110.4 4. adds weight to the case that TCT is undervalued. It also reported 68% occupancy for its newly refurbished retail podium at Central Plaza.7 N/A 12m N/A N/A * % Relative to local index Sector: Support Services Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 35. INDUSTRY OUTLOOK Company description TCT's main objective is to maximise capital growth from a portfolio of properties in China.0 FULL Tribal Group INVESTMENT SUMMARY (TRB) Bid discussions have been terminated and we are now reinstating forecasts.7) P/E (x) N/A N/A N/A N/A P/CF (x) N/A 6.1 3m 4. logistics and retail properties. outside of TCT's business model.2 P/CF (x) 1. Y/E Dec 2008A 2009A 2010E 2011E Revenue (S$m) 80.1) 3m (53. TCT secured a new strategic partnership that will extend the portfolio into mainly retail property in central and western China.7 10.7 4. Y/E Dec Revenue (£m) 234.0 Market Singapore Exchange Share price graph (S$) Treasury China Trust INVESTMENT SUMMARY (TCT) Operational progress in Q3 included an increase in aggregate portfolio occupancy to 86. The focus is on large scale development opportunities in the commercial sector and on income producing assets such as office.9 Price performance % Actual Relative* 1m (42. albeit at substantially lower levels. INDUSTRY OUTLOOK Company description Tribal provides consultancy. with new contracts for student management systems in the UK and New Zealand and for mobile learning in the US. is leaving the group at the end of December and progress is being made identifying a successor. Radical changes to the role of the state in the provision of public services could present Tribal with myriad opportunities. support and delivery services focused on improving the delivery of public services.3 13.0 EPS (p) 14. This followed October's 0. Much of this is aimed at residential property.6 24.3) (49.6 6.7 178.7 5.5) 12m (44.4% prospective yield which. such as working with GP practices in their envisaged commissioning role. The CEO.3 7.0 0.0 193.9 77.5c quarterly dividends put the units on a 6.6%).57 Market cap: S$377m Forecast net debt (S$m) 575. Post the CSR. Overseas revenues are building.1 EBITDA (£m) 24.8 PBT (S$m) (49.5 N/A 2.1 18.0 Forecast gearing ratio (%) 61.4) (10.2) (23.9) (7.2 1. primarily within the UK. The PRC government's determination to curb inflation pressure and property speculation prompted its fifth increase in capital reserve requirements this year.5) EPS (c) (29. This reflects the materially reduced UK government advisory work and continued delays and deferrals in UK health advisory business.2 85.0 10.6 13. with the steep discount to NAV.3 21. In November.4) (29.9% (end Q2: 83. Longer-term prospects benefit from HMG's intention to reduce public spending through shared service provision.0 EBITDA (S$m) 4.8 77.8 P/E (x) 2.25% increase in the benchmark interest rate. Other news included refinance of the City Center debt facility on improved terms and including development debt for CC3.

providing a highly visible and predictable revenue stream.8 9. frequent upgrade cycles.7 94.6 9.5 98.5 2.1) 12m 33. The recent pull back in the shares caused by sector read-across provides an opportunity to consider the stock again. is now looking ahead positively.93 3.3 11.0 108.3 116.3 651.2 89.Edison Insight Sector: Engineering Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 51. employing more effective internal controls and positioning itself to respond to any stimulus to the global economy. despite the challenging trading climate.5 0.0 FULL Trifast (TRI) INVESTMENT SUMMARY As emphasised by the recent interim statement.68 2.7 * % Relative to local index Analyst Roger Johnston 114 2 December 2010 .9 85.1 P/CF (x) 11.4 17. with a toehold in the US.1 96. Principal operations are in Europe and South-East Asia.0p Market cap: £1124m Forecast net cash (£m) 1.9 104.0p £43m 5.40 P/E (x) 44. but provides consolidation opportunities for stronger businesses.1 5. Ultra is better placed than most. Trifast is well past the early phases of its restructuring. The business is moving ahead.3 125.8 Forecast gearing ratio (%) N/A Market FULL Share price graph (p) Ultra Electronics INVESTMENT SUMMARY (ULE) Ultra Electronics is a steady-growth business that has provided a 17% CAGR in total shareholder return since flotation in 1996. INDUSTRY OUTLOOK The global industrial fasteners market is valued at more than £20bn.0 EPS (fd) (p) 1. developing their own local facilities or supply routes. With no programme >5% of revenues. The strong first-half performance has encouraged us again to lift our profit estimates. In addition.0 17. Successful manufacturers and distributors have responded to the shift in manufacturing capacity to lower-cost regions by Company description Trifast is a leading global manufacturer and distributor of industrial fasteners. we feel the key themes to come out of the UK's SDSR play to Ultra's strengths surrounding Battlespace IT and security.8 9.0 P/CF (x) 7.5) (10.6 20.8 112.1 12.1 26.6 Price performance % Actual Relative* 1m 23. aircraft & vehicle systems (24%). We also feel that Ultra benefits from its geographic strategy with 53% of sales to the US and only 6% direct to the UK MoD. This has been delivered through both organic and acquisitive growth in niche areas of defence electronics across a range of customers.8) 3m 0. Y/E Mar Revenue (£m) 104.9 PBT (£m) 2.2 10. They have also created effective logistical services and shifted the emphasis towards more complex products to increase value added.4 4.0 713.6 3m 27.15 0.0 15.0 EBITDA (£m) 84.1 114.6 765.9 14. reinstalled 18 months ago. The global recession has caused pain across the sector.3 P/E (x) 20.1 105.0 EBITDA (£m) 4.7 PBT (£m) 72. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 515.2 EPS (p) 80.4 Price performance % Actual Relative* 1m (11.9 (6.6 24.4 103.4 12m 114. Ultra is well positioned to benefit from the trend towards more Company description Ultra Electronics is a global specialist aerospace & defence electronics company with operations across three divisions: tactical & sonar systems (43% 2009 sales).4 15.3 75.5 64. The new management team. and information & power systems (33%).2 5.1 2009A 2010A 2011E 2012E * % Relative to local index Analyst Nigel Harrison Sector: Aerospace & Defence Price: 1638.9 3. INDUSTRY OUTLOOK With end-markets across defence moving towards a greater demand for electronic equipment and information management.

PBT by 12%.3 44.1 30. Interims revealed increased revenues. INDUSTRY OUTLOOK Company description Vectura Group is a product development company focused on the development of a range of inhaled therapies.7 36. we have increased our FY11 and FY12 EPS forecasts by 3% and 5% respectively.0p £217m 80.7 31. with delays in aerospace and automotive and wind energy markets essentially grinding to a halt.7 37. INDUSTRY OUTLOOK Company description Umeco is an international provider of supply chain services and advanced composite materials primarily to aerospace and defence (70%).7 P/CF (x) 7.4) (5.4 EBITDA (£m) (7.3 12m 52.5 24.6 5. a narrower net loss (including exceptional restructuring costs) and an improved cash balance. However.2) 8.8 45. launch expected in 2012 and 2013 respectively) and generic projects VR315 and VR632.9 3. With the long-term outlook bolstered by a new RR North America contract. which could become the first such therapies to reach the blockbuster COPD market.7 12m (6. There was some margin pressure during the period due to higher raw material costs in Process Materials and reduced aftermarket performance fees in supply chain.3) (18.4) (15.9 409.2 459.3 N/A FULL Vectura (VEC) INVESTMENT SUMMARY Vectura’s strategic focus is on developing respiratory medicine/inhalation technologies and securing new partners for these assets. which are now one to three years from the market.9 4. marine (4%) and other industries (14%).3 3m 38. Vectura offers exposure to potential generic ICS/LABA asthma combinations (despite US regulatory complexity) and novel LAMA (NVA237) and LABA/LAMA combination (QVA149).3 EBITDA (£m) 39. principally the two branded drugs NVA237 and QVA149 (partnered with Novartis.4) 3.9 26. As a result of the strong recovery in Composites. there is also unrealised value in its IP and technology platforms.2 50.3 12.5p £223m 58. Its goal is to improve patients’ lives and generate value for its stakeholders.5 EPS (p) 39.5 11. Y/E Mar Revenue (£m) 410. although we anticipate that these will ease during H2.0) P/E (x) N/A 18.9 2009A 2010A 2011E 2012E * % Relative to local index Analyst Roger Johnston Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 68.3 11.5 9.7 5.4 39.7 3m 4.3 46. we feel Umeco is well placed to benefit from a recovery in its end markets.6) EPS (p) (1. While 2010 results were hit by lower composite revenues.6 39.6 23.1 PBT (£m) 28. motor sport (7%).7 (1. wind energy (5%).Edison Insight Sector: Aerospace & Defence Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 450.0 FULL Umeco (UMC) INVESTMENT SUMMARY Umeco's interims saw revenue increased by 9%. a proposed Chinese wind market JV and reduced leverage.3 (10.4 424. Y/E Mar 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m 10.4) Revenue (£m) 31.4 57. The investment case remains geared to the success of later-stage inhaled therapies. EPS up 18% and the dividend raised by 4%. 60% of the business is in the higher visibility Supply Chain. The recent interims highlighted these markets have moved into a strong recovery mode. principally for the treatment of respiratory diseases.7 13.5 N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Lala Gregorek 2 December 2010 115 .8) PBT (£m) (7.6 Price performance % Actual Relative* 1m 3.3 P/E (x) 11. as the recent formulation licensing deal with GSK highlighted.2 (10.5) 8.9) (19.5 37.

3) (6. rather than achievements.2 8.0 7. supported by fundamental controls from the centre.5) PBT (£m) (19. The strategic focus is now firmly on M&A and securing new research collaborations (or additional milestones to add to the €750k received from Servier in October) over the next 12-18 months.6 8. However. This is being achieved through the completion and subsequent improved performance of a series of acquisitions.3 3.1 EPS (p) 3.8 N/A FULL Vernalis (VER) INVESTMENT SUMMARY With £33.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 31. and clinical Company description Vernalis is a UK company with an early to mid-stage development pipeline of projects targeting indications in the CNS area and cancer.5p £31m 28. AUY922 proof of concept and full recruitment of the V3381CC chronic cough Phase II is expected by end-2010. build their downstream activities.0 13.6 (27.5 6.9 11.5) 12m (61.7) (65.0) (32.4 3.3) (11.6 3.4) (6. Vernalis remains well positioned to progress and expand its R&D pipeline through licensing and acquisition. V158866 and V158411 plus Biogen’s A2A antagonist back-up. The group remains acquisitive.0) (33. Y/E Dec Revenue (£m) 54.5 11. the announcement that development of V3381 has been discontinued (following a review of interim data from a small study in chronic cough) represents additional clinical disappointment for 2010.8 13. but used car values have recently started to drift downwards. entry of in-house programmes.1) (24. Recent share price movements reflect City caution about consumer spending.4) (6.6) EPS (p) (128. SMMT forecasts on new vehicle registrations are still looking optimistic.6) 3m 8. INDUSTRY OUTLOOK City sentiment towards the motor distribution sector remains cautious. Nevertheless. as fears about recession are seen to have greater prominence than the positive action taken by retailers to Company description Vertu was established to build a major motor vehicle distribution group.2 Price performance % Actual Relative* 1m (12.0 PBT (£m) 3.8 818.0 1000.7) (4.9 930.9 10. The franchises are led by motivated teams.4 8.9 EBITDA (£m) (9.5) (10. Additional projects could be generated from the Cambridge research facility. having added 16 dealerships this year.0) (19.8) 12m (26.9) P/E (x) N/A N/A N/A N/A P/CF (x) 1. INDUSTRY OUTLOOK The next 12 months should see Phase II start for V85546 (possibly with a partner).5) 3m (3.0 EBITDA (£m) 7.0 P/E (x) 8.6 4.0 9. but the timing is difficult to predict.1 12.5) (4.9 7.9) (12.4) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Lala Gregorek Sector: General Retailers Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 28. the rating recognises neither the earnings potential of recently completed deals nor the capacity for further acquisitions.1) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Nigel Harrison 116 2 December 2010 .5p £57m 15.5 P/CF (x) 1.6m in cash at end-October. indications from most leading groups suggest they will deliver profits progress in both 2010 and 2011. Such newsflow should represent the next significant catalyst.2) (10.1 N/A AIM Vertu Motors INVESTMENT SUMMARY (VTU) The Vertu strategy is to develop regional clusters of franchises with chosen OEM partners in the volume sector of the motor distribution market. Y/E Feb Revenue (£m) 760.2 2.0 N/A N/A N/A Price performance % Actual Relative* 1m (33.

0 FULL Volex Group INVESTMENT SUMMARY (VLX) Initial recovery phase benefits were clearly visible in strong H1 results.9 Revenue (£m) 265.7 21. Lorcaserin also received a CRL. diabetes and sexual health.7) N/A PBT (US$m) (5.2) 3m 17.6% for lorcaserin).01) (90.6 115.34 Market cap: US$515m Forecast net cash (US$m) 129.0) 3m 34. The trading environment is considered to be stable and we now expect greater emphasis on delivering a sustained improvement in margins and profitability from a deepening of the organisational improvement programme.4 P/E (x) 28. investors may need to be more selective on stocks and sub-sectors going forward.1 14. INDUSTRY OUTLOOK Qnexa is one of three FDA-filed obesity drugs. Vivus held $158.0 P/CF (x) 10. it is currently unpartnered. It also requested formal submission of the two-year data from the OB-305 (SEQUEL) study.0 17. The response is expected to be made during December.4) N/A EPS (c) (8.7 N/A EBITDA (US$m) 0.4 (51. but unlike Arena's lorcaserin and Orexigen's Company description Vivus. while Contrave will face the FDA AdCom on 7 December.4% vs 5.3 10. INDUSTRY OUTLOOK A sharp downturn in consumer demand subsequently yielded some healthy year-on-year percentage increases for electronics companies in the early stages of recovery.1 36.3 22. Contrave.9) (72. These rates are flattening out and the rate of progress is also less uniform going into Q4.3 11.7 21.3 14.5 18.3 PBT (£m) 8. Consequently.Edison Insight Sector: Pharma & Healthcare Price: US$6.2 (48.0 * % Relative to local index Analyst Toby Thorrington 2 December 2010 117 .0p £193m 8.0 200.6 17.0) (67.2 50. Q3 net loss widened from $41m to $59. It supplies data and telecom equipment and healthcare and industrial products to large OEMs of consumer electrical and electronic devices.9 12m 233.8) (2.2% for Contrave and 3.0) (29. Inc is a pharmaceutical company dedicated to the development and commercialisation of next-generation therapeutic products addressing obesity.19) (66.2 24.9 14.2m in cash & equivalents at the end of the period. remains the most active region. In Phase III it showed the most impressive efficacy (placebo-adjusted weight loss of 9.9) (2.1 17. which triggered another round of upgrades primarily driven by higher revenues. Y/E Dec Price performance % Actual Relative* 1m (1.2) 12m (25.5 EPS (p) 10.5 10.0 15.0 302.1 229.0 322.6 18.6m due to higher G&A expenses and absence of recurring revenue from Evamist.9) 2008A 2009A 2010E 2011E Revenue (US$m) 102. Asia Company description Volex Group is a leading global provider of power products and interconnect cable assemblies.3 Forecast gearing ratio (%) N/A Market NASDAQ Share price graph (US$) Vivus (VVUS) INVESTMENT SUMMARY Vivus remains focused on its response to the FDA for Qnexa following concerns raised relating to teratogenicity (both a risk assessment and a mitigation strategy) and cardiovascular issues (demonstrating that elevated heart rate does not increase the risk of adverse events).15) N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Robin Davison Sector: Electrical Equipment Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 313. Y/E Mar 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m (2.2) (51.0 EBITDA (£m) 14.

43 P/E (x) 9.79 6.7) (9.4 EBITDA (US$m) (7. manufacturing facilities have closed down.4m.4 13.5) (9.3p £24m 2.9 6. Y/E Jan Revenue (£m) 63. Y/E Dec Revenue (US$m) 0.2) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* Analyst John Savin 1m 2.5 7. is a leader in the development.1) 3m 36. Harlequin. but the Walker Greenbank brands continue to progress as a result of consistent investment in design and colour.2m equity issue was made in July to build working capital.4 5.0) (11.8 4.2) (33. A $7. Morris and Sanderson.8 Price performance % Actual Relative* 1m (5. Meanwhile.8) PBT (US$m) (8.Edison Insight Sector: Pharma & Healthcare Price: US$1.4 6. INDUSTRY OUTLOOK The UK interior furnishing industry has experienced uncertain times for many years under the influence of fashion changes.0 EPS (p) 4.0 AIM Walker Greenbank INVESTMENT SUMMARY (WGB) Trading conditions remain challenging. while several specialist Company description Walker Greenbank is a vertically integrated producer and distributor of high-quality wallcoverings and furnishing fabrics. enabling high-throughput quantitative analysis. genotyping.000 genes using sensitive quantitative PCR. However.0) (37. Multi-sample 384-well capabilities are now available (at an extra $75k).6 2009A 2010A 2011E 2012E * % Relative to local index Analyst Nigel Harrison 118 2 December 2010 .5) (10. cash of $1.5 5.9 5.2 (20.6 3m 10.29 3.4 12m 117. H1 results showed revenues of $822k. the group's manufacturing operations have responded to restructuring and are benefiting from the operational gearing impact on improved demand.5 EBITDA (£m) 5. including prestigious universities such as Pittsburgh Medical Centre. Each chip tests 1. cell biology and stem cell research for the life science and pharmaceutical industries.2 4.41 Market cap: US$58m Forecast net cash (US$m) 1.1) (31. The focus is now on working with these lead customers to develop strong applications that use SmartChips as these will drive sales and volumes in subsequent years.3 P/CF (x) 6.6 96.6 12.184 genes in one sample Company description WaferGen Biosystems Inc.9) 12m (21. We have raised our estimates again following a positive trading statement earlier this week.9) 2008A 2009A 2010E 2011E * % Relative to local index Sector: Pcare and household prd Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 40. Two gene expression profiling SmartChips were launched on 10 June: a cancer pathway chip and a miRNA chip (miRNA are gene regulatory molecules).4 12.0) (10. Kyoto and Ghent and a distribution deal with Takeda Rika Kogyo in Japan.2 2.8) (5.6 0. Many brands have failed to grow.8 Forecast gearing ratio (%) N/A Market OTC Share price graph (US$) WaferGen (WGBS) INVESTMENT SUMMARY WaferGen has launched its SmartChip system with 11 early-access customers. especially in the US and continental Europe.9 2.0 6.1 7. The balance sheet is strong and overheads have been reduced.0) (10.0 71.5m and operating loss of $5.07 5. Leading brands include Zoffany. success is being delivered delivered by operators able to differentiate themselves from competition by consistently offering innovative and high-quality design and products. manufacture and sale of state-of-the-art systems for gene expression.4 68.4 1.7) (26.0 PBT (£m) 3.4) EPS (c) (33. Q3 results were in line with forecasts.4 4. Manufacture for the volume segment of the market has largely moved overseas.7 60. INDUSTRY OUTLOOK The $150k SmartCycler RT-PCR system and SmartChip tests for 5.

7 1.0 5.9 1.6 4.000 shares at 25p/share.5 7.1 11.8) (9.Edison Insight Sector: Support Services Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 20.2 13.5 3.99 €92m 2.3 PBT (£m) 0.0) (12. along with close protection services and training. UK and overseas customers.2) EPS (c) (167.5 EBITDA (€m) (20. which should put it in a strong position to license Mesupron.4) (133.1 N/A AIM Westminster Group INVESTMENT SUMMARY (WSG) In October.5) (24.49% of the enlarged share capital. While there is near-term forecast risk due to the lumpy nature of contracts. The financial model has not yet been updated to reflect the acquisitions. hence the need for a fundraising. with development potential in most solid Company description WILEX is a biopharmaceutical company listed on the Frankfurt Stock Exchange. while providing flexibility to pay-down debt if necessary.5 0. WILEX's cash remains lean.8p £5m 2.2 1.9 10. but a €20m equity line and the cornerstone shareholding of Dievini Hopp (35.6 P/E (x) 13.0 EBITDA (£m) 0.8 3.4) Revenue (€m) 3.2 12m 14. Y/E Dec Price performance % Actual Relative* 1m (9.6) (25.9) (12. We feel the combination of Westminster's focus on security.2 0. INDUSTRY OUTLOOK Mesupron is an orally-available anti-metastatic drug.9 26.7) (34.5) (25.2 EPS (p) 1. the interim analysis of which is now in prospect for mid-2011. for which no product is currently approved. tumours.3) 12m (34.1) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Robin Davison 2 December 2010 119 . This will be used to deliver further growth. as well as a 24/7 alarm receiving centre and control room. The balance comprises the provision of close protection services and training. Rencarex is targeted at adjuvant treatment of non-metastatic kidney cancer. we feel that if the group converts a small proportion of enquiries it could well outperform over the coming years.8 P/CF (x) N/A N/A 5.9 (0. which we believe will remain robust.5) (24. Rencarex is the leading product in development for this specific indication. INDUSTRY OUTLOOK Westminster is an established niche player providing advanced technical security solutions to Company description Westminster is predominantly an established niche player in the provision of advanced technical security solutions.3 * % Relative to local index Analyst Roger Johnston Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (€m) Forecast gearing ratio (%) Market Share price graph (€) €4. a core activity that represents two-thirds of turnover.1) (40.9 5. Y/E Nov 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m 2.1) 3m (5. representing 16. Westminster announced it had raised £1m from a new strategic investor through the issue of 400.4) (93. would enable WILEX to capture the value uplift associated with a positive result in the ARISER study. This.7 N/A FRA WILEX (WL6) INVESTMENT SUMMARY WILEX’s recent acquisitions of Heidelberg Pharma and Oncogene Science have created a larger entity and should pave the way for a fundraising. Its aim is to develop drugs and diagnostic agents with a low side effect profile and targeted treatment of different types of cancer as well as for early detection of tumours.1 0.1 1.0) PBT (€m) (20.2 0. increasing level of enquiries and international focus provides substantial growth opportunities.5 1.1 (6.5) 2008A 2009A 2010E 2011E Revenue (£m) 5.7%) ensure its financial position.6) 3m 16.5) (137. in turn. following surgical removal of the kidney.0 1.

2 39. Our current valuation of 235p is based on a conservative 50% chance of success.0 42. Demand from the Company description Xaar designs and manufactures inkjet printheads.0 26.9) (1.5 12.2 12m 145.4 EBITDA (£m) (0.8 8.5 N/A FULL Xaar (XAR) INVESTMENT SUMMARY As a pivotal figure in the global transition to digital printing.6) (2.5p £422m 23.5) (0.0 0.1 2008A 2009A 2010E 2011E Revenue (£m) 0.9 * % Relative to local index Analyst Dan Ridsdale Sector: Oil & Gas Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 274.1 8. All eyes are currently on the 9/3b-6 well flow test with results due in the first week of December.0 5.3 P/CF (x) 26.8) (0. Its Platform 1 products are used primarily for outdoor advertising.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 226.6) 20. The ceramics market is embracing the technology most aggressively at present but the range of potential applications is broad. If successful. We believe our 19p EPS estimate for 2013 is conservative.5 71.0 5.9) 30.5 5.0 57. Platform 3 widens the addressable market to include industrial. Success with Bentley could make it one of the North Sea’s largest independent players.6 PBT (£m) 2.8 EPS (p) (0. Y/E Dec Price performance % Actual Relative* 1m 70.9 24. labelling and other applications. which is focused on the exploration and development of heavy oil resources in the North Sea on the United Kingdom Continental Shelf. and its is not until 2013 that we will see a full year's financial benefit from the £22m investment in capacity expansion.6 P/E (x) 75.1 52. through developing its Bentley field. Xcite plans a unique alliance financing structure to both incentivise partners while retaining a 100% WI. The opportunity for the P3 products looks significant.5 EBITDA (£m) 6.2 P/CF (x) N/A N/A N/A 17.0p £162m 21.2 10. This opens up significant incremental revenue streams for Xaar. ceramics market is the primary driver.6 PBT (£m) (0. The 2011 rating is a premium. INDUSTRY OUTLOOK The market for Xaar's P1 printheads (used in outdoor advertising and case coding) looks relatively stable. with full field development to follow by 2014. XEL expects to move to first-stage production by end-2011.2 14. Management is understandably careful regarding newsflow but has indicated the potential for resources to be higher than the current view of 160mmboe.8 3m 302.9 536.0 72.3 45.2 EPS (p) 3. where manufacturers are looking to make significant investments in expanding their digital production capacity.8 P/E (x) N/A N/A N/A 13.8) (0. but virtually all capacity for this year has already been allocated.4) (0.5 * % Relative to local index Analyst Ian McLelland 120 2 December 2010 .9) (0.9 12m 603. INDUSTRY OUTLOOK Company description Xcite Energy is an oil exploration and development company.2 248.8 7.0 0.6 N/A AIM Xcite Energy INVESTMENT SUMMARY (XEL) Xcite's strategic aim is to become a significant heavy oil producer in the North Sea by 2014.8 2.7 18. Y/E Dec Price performance % Actual Relative* 1m (3.7 122. we would expect this to increase significantly in the event of a successful flow test and an indication of increased reserves.9) 30. Xaar’s growth story should have a long way to run.9) 3m 52.0 66.0 2008A 2009A 2010E 2011E Revenue (£m) 42.

Phase I/II data from Incyte/Novartis’s twice-daily JAK1/2 inhibitor INCB18424 is promising.0) (23.5 0.6 P/E (x) 28. Nimotuzumab has shown a reduced incidence of side effects common to Erbitux and Vectibix: a potential competitive advantage.2 2009A 2010A 2011E 2012E * % Relative to local index Analyst Lala Gregorek 2 December 2010 121 . INDUSTRY OUTLOOK Anti-EGFR MAb Vectibix failed in first-line head and neck cancer. this and the recent ESH poster on CYT387's comparative profile may stimulate partnering interest. XP received planning permission for the Vietnam facility last month. Europe and Asia. service and sales teams across the US.5 EPS (fd) (p) 34.5 Forecast gearing ratio (%) N/A Market TSX Share price graph (C$) YM BioSciences INVESTMENT SUMMARY (YM) CYT387 is the most advanced unpartnered JAK1/2 inhibitor in development.0 8. Healthcare equipment manufacturers are reporting bookings growth and improving book-to-bill ratios after many quarters of weak bookings.0p Market cap: £193m Forecast net debt (£m) 18.6m provides a runway into 2012. Clinical data for potential best-in-class EGFr inhibitor nimotuzumab is also expected this year and may trigger deal activity/further development.8 PBT (£m) 8.Edison Insight Sector: Electrical Equipment Price: 1003.1) (1.4 EBITDA (C$m) (12.8) (24.9) (28. Consequently.2% in FY11.8 30. Cash of C$45. Erbitux.9) (16.3) 3m 35. an indication dominated by Company description YM BioSciences is an oncology-focused business developing compounds licensed from academia and acquired through company takeovers.3 67.8 24.7 15.0 EBITDA (£m) 10.5 74. We upgraded our revenue.1) (26.4 P/CF (x) 20.9 11.3 49.6 17.1 13.9) PBT (C$m) (11.6) (17.8 40.2) (23. although business development may bring in further funds.8 Price performance % Actual Relative* 1m (2.0 Market FULL Share price graph (p) XP Power (XPP) INVESTMENT SUMMARY XP's 4 October IMS confirmed that the company continued to see robust trading through Q3 with business strong across the board.2 132.3% in FY10 and 7. which should enable construction to begin by year-end as planned. Its stock is listed on Amex and the Toronto stock exchange. earnings and dividend forecasts to reflect the strong order backlog: EPS was boosted by 7.6 95.4 2008A 2009A 2010E 2011E * % Relative to local index Analyst Katherine Thompson Sector: Pharma & Healthcare Price: C$1.4) 3m 30.6 15.7) EPS (c) (20.6 12m 46. while the industrial sector is starting to show signs of improved activity. the company guided to higher revenue growth for FY10 (at least 30% y-o-y) and raised the Q3 dividend.8 66.3) (20.7 12m 157. with more detailed results to be presented at ASH on 6 December.3) (20. Initial data from the Phase I/II MPN study has been positive.6 9. The three end-markets supplied by XP are showing differing rates of recovery.0 11. XP continues to gain market share as customer programmes based on recently launched products ramp into production. INDUSTRY OUTLOOK Company description XP Power is a developer and designer and manufacturer of power control solutions with a production facility in China and design.2 14.6 3.3 87. Y/E Dec Revenue (£m) 69.5 2.0 Forecast gearing ratio (%) 44.8 15. although preclinical data review suggests CYT387 has comparative potency but with potentially an improved therapeutic window and dosing.6) (17.6 20. Technology customers have rebounded strongly after a dismal 2009.1) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (14.82 Market cap: C$147m Forecast net cash (C$m) 18. Y/E Jun Revenue (C$m) 4.2 18.

0 12m (10.5 3m 15.3 44.1 EPS (p) 2.5 57.3 2. with both GfK and Synovate reporting revenues over 10% ahead.5 4. The Harrison acquisition has given a step up to building the scale needed to tackle the key US market. Y/E Jul Revenue (£m) 44.7 PBT (£m) 3.8 N/A AIM YouGov (YOU) INVESTMENT SUMMARY YouGov is now back on a growth trend after a difficult couple of years. is still brittle.4 6.5 3.3) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Fiona Orford-Williams 122 2 December 2010 .4 6.6 12. though improving. pioneering the use of the internet and information technology to collect high quality. INDUSTRY OUTLOOK After discovering that it was not.8 3.0 6. with the new CEO focusing on building on the group’s core strengths.9 19.1 8. WPP's Q3 statement also talks of the need to focus on "the application of technology and analysis of data. reflecting past disappointments.9 12. to the benefit of our clients and people". The rating is at the bottom of the range of peers. in fact. immune from economic factors.3 9.3 3. the industry is showing gentle recovery. There has been a little M&A. in-depth data for market research and stakeholder consultation. Company description YouGov is a professional research and consulting organisation.7) (19. IMS) and much noise around the development of opportunities in social networking. which can be rolled out across territories.Edison Insight Sector: Media & Entertainment Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 45. Buyers’ and providers’ confidence. Investment in a technology platform and new products is providing a credible portfolio of real value to the corporate market. mostly earlier in the year (Ipsos/OTX.6 Price performance % Actual Relative* 1m 11.7 P/CF (x) 8.2 52.8p £44m 17.9 P/E (x) 19.1 11.1 EBITDA (£m) 3.1 6.8 4. providing greater consistency.8 5.

Date Monday 6 December Company Alternative Networks Treatt Plastics Capital Sirius Real Estate Tricorn Group HarbourVest Partners Tuesday 7 December Andor Technology Innovation Group Pressure Technologies Southern Cross Healthcare Group Victrex Bglobal Brulines Group Daisy Group Focus Solutions Group NewRiver Retail Ltd (Reg S) Cloud computing roundtable HarbourVest Partners Wednesday 8 December ATH Resources MedicX Fund International Greetings Kesa Electricals Micro Focus International Stagecoach Group HarbourVest Partners SQS Software Quality Systems Matchtech Thursday 9 December Caretech Holding Titon Holdings Ashtead Group DS Smith HMV Group Park Group Photo-Me International HarbourVest Partners Management Consulting Group Friday 10 December Ocean Power Technologies Polar Capital Holdings AssetCo Spice Edison event. London Finals Interims Event Finals Interims Edison event. Leeds/Manchester/Liverpool Edison breakfast. South West Interims Monday 13 December Interims 2 December 2010 123 . If you would like to attend an Edison investor event. Glasgow/Manchester Edison event. London Edison event. London Finals Interims Edison breakfast. Edinburgh Finals Interims Edison event. London Edison event.Edison Insight Events diary Listed below are the expected dates of forthcoming events commencing Monday 6 December 2010. please contact Celine Saikali on 020 3077 5702.

Edison Insight Date Tuesday 14 December Company 2 ergo Group Domino Printing Sciences Infrastrata Renovo Group RWS Holdings Carpetright European Nickel Imagination Technologies Group Private and Commercial Finance Group Scott Wilson Event Finals Interims Wednesday 15 December eXpansys Supergroup Sports Direct International Interims Thursday 16 December Interims Friday 17 December Jersey Electricity A Shares Alpha Strategic Finals Interims 124 2 December 2010 .

Edison Insight Company 4SC Aberdeen New Thai Investment Trust Ablon Group Ablynx Acencia Debt Strategies ACM Shipping Group Active Energy Group Addex Pharmaceuticals ADX Energy Agennix AG Ai Claims Solutions Algeta Alkane Resources Allergy Therapeutics Allied Gold Allocate Software All Star Minerals Alpha Strategic Altona Energy Anglesey Mining Animalcare Arbuthnot Banking Group Ariana Resources Ark Therapeutics Arian Silver Armour Group Ashley House Asian Growth Properties Augean Aurizon Mines Avon Rubber Baobab Resources Bellzone Mining Bezant Resources Biocompatibles Biome Technologies Bionomics Biotie Therapies Corp Blackthorn Resources Blue Star Capital BrainJuicer Brewin Dolphin Brady Brightside Group British Polythene Industries BTG Burst Media Byotrol City Natural Resources ClearStream Technologies Group Coal of Africa Consort Medical Cyan Holdings Daisy Group DDD Group Deltex Medical Dexion Commodities 2 December 2010 Sector Pharmaceuticals & Biotech Investment Companies Property Pharmaceuticals & Biotech Investment Trusts Transport Electronics & Electrical Equipment Pharmaceuticals & Biotech Oil & Gas Pharmaceuticals & Biotech Financials Pharmaceuticals & Biotech Mining Pharmaceuticals & Biotech Mining Technology Mining General Financial Mining Mining Support Services Financials Mining Pharmaceuticals & Biotech Mining Electronics & Electrical Equipment Property Property Support Services Mining Aerospace & Defence Mining Mining Mining Pharmaceuticals & Biotech Engineering Pharmaceuticals & Biotech Pharmaceuticals & Biotech Mining Financials Media Asset Management Technology Financials General Industrial Pharmaceuticals & Biotech Media & Entertainment Basic Industries Investment Companies Pharmaceuticals & Biotech Mining Pharmaceuticals & Biotech Technology Technology Technology Pharmaceuticals & Biotech Investment Companies Most recent note Outlook Investment Trust Review Update Update Outlook Review Update Update Flash Update Update Review Outlook Outlook Update Update Outlook N/A Outlook Update Review Update Outlook Update Update Update Update Update Flash Note Update Update Update Update Update Review Flash note Review Review Update Update Review Update Update Outlook Flash note Review Review Outlook Investment Trust Review Outlook Update Update Flash Update Update Update Investment Trust Review Date published 18/11/10 07/05/10 21/09/10 22/11/10 22/11/10 01/12/10 02/11/10 16/09/10 05/11/10 22/10/10 29/09/10 17/08/10 23/07/10 15/11/10 07/09/10 10/08/10 11/11/09 N/A 04/10/10 04/11/10 25/10/10 04/11/10 03/08/10 01/12/10 12/11/10 01/12/10 05/10/10 31/03/10 29/09/10 11/11/10 24/11/10 12/11/10 23/11/10 27/09/10 09/09/10 05/11/10 17/11/10 03/11/10 25/10/10 30/06/10 05/10/10 04/10/10 29/11/10 12/05/10 16/11/10 26/11/10 01/11/10 23/11/10 29/09/10 24/11/10 13/09/10 20/10/10 11/11/10 01/12/10 28/09/10 22/09/10 09/06/10 125 .

Edison Insight Company Dillistone Group DouglasBay Capital Eastern Platinum Ebiquity Eco City Vehicles Electrum Resources EMED Mining Empresaria Group Entertainment One Epistem Holdings Evolva Evotec Ferrexpo Fiberweb Forum Energy Fronteer Gold Frontier Mining Gartmore Fledgling Trust Gartmore Global Trust Gartmore Growth Opportunities Gartmore Irish Growth Fund Gasol GB Group GMA Resources Gold One Goldplat Gulfsands Petroleum GW Pharmaceuticals Helius Energy Hightex Hogg Robinson Group H R Owen Hybrigenics i-design Idatech IFG Group ImmuPharma Innovation Group IQE Ironwood Gold IS Pharma Is Private Equity Is Yatirim Menkul Degerler Ithaca Energy K3 Business Technology Group KBC Advanced Technologies KCOM Group Kopylovskoye Landkom International Leni Gas & Oil Lifeline Scientific Lincat Lombard Medical Technologies Lonrho Lookers Low & Bonar LSL Property Services 126 Sector Technology Investment Companies Mining Media General Retailers Natural Resources Mining Support Services Travel & Leisure Pharmaceuticals & Biotech Pharmaceuticals & Biotech Pharmaceuticals & Biotech Mining Basic Industries Oil & Gas Mining Mining Investment Companies Investment Companies Investment Companies Investment Companies Oil & Gas Technology Mining Mining Mining Oil & Gas Pharmaceuticals & Biotech Electricity Construction & Building Materials Support Services General Retailers Pharmaceuticals & Biotech Media Alternative Energy Financials Pharmaceuticals & Biotech Technology Technology Mining Pharmaceuticals & Biotech Investment Companies General Financial Oil & Gas Technology Technology Electronics & Electrical Equipment Mining Food Producers Oil & Gas Pharmaceuticals & Biotech Engineering Pharmaceuticals & Biotech Investment Companies General Retailers Construction & Building Materials Property Most recent note Review Update Update Update Flash Update Update Update Update Update Outlook Update Update Update Flash Update Update Investment Trust Review Investment Trust Review Investment Trust Review Investment Trust Review N/A Update N/A Update Update Update Review Outlook Update Flash Note Flash Note Outlook Update Update Outlook Update Flash Note Update Outlook Update Update Update Update Update Update Update Outlook Update Flash note Outlook Update N/A Update Outlook Outlook Update Date published 24/09/10 30/11/10 16/11/10 23/07/10 17/11/10 01/12/10 26/05/10 05/10/10 17/11/10 16/03/10 22/11/10 16/08/10 10/08/10 25/10/10 25/11/10 17/11/10 29/10/10 05/11/10 30/09/10 21/04/10 17/08/10 N/A 30/11/10 N/A 27/10/10 23/09/10 04/11/10 30/11/10 16/09/10 20/09/10 30/11/10 08/09/10 19/10/10 18/10/10 06/10/10 22/09/10 25/10/10 09/09/10 05/10/10 10/06/10 12/10/10 12/10/10 23/11/10 22/11/10 18/11/10 07/10/10 25/11/10 21/10/10 25/11/10 01/10/10 11/05/10 12/08/10 N/A 11/12/09 09/11/10 28/10/10 05/11/10 2 December 2010 .

Edison Insight Company Matchtech Group Maxima Holdings MDM Engineering Group Medcom Tech MedicX Fund Limited Merchants Trust (The) Merrion Pharmaceuticals Mondo TV Molins Monitise Nautical Petroleum Nevsun Resources Newmark Security NeuroSearch Next Fifteen Communications NextGen Sciences Nexus Management Nighthawk Energy Nkwe Platinum Northern Petroleum Omega Diagnostics Group Oncolytics Biotech Inc Oracle Coalfields Oxford BioMedica Paion Panmure Gordon Patsystems Pharming Group Phytopharm Praesepe Primary Health Properties ProMetic Life Sciences Proximagen Neuroscience Psion Public Service Properties Investments QinetiQ Randall & Quilter Range Resources Redhall Group Red Rock Resources ReGen Therapeutics Renewable Energy Generation Rockhopper Exploration RPC Group Sarantel Group Sceptre Leisure SciSys SeaEnergy Securities Trust of Scotland Seeing Machines Share plc Sigma Capital Group Sirius Exploration Sirius Real Estate SkyePharma Sosei Group Corporation Sportingbet SQS Software Quality Systems AG 2 December 2010 Sector Support Services Technology Mining Pharmaceuticals & Biotech Property Investment Trust Pharmaceuticals & Biotech Media Engineering Technology Oil & Gas Mining Support Services Pharmaceuticals & Biotech Media Pharmaceuticals & Biotech Technology Oil & Gas Mining Oil & Gas Pharmaceuticals & Biotech Pharmaceuticals & Biotech Mining Pharmaceuticals & Biotech Pharmaceuticals & Biotech Financials Technology Pharmaceuticals & Biotech Pharmaceuticals & Biotech Travel & Leisure Property Pharmaceuticals & Biotech Pharmaceuticals & Biotech Technology Property Aerospace & Defence Financials Oil & Gas Engineering Mining Pharmaceuticals & Biotech Electricity Oil & Gas Basic Industries IT Hardware Travel & Leisure Technology Alternative Energy Investment Companies Technology General Financial General Financial Mining Property Pharmaceuticals & Biotech Pharmaceuticals & Biotech Travel & Leisure Technology Most recent note Outlook Update Update Review Update Investment Trust Review Update Update Update Outlook Update Update Outlook Review Outlook N/A Update Flash Note Update Flash note Flash note Update Update Outlook Update Outlook Review Update Update Update Update Update Update Outlook Update Update Update Outlook Review Update N/A Outlook Update Flash Note Update Outlook Review Update Investment Trust Review Review Update Update Update Update Outlook Update Update Review Date published 13/10/10 12/08/10 13/10/10 22/11/10 15/11/10 24/09/10 19/11/10 17/11/10 26/10/10 16/02/10 29/10/10 15/07/10 26/07/10 19/10/10 19/10/10 N/A 06/10/10 21/10/10 15/10/10 12/11/10 17/11/10 23/06/10 27/09/10 26/08/10 25/11/10 30/11/10 27/07/10 01/12/10 25/06/10 15/07/10 10/11/10 20/10/10 06/08/10 22/11/10 22/09/10 24/11/10 14/10/10 15/06/10 15/06/10 22/09/10 N/A 26/10/10 10/06/10 01/10/10 13/10/10 28/10/10 05/10/10 20/05/10 22/11/10 21/10/10 01/11/10 30/09/10 20/08/10 26/10/10 09/04/10 26/05/10 24/11/10 09/09/10 127 .

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