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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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there is a risk that these encouraging results patterns may not prove sustainable.2%. favouring diversified growth (basic materials) and high cash returns (telcos. namely a lack of suitable policy instruments to manage the ongoing painful process of deleveraging across the developed world. exogenous shocks (from eurozone sovereign debt crises to agricultural product price hikes via hints of war in Korea) and the resort to tired. We continue to expect equities to trade within a relatively narrow band. A review of the latter suggests the same familiar problems beset the global economy. with pronounced swings both to the downside and upside. How long such a process may take remains fully to be seen. and finds itself up just 6. labour markets need more structural reform and the euro probably needs to go. Looking ahead to 2011 we consequently see no reason to change our current equity strategy. These factors have somewhat masked a recent improvement in corporate earnings. it is hard to see how the next 12 months will be markedly different. As we have written previously. tried and tested policies (QE II) have all seen our thesis broadly borne out. utilities) principally at the expense of the consumer and financials sectors. where investors would “most likely gain distinction through differentiation”. Further volatile dislocations may have to come before confidence can return fully. Inconsistent macro and micro data. In reality. the All-Share has oscillated in a range of 2485-3033. A broadly similar pattern has been repeated in other global indices. At present. what this may imply is more pain: fiscal austerity needs to be combined with monetary loosening. 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. Stagnating growth and rising inflation represent other concerns. it may be difficult for equities to break out of their relatively range-bound trading patterns. Gold also remains highly attractive in our view. and surprises/disappointments along the way will undoubtedly create investment opportunities. 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 . Set for a repeat One year ago in our December 2009 Equity market overview and strategy. Edison Investment Research May/10 VIX Looking ahead. is still more than double where it has traded for much of the mid-2000s. a particularly disappointing performance when one considers the positive effect that should have been accorded by interest rates being effectively at zero. while down almost fourfold from its Lehman spike. volatility (measured by the VIX index). but as fundamentals move back to dominate. 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. 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.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. With but a month of the year remaining.

our more specific concerns relate to the fact that the Fed may be overestimating by how much and how fast unemployment can fall. 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. increasing policy (re)application also runs the inevitable risk of suffering from diminishing returns. However. with the All-Share having since declined by 2. a level last seen before the collapse of Lehman Brothers in September 2008. However. After the initial excitement of QE II. 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. As we have written previously. the All-Share crossed the 3. and inflation seems to be on the rise almost everywhere. 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. 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. and even Belgian) spreads relative to the Bund have continued to widen. At the most basic level. Greece recently announced that its 2 December 2010 3 . but most crucially relate to sentiment/ reality centred on quantitative easing and the future of the Eurozone. suggesting that the US (and much of Western Europe) is still on a long and painful journey. it may take as long as four years following the end of a recession for unemployment to return to pre-recession levels. Given the challenges that QE II may face combined with the possible stagnation of the global economy. we do not discount the possible launch of QE III at some stage in 2011. Trading patterns in the last month demonstrate just how quickly sentiment can change. but also most economists appear in agreement that they have little idea whether a second round of quantitative easing will actually work. there has been no consolidation of these gains. 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.Edison Insight Germany and France.000 mark. The day after America’s second round of quantitative easing was announced (4 November). 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. 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. Furthermore. a risk that will only be exacerbated by unresponsive policy-making from other recalcitrant nations. With regard to the eurozone. 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. up 22% from its July low and with a rise of c 10% from the start of the year. Not only is QE II an untried policy that “smacks of desperation” (according to the Lex column in The Financial Times. 2 November). concern over these matters has also clearly overlaid emerging signs of slowly improving corporate earnings. the gloss seems to have worn off remarkably quickly. but also by the high degrees of scepticism voiced by central bankers from a number of nations. According to economic analysis by the IMF. industrial output has shown signs of stalling in China and India. Putting this factor to one side.6% and November having seen more ‘down’ trading days than the inverse. These oscillations (a repetition of the trends seen for most of 2010) have been a function of several factors. Spanish (as well as Italian. the main engines of the eurozone.

Investors in these five names have been rewarded by an average share price return of 20. Next) as well as some global industrial players (e.40 1.15 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. 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. Our strategy pertains to one of stock selection. 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. while the gap between those firms raising guidance relative to those cutting stands at its highest since 1999 according to Bloomberg. may also be likely further undermined going forward by rising inflation. As positive as this trend is surprising. GSK. has been the strength in recent corporate earnings. 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.30 1. Compass Group. There is only a finite amount of cost-cutting and leverage gains companies can bring to bear in the absence of top-line growth. 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). Over 75% of US companies reporting in Q3 exceeded consensus expectations. particularly in the face of weak growth. a similar picture has occurred with firms as diverse as Barclays.2% year-to-date (some 14 points ahead of the All-Share). Burberry and BT all having recently surpassed expectations when reporting results.6%) and it has already begun to fall behind with its repayments to the EU/IMF. we are forced to question the sustainability of such recent strength. A number of consumer-facing businesses in particular (e. In the UK. Even if we are incorrect in this thesis. combined with a mean dividend yield of 3. our concerns relate to sustainability. 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.4%.25 1. Revenue improvement. for example.Edison Insight public debt (at 15.g. Marks & Spencer.55 1.50 1. Aggreko. such as it is.g.45 1. While it is hard to predict how events will ultimately play out. it is fair to contend that investors will likely have to endure further bouts of substantial volatility. Beyond such best-in-class businesses. 4 May/10 2 December 2010 Nov/10 Jan/10 Jun/10 Feb/10 Mar/10 Oct/10 Apr/10 Jul/10 . spreads on bond yields continue to rise and the euro weakens. but also that failure becomes a self-fulfilling prophecy. In the interim.35 1.20 1. 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. it appears that investors have had some tendency to overlook better performance amid macroeconomic tumult.4% of GDP) was higher than previously disclosed (13. as mentioned previously.

Edison Insight After the robustness of the Q3 reporting season. telcos. inherent scarcity value and a hedge against either inflationary or deflationary scenarios. particularly since our central thesis is for further volatility. up from 6.9% on a year-to-date basis. We therefore continue to advocate the adoption of a ‘bar-bell’ approach. As we discuss in more detail below. On a year-todate basis. World Bank President. the All-Share has outperformed the Euro Stoxx by 8. at least for the early part of 2011. Trading patterns from the last month have served only to reinforce this thesis. we continue to stress the merits of gold. with the relative gains between these indices having widened in the last month. While the UK’s performance can hardly be described as satisfying. Exhibit 3: Gold has been a significantly better investment than equities in the last 12 months Note: Rebased to 100. The precious metal hit a 52-week high on 9 November while it has outperformed the MSCI Global equity index by 20. 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. utilities and healthcare. while also continuing to keep a high focus on defensives. We reiterate our view that this remains an attractive asset class with no counterparty risk. Additionally. In the last month. with a similar pattern repeated between the FTSE-100 and the Euro Stoxx 50. this leads us to an overweight stance in basic materials. On a three-year view. the disparity in index performance has. As in previous months.7 percentage points. balanced with underweights in the consumer and financial space. 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. Again. Robert Zoellick. with the German market (DAX30) having outperformed the Spanish 2 December 2010 5 Oct/10 Apr/10 Jul/10 .5 points a month ago. some 40% above current levels. while an equal number of the market sectors we track have gained relative to declined in value (see Exhibit 8 below). As a result.8% despite having hit a 52-week high on 9 November. however. further stoking positive sentiment. we see here some risk for disappointment. the number of positive and negative trading days have been roughly equal (down days have won out slightly). we are also concerned that there may perhaps be undue optimism levels ahead of the impending fourth-quarter reporting season. Put simply. we see limited reason for changing our theoretical asset allocation strategy. we believe it could reach $2. the next two months will also likely see companies issuing guidance for 2011 for the first time. we favour emerging over domestic growth and place a high emphasis on free cashflow/dividend generation. combining some sectors/stocks that would benefit from any move towards the risk trade. been most notable between perceived ‘safe’ and ‘failing’ eurozone nations. has also recently suggested the return to a modified gold standard. With internal planning and budgeting likely to complete soon. domestic investors can at least take comfort from the fact that the FTSE-100 and the All-Share have comfortably outperformed their European counterparts. at the risk of repetition (from previous editions of Insight).000/oz. with the All-Share having traded down 0.

0 10. 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 12.1) La s t thre e months 10.3 15.9 4. over 10 points better than the AllShare.4 19. a negative indicator. the unemployment rate remains stuck at 9. but has fallen in the last month. Moreover. 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. Edison Investment Research Outlook: Six key questions for 2011 As inevitable as it is topical.8 1.7 3.5) (5.000 jobs having been created in the last month. were it not for the strength of the DAX. 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. While this does not suggest that the global economy will return to recession any time soon.7 9. and where The Economist forecasts a slowdown in 2011 GDP to 2. with inventories rising faster than new orders.6 5.6% despite 151. and with output set to decelerate.5) Source: Datastream. We see good reason for such trends to continue and. risks logically seem weighted on the downside.6 (11. having gained 15.6) (7.2 10.8 8 .3 2.Edison Insight bourse (IBEX35) by over 15 percentage points. durable goods orders have declined for two of the last three months. the largest increase since May.2 (7. the spread between these two indices has exceeded 40 points. Data released by Eurostat since the last edition of Insight highlighted a slowdown in eurozone GDP growth in Q3 to 0. In the US (still the world’s largest economy.3 7. we remain sceptical about whether a slowing growth scenario is fully discounted. Below is a (non-exhaustive) list of considerations we feel important. The picture is little different elsewhere in the developed world.7) (2.2) (2.2 5.3% drop comparing to a 5.9 4. 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. The ISM index remains above 50.7 6. 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.4 8 .0 7.0% reading for Q2). Returning to the UK.0 (20.3 7.2) 3. Despite record post-reunification confidence levels and employment rates in Germany. The robustness of the DAX is notable.1 11.0 5.1) (9.0 2.6 La s t s ix months 12. 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.4% (against a 1. the health of the global economy will be crucial to these gains being maintained going into 2011. Meanwhile.8 ) (4.6) 0. the rate of GDP growth 6 2 December 2010 .3% relative to the estimated 2.6% for 2010). On a 12-month basis.0 (18 .7 (2.0) (14.5% rise the previous month.7 La s t 12 months 9.0% year-to-date.2) 2.5 12. Current data points from around the world are also far from encouraging.1 10. As we discuss in more detail below.0 5.8 (4.6) La s t month (0.5 2.3 22.8 ) (3. with October’s 3. then the Euro Stoxx’s performance would likely be notably worse.7) (0.3) 15.

there is the issue of timing – how quickly will it happen. Despite robust manufacturing growth (at its fastest in the last 16 years according to figures released on 1 December). and second. as the economies of Brazil. that significant unused capacity exists in the economies of the developed world (see output gap data in Exhibit 5 below). the reality is more complicated: first. unemployment stands at over 10. will all countries benefit equally. Russia. India and China necessarily continue to industrialise and modernise. Exhibit 5: 2011 GDP estimates point to a slowdown. With regard to the output gap. Furthermore. More broadly. and. The current rate of growth in manufacturing may not be sustained.8% decline compares to a 5.1%. The OBR has also recently (29 November) trimmed its UK GDP estimates both for 2011 and 2012. The developing world may be able to help the western world through some of its transition. Edison Investment Research When does the BRIC bubble burst? Few doubt the structural case. it needs to be combined with fiscal reform.3% to 0. higher than it has been in 12 years and also above levels in either the US or the UK. combined with an absence of aggressive exchange rate devaluations.1% rise for the previous month) and. OECD.7% unemployment rate. which would logically eat-away at improved production. then it will also likely result in higher inflation. the UK can draw little comfort from its 7. 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. Both assumptions may be called into question. 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 . Even if QE II in the US does bring better growth (the expectation). However. a view endorsed by the Bank of England’s latest report (10 November) which states that “growth may slow in the near-term”.7%) and Germany’s relative success cannot mask the broader challenges besetting the eurozone. closing it requires efficient and coordinated policy stimulus. It is still rising in 19 of the EU’s member states and stands at above 20% in Spain. most notably. 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. it seems unlikely that a consensus will emerge regarding coordinated fiscal and monetary policy. QE II alone may not deliver an improved performance. Optimists premise their better-growth outlook on two factors: first. With unemployment rates still stubbornly high. that deteriorating western world growth trends may be offset by robust emerging market patterns. with a now divided legislature. The Economist. there is also a strong case for labour market reform. Industrial new orders are dropping (September’s 3. even if there will likely be political stability in the world’s major developed economies in 2011 (no general elections are scheduled).Edison Insight over the last quarter shrank by more than threefold (2. next. remains to be seen.

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

it is unlikely to be a panacea for equity markets in our view.5% 8 . with retail sales growth currently slowing (according to the ONS).0% 2. and in common with the consumer space. 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. but it will take time for the evidence on this to become clear. both factors that will likely be compounded by the still-unknown consequences on ongoing eurozone sovereign debt exposure. The implementation of Basel III regulation is another risk factor. discussed earlier) has been the financial sector. Turning to media.5% 5. reinforcing our negative stance on these sectors. with the output gap failing to close. From an investment perspective.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. 2011 will be see the negative impact of a lack of super-quadrennial events and therefore limited scope for upside potential to estimates. Edison Investment Research Wither the consumer? The consumer matters. therefore. being responsible for more than 60% of GDP in the UK and over 70% in the US.0% 3. we see negative implications for other sectors under the consumer umbrella. Even if the current environment does favour M&A (companies might logically look to ‘buy’ growth if they are unable to generate it organically). Our concerns relate to excess leverage and insufficient liquidity within the financial system. Stagflation remains the worst of all possible worlds. 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. with the full impact of October’s spending cuts (and job losses) still to come combined with January’s increase in VAT. Next and Sainsbury’s are already warning of the consequences. With regard to the former. Among the retailers. The indicators are negative. 2 December 2010 9 Aug/10 Feb/09 Jun/09 Oct/09 Apr/09 .5% 6. rising prices and high unemployment. Marks & Spencer. In the UK specifically. but also to the effect from a high oil price combined with ongoing capital intensity requirements. we find it hard to construct a positive case for the year ahead. highly contingent on the strength of domestic consumption. and the Nationwide’s consumer confidence index at 53 for October. Additionally.0% 6.0% 0. How the economy performs is. In the meantime – and also. Exhibit 6: UK inflation and unemployment trends suggest stagflation may be coming Inflation 4. VAT rises on 1 January will also only likely exacerbate matters. particularly airlines and media. A more optimistic consideration would suggest that judicious policy-making (via interest rate rises) can help ward off inflation.0% 5.5% 7.0% 8 .0% 7. We find little cause for comfort within the financial sector. In this respect.0% 1. risks seem heavily weighted towards the downside. domestically-oriented consumer plays would logically be the biggest potential losers from a moribund consumer.Edison Insight National Statistics. our concerns relate not only to consumer exposure. 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. its lowest in 18 months and down from a recent peak of 120 in February.

but at a noticeably slower rate than in the past. although this latter sector has a but 1. which began 2010 as our most favoured sector and has been our second most preferred (after basic materials) for the last three months. perhaps unsurprising.7% in the last 12 months.5% weighting in the All-Share relative to 13.09 Telecoms Basic materials Healthcare Utilities Industrials Technology Oil & gas Consumer services Consumer goods Financials As exhibits 7 and 8 highlight. The sector us up 17. cash returns. 10 2 December 2010 . some global exposure. some global exposure. While there have clearly been variations. valuation not supportive Structural concerns given outlook. M&A potential Valuation. valuation Valuation. a performance bettered among the UK sectors only by technology (29. we believe that the ‘bar bell’ approach makes most logical sense. Against a backdrop of ongoing uncertainty and likely rising risk levels. some seven points ahead of the All-Share benchmark.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. telecoms. US trends also negative Risk aversion levels rising.8%). We therefore suggest choosing carefully. relative to 38% six months ago. In other words. with over 20 FTSE-250 companies having succumbed to deals in the past year. but valuation demanding. underperformance creates opportunity Earnings momentum positive but slowing. risk aversion levels clearly remain high. but we expect this to be a selective rather than broad trend for 2011. cash returns. 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. and how they compare to a year ago Pos ition Bes t D e c . M&A potential Defensive profile. The IPO market is also subdued. Our conviction in basic materials has been vindicated by a 27. Mid-cap UK equities may provide fertile ground for stock-picking. Exhibit 7: Edison sector rankings and rationale for December. our core overweight sectors (in order) of basic materials. global exposure. while the consumer sectors have also been among our least favoured for all of 2010. Moreover.Edison Insight Deals have happened for much of the last year. heavy domestic bias D e c . risks emerging Poor macro prognosis. Risk aversion levels remain high and not all companies have the requisite balance sheet strength. 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. recent gains unjustified M&A potential.2% gain in the last 12 months. given an uncertain macro environment. 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). the basic materials sector has persistently sat in either first or second place within our conceptual framework of sector rankings.4% for the former. equivalent to a combined total of $55bn. 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). our views have remained highly consistent over the last 12 months. we have also been rewarded with a market-beating gain. 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. present appetite for M&A is low. heavy domestic bias Structural concerns given outlook. Market volatility/ uncertainty have been typically cited as the reason for deferral. On telecoms. As we have written in previous editions of Insight. According to a recent survey by Ernst & Young fewer than 25% of global companies say they are now seeking acquisition targets.

8 % ( 0.6% 6 .9% 10.7% 9.2% 0.2% 2.8 %) 0.8 % 13.0% 13.1% 16.3% 3.6% 2.9 22.4% 2. we downgraded the sector again in October and have been cautious since.0% 10.1%) (1.4% 6.4 13.2% 7. 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 .3%) (3.2% La s t s ix months 25. in reality.7% 15.5 14.5% 8 .8 % ) La s t thre e 26.5% 23.6% 6.1 10.4% 0. This performance.4% 1.9% 13.7% Source: Datastream.2% 20. This strategy has worked.3 Y ie ld 1.9% 5. with financials having been the second worst performing sector (up just 2.5%) in the last 12 months.5% 17.2% 4. Only oil and gas – compounded by BP – has performed worse. Edison Investment Research Basic materials: Momentum.1% 100. we began 2010 being most cautious on the financial sector.6% 9.8 % 2. which coincided with a brief period of outperformance).0% P/E 10.2% 23.5 12. and while we turned more optimistic during the summer (July through to September.2% 4.9% 2.0% (5.3% 2.1% 0. which we caution is strictly illustrative since it only relates to hypothetical positioning across UK equities whereas.2% 17.4% 9. Exhibit 9: Edison sector rankings. Exhibit 8: How our rankings have changed in the last 12 months.7% 9.8 % La s t 12 months 27.7% 14. 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* 13.9% 8 . investors will likely take into consideration a much broader range of factors. We have made no changes relative to the previous month. key valuation and performance data Note: * All Share benchmark weight. the performance of these sectors has been somewhat more robust.8 % 7.Edison Insight On the negative side.9% 12.2% 1.0% (2.4 18 .4% 3 .4 18 .6% 11.2%) 29.0% Y TD 16.7%) (2.9% 1.0% 25.2% 12.2 13. only serves to reinforce our negative conviction for the year ahead. 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.8 % 3.6% 14.5% 10.5% 13.4% (1.9% 18 . consistency in core sector calls Note: sectors ranked from 10 to 1.5%) 1. growth and value As discussed earlier. with consumer services performing in line with the market and consumer goods gaining 680 basis points on a market relative basis. Despite our caution on the consumer.5% 8 . however.8 % 2.7 14.5% 4.0%) 23.2% La s t month 1.9% 8 .4% 6.9 8 . with 10 being the most preferred and 1 the least.8 % 8 .5% 11.3% (1.

we have concerns about potentially deteriorating earnings momentum and rising input costs (see. Rolls Royce and Smiths Industries. in particular. while Cable & Wireless.Edison Insight currently supportive (c 11x 2011 P/E) valuation. Some of the larger sector names also offer global exposure (especially in the form of Vodafone. Hill & Smith. the Q3 reporting season may represent an apogee for the sector. and BP’s well-documented problems now seemingly having passed. Oil and gas: Near-term gains may not prove sustainable With the oil price close to a six-month high. Our relative preference for telco over utility and pharma is a function of valuation (8. and cash returns (4. and particularly its exposure to the BRIC economies. the sector has rallied 13. 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. Vodafone is in the process of disposing of assets and unlocking value. GSK and Astra). for example. National Grid and Vodafone) and also upside potential from possible M&A.8% in the last three months. All three sectors currently trade on sub-market multiples with above-average dividend yields. Relatively. for example. from BT. United Utilities and Northumbrian Water have all attracted bid speculation in the past months. within industrials we favour those stocks that offer global. a performance only bettered by the basic 12 2 December 2010 . 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. Telco. utilities and pharma: Attractive on yield and other factors The appeals of defensive sectors are broadly understood. healthcare looks the most expensive of the three defensive sectors and offers less scope for near-term M&A potential. Other UK industrials that have also referenced greater caution regarding the outlook in their recent releases include Cobham. and particularly emerging market exposure. combined with relatively low economic risk. Arcelor’s last earnings release) may constitute an additional risk. cost-cutting and operating leverage benefits may have begun to run their course. Elsewhere.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. their combination of attractive dividend yield and value. Looking ahead.1x 2011 P/E). hence its relative undperformance. Given the heterogeneous nature of the sector. Edison Investment Research Industrials: Risks to rise The performance of the industrial sector has been robust year-to-date (up 18.9% sector yield). However. Meanwhile. We favour this sector owing to its global characteristics. 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.

2011 looks set to be a considerably more difficult year. 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. Home Retail. Lloyds citing weak mortgage demand and RBS highlighting increasing losses. Beyond valuation and performance.2%) on a 12-month view appears to create an opportunity. Kingfisher. results from the recent reporting season have been highly mixed with Barclays citing a subdued economic environment and slowing new business growth. we are concerned that the macro prognosis appears to be deteriorating. Companies including Debenhams. Our team discussed the outlook in a recent note (see “The market remains well supplied”. First. low to no-growth consumer environment for some time to come”). Next. As discussed earlier. while inventories stand at close to record levels. 2 December 2010 13 .Edison Insight materials sector. the performance of the UK financial sector – down 3. for example. while chip industry forecasts (from SIA. especially given the sector’s rating of more than 22x forward earnings. 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. BBVA. Moreover. outlook uncertain With bank exposure to Irish (and Portuguese) debt at the forefront of many investors’ minds. while valuation (c 13x 2011 earnings) is also supportive. iSuppli) have also recently been trimmed. On the positive side. an outcome not fully reflected in current valuation levels in our view. As a result. October’s US durable goods figures were particularly weak for electronics (down 7.1% in the last month. but it remains the best performer in the All-Share since 1 January. new Basel regulations may force banks (in particular) into another round of capital rising. Among the UK majors. Eurozone uncertainty notwithstanding. but we expect this to be concentrated towards the lower end of the market cap spectrum. Technology: More downside potential to come As discussed earlier. Marks & Spencer and Sainsbury’s have all highlighted increasing notes of caution in recent releases and interviews (Next. sector valuation. 15 October). we see risks weighted to the downside and expect recent underperformance to continue into 2011. Our concerns are driven by poor consumer confidence and declining retail growth. both which may likely be compounded by VAT hikes and potentially higher unemployment. Apple and Cisco have recently warned. Despite recent rises to guidance from Dell and HP. for UK investors some further M&A activity may materialise. but have gained more than the All-Share on a one-year view. on a headline multiple of more than 18x forward P/E is not supportive in our view.and three-month view as being as welcome as it is overdue. Standard Chartered. worse than any sector – is unsurprising. Financials: Performance disappointing. but supply and demand remain imbalanced. the tech sector’s weighting in the UK market (at 1. Even if sales do receive a temporary fillip in the run-up to Christmas and ahead of January’s VAT increase. That the sector remains in negative territory (down 1.3%). fundamentals give us cause for concern. more may follow. sees “a very sluggish.7%) and communications equipment (down 12. only HSBC sounded an upbeat note. we see its market relative underperformance on both a one. Next. and one driven largely by overseas exposure. BNP Paribas and Société Generale have all recently come to the market. Finally. 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).5%) is small.

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

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

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 $4.500 3. No of profitable companies Significant deall flow/catalysts Holiday season trading 102 £2.000 500 0 900 800 700 600 500 400 300 200 100 0 Sector P/E FY1 FY2 17. there will be good SaaS companies and bad ones. Sector performance 3.2bn 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. see our sector report “Cloud computing: Managing the transition” available on the Edison website.PRICE INDEX FTSE ALL SHARE S/W &COMP SVS £ . and cloudrelated take-out values averaging 5.000 2.500 2.com and Google could reduce barriers to entry for specialist applications while concentrating value around the first movers.4x trailing revenues over the last year. with 36 SaaS businesses acquired in Q310 alone.000 1. It is not clear to us whether SaaS will be value-creative or erosive for the software sector as a whole.Edison Insight Sector focus: Technology Cloud computing: Managing the transition The emergence of cloud computing will reshape the software industry. disclosing development milestones and metrics for the new business in order to give investors the tools to assess performance and valuation. The emergence of platform-as-a-service (PaaS) offerings from the likes of Salesforce.500 1. M&A in the sector is also rife. Just like any other business model. it is possible these figures underestimate the extent to which SaaS businesses are winning share. This presents significant opportunities for companies and investors alike but threats and pitfalls also lie on the transition path ahead.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 . Fundamental technology shifts are usually presented as an opportunity with the threats being underestimated – SaaS is no exception. We offer advice to investors and corporates on how to manage this transition.1x Key sector data Number of constituents Average market cap.8x 13. For more information.3m 89 FTSE ALL SHARE . We believe it is vital that software companies consider their approaches to cloud computing and define their strategies. at a disruptive pace in some areas and evolutionary one in others. successes and failures.

the jury is out as to how this will affect small companies in the North Sea.000 8 . which could significantly affect small companies.1x 14. with UK energy minister Charles Hendry stating that the UK sets the gold standard for safety in the EU. it could see from experience that a rapid turnover of leases was very effective in stimulating exploration and appraisal activity.000 500 0 10.000 4. Sector performance 3. Clearly the issue of how small companies can handle a Macondo-style blowout needs to be addressed.000 6.1x Key sector data Number of constituents Average market cap. Looking at the Gulf of Mexico.000 5. 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 £2.500 1. 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.PRICE INDEX FTSE ALL SHARE OIL &GAS £ . and from this observation the Promote Licences were born.500 3. with the proposal being voted down in October and Europe-wide oil and gas safety regulations being strongly resisted.000 2. This time round.500 2. however. 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 . Analyst Elaine Reynolds Fast-forward 10 years and the industry is grappling with a different set of lessons from the Gulf of Mexico. In the Gulf.Edison Insight Sector focus: Oil & gas Little victories At the start of the decade.000 1.9bn 75 FTSE ALL SHARE .000 9.000 1.000 3.000 0 Sector P/E FY1 FY2 19. the government will not be able to extract as much as possible of the estimated 20mmboe left in the North Sea. 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. There are suggestions that the government is looking to change the qualification criteria to become an operator in the North Sea. Could the same thing happen here? The immediate threat of a suspension of EU Oil & Gas licences has been avoided for now.000 2. let’s make sure we don’t throw the baby out with the bathwater. activity in the UK sector of the North Sea had slumped. as seen on Macondo. Whatever solution is found. Promote gave the North Sea the kick-start it needed and helped to deliver increased activity. 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. 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. Co. With terms designed to attract independent oil companies and niche specialists. The oil price collapse in 1998 had resulted in a massive reduction in capital spending on the UKCS.000 7.

9 6.2 (17.5 15.5 (2.17 44.2) (1.5 13.7 1.0 N/A (0.9) 245.2 2.9 (155.7 N/A 2.7) 1.5) FY2 change in EPS 2 From To (93.2 (0. Stock Year end Movement FY1 change in EPS h From To N/A 5.5 N/A N/A N/A 27.1 N/A (1.8) (94.5 27.9 0.9 3.8) 0.9 2.5 (18.8 3.0 N/A N/A N/A 44.6 12.1) (3.0 12.0 1.0 (1.7 (3.0 N/A (0.2 3.9) 4.8) 22.5 10.2 27.8 4.9) 55.3 22.5 N/A (1.7 N/A 13.6 N/A 1.0 5.6 (2184.4 (2266.92 7.3) 2.74 33.8 N/A N/A N/A 43.8) 24.1 3.7 N/A 23.7) 0.0 (4.2 21.4 304.83 6.1) N/A 5.7) 23.4 (137.1) (2.3 (133.4 N/A 11.8) (1.0 23.32 10.8 3.7 6.5 0.5 16.1) 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 .7 1.9 8.9) (4.8) 251.8 5.0 1.5 N/A N/A 0.6 22.52 38.2 9.3 18.1) 0.9) (0.2 (17.2 (0.40 46.5 N/A N/A N/A 21.0 19.1 3.6 39.4) 108.3 N/A 13.3 (4.4 7.3) 162.1 32.2 1.2 5.9) 0.35 6.4 12.9) 4.1 6.1) 0.5) 0.3 0.9 38.0) 10.4 12.3) 73.1 9.3 22.0 N/A N/A 0.0 308.5 (4.2 10.94 6.1 11.93 39.9 (177.Edison Insight Forecast changes The table below details stocks where we have changed our forecasts to 2 December.72 13.1 (41.2 17.0 0.15 N/A 26.7 N/A 14.5) (0.3 22.6 5.6 5.

0 12. Pfizer/Amgen). 2017-18.0 EBITDA (€m) (10. although Abcam is a smaller niche supplier compared with wider peer group. These include vidofludimus for rheumatoid arthritis and inflammatory bowel disease and resminostat for liver cancer and Hodgkin’s lymphoma. The major TNF inhibitors already generate sales already in aggregate of c $18bn across all indications (RA and other autoimmune diseases). the US and Japan.1 2009A 2010A 2011E 2012E * % Relative to local index Analyst Robin Davison 2 December 2010 19 .87) (51.6 12m 82. and selling antibodies online for research use.0) (19. J&J/Merck & Co) all achieving sales of over $5bn/year.8) (15. with a global customer base. the ENTRANCE study of vidofludimus in IBD. The first of these.1 N/A N/A EBITDA (£m) 17. 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.9 N/A N/A P/CF (x) 8. Humira (adalimumab. Y/E Dec Revenue (€m) 3. Abcam is focusing on medium-term geographic expansion and intends to develop market share in the Far East. Abcam and Santa Cruz Biotechnology are market leaders. 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 26.7 65. Y/E Jun Revenue (£m) 56. Abbott) and Remicade (infliximab.0 N/A N/A PBT (£m) 17. 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.3) 0.0) PBT (€m) (10.17) (48.3) EPS (c) (45. has just rendered a positive result and the other three are all due to read-out by mid-2011.2) 12m (2. INDUSTRY OUTLOOK Company description Abcam is focused on making.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 16.0 1. if successful. Antibodies are an essential and fundamental tool of life sciences research.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.2) (18. would confirm blockbuster potential for this product.17 Market cap: €122m Forecast net cash (€m) 16. with three products Enbrel (etanercept. which.1 N/A N/A Price performance % Actual Relative* 1m (0.0 1. Its main operations are in the UK.7 28.4 3m 8.9) (22. The most important will be the COMPONENT study of vidofludimus in rheumatoid arthritis (RA).8 N/A N/A EPS (p) 36. sourcing.6 N/A N/A P/E (x) 9. There are millions of such antibodies and the market is fragmented.2 (3.7) (15.0 3m 15. since the company relies on added value from characterisation data to enhance long-term turnover from its products.0) (18. Its product mix is a vital driver of future demand. Positive results from these trials should enable 4SC to secure development partnerships with major pharmaceutical groups.9 Forecast gearing ratio (%) N/A Market AIM.Edison Insight Sector: Pharma & Healthcare Price: €3. under pressure as a result of government deficits.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) 334.1 5.6) (22.8 71. providing Abcam enough growth potential.89) (58.9 56.7 17.9 1.0 6.

It holds a portfolio of 33 assets. despite weak tenant demand.3) (41.9) 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. It is developing a novel class of therapeutic proteins called Nanobodies to treat a range of indications. The characteristics of Ablynx's Nanobodies. together with the initial results from clinical trials. well diversified by sector. which generated FY09 sales of $5.4) (9.2) 2. by which time up to five Nanobody programmes could have achieved significant value inflection points. if proof-of-concept clinical trials are successful. the shares fully discount the issues facing the group over the next 18 months.0 N/A EBITDA (€m) 7. INDUSTRY OUTLOOK Ablon holds 14 completed schemes and 19 development projects.9 25. A shortage of debt finance and lack of well-developed investment markets may delay recovery. included €5.0 EBITDA (€m) (18.3) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Roger Leboff Sector: Pharma & Healthcare Price: €8. mean they have considerable commercial potential across many indications.1) (2. At c 73% below NAV.1) N/A P/E (x) N/A 28.8 N/A Price performance % Actual Relative* 1m (10. It has sufficient capital to operate into 2013. A further 12 units are due for delivery in H2.4) EPS (c) (41.5p £66m 231.7) 12m 5.8) (29.0 12.7) (69.0) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Mick Cooper 20 2 December 2010 .1 12.Edison Insight Sector: Property Price: Market cap: Forecast net debt (€m) Forecast gearing ratio (%) Market Share price graph (p) 60.7 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. These were built to meet an identified need for modern commercial space.3 (6.68 six months earlier. Gross commercial rents fell 5. These novel therapeutic proteins have the specificity of monoclonal antibodies but with many of the benefits of small molecules.2) (94.1) (4. Its most valuable product is ATN-103 (a potential successor to Enbrel.3) (53.2) 12m (12.2 3m 10.7) 3m 15.5) (19.2 (14.6) (30.3m from 37 units at its Viva Residence in Prague. It has four products in clinical development.69 vs €2.9) (21.4) N/A EPS (c) (9.3 (1. Asset values were steady during the first half: NAV/share €2. up 56% to €14.2) (43. Gross sales income.8 8. 14 income producing investments and 19 development projects. Y/E Dec Revenue (€m) 23. Other Nanobodies of significant value include the fast followers of Prolia (ALX-0141) and Actemra (ALX-0061).1) PBT (€m) (15.6 32.4m.5 (1.6% y-o-y to €8. Company description Ablon Group is a leading developer and investor in commercial and residential property in Central and Eastern Europe. but local recession cut demand and increased competition for tenants.6bn) and it could enter Phase III development in 2011. but the local housing market remains weak.2 14.8 29.0 AIM Ablon Group INVESTMENT SUMMARY (ABL) The interims provided a few signs that Ablon's CE European markets may be bottoming out. There is a strong demand for novel pharmaceutical products for either unmet medical needs or to improve on current treatments.00 Market cap: €349m Forecast net cash (€m) 108.0) 1.3 28. so key markets face oversupply. but a diminishing development pipeline will help.7m after tenant departures in central Budapest. Y/E Dec Revenue (€m) 16.7 29.0 113. INDUSTRY OUTLOOK Company description Ablynx is a drug discovery company with a proprietary technology platform.2 N/A PBT (€m) (17.2 N/A N/A P/CF (x) 27.0) (19.

2) (72.8 25. underlying growth is being sustained.9 P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (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.3 PBT (£m) 8.6) 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. However.9 6. but rising oil consumption is stabilising wet freight rates. Y/E Mar Revenue (£m) 30.0p £43m 5.9 5.9 29. but as demonstrated this week with the interim figures.3) (1.Edison Insight Sector: Financials Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 222.8 (2.3 15.0 35. Current market penetration is estimated at c 0.8%-owned voltage optimising unit.3) (0.34) 0.9 7. steady cash generation and the clear medium-term strategy ought to encourage a higher rating.0 2. where the opportunity still benefits from the green agenda and cost-saving promises. The global recession has created volatility in freight rates.4 P/CF (x) 4. 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.9 31.0) 3m (41.6 6.4 EBITDA (£m) (0. Investment in future growth and weakening shipping rates continue to undermine margins.0 EBITDA (£m) 8.3) 0.9) (1.0) (1.2 PBT (£m) (0. Competition is present.1 25.6 7.03) (1. The larger shipbrokers are better equipped to provide advice to customers which. underlying potential for shipping. suggests a quality of earnings that is not recognised in the City.8 P/E (x) 6.5% in the UK.3 4. combined with the cash-generative nature of the businesses. and carbon reduction initiatives also boosting Company description Active Energy's origins are in supplying various components to manufacturers of gas appliances.3 0.1 3m 23.4p £4m 0. A major investment in developing a presence in the dry cargo market may slow down growth in the short term.1 6.2 EPS (p) (1. and also handles ship sale and purchase to an international customer base. Active Energy Ltd.4 Price performance % Actual Relative* 1m 3.1 8. The disposal will enable management to focus on driving the voltage optimising business.1) 12m (69. the legacy businesses had limited growth prospects and were challenging to manage.7 26. 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.3) 0. with rising electricity prices likely to speed the return on investment.7 6.5 N/A AIM Active Energy INVESTMENT SUMMARY (AEG) Active Energy has disposed of its Gasignition and Derlite businesses. however.3 8.9 12m 7.3) (72. While the disposal proceeds are modest. The investment case is now centred around a UK-based subsidiary that designs and sells power optimising transformers under the brand VoltageMaster.0 EPS (fd) (p) 36.52) (1. It arranges spot and time charters. demand.2) * % Relative to local index Analyst Dan Ridsdale 2 December 2010 21 . INDUSTRY OUTLOOK The demand outlook for voltage optimisation equipment looks compelling. and overseas markets are even more nascent.7 5.19 P/E (x) N/A N/A N/A 17.0 8.5) (32. leaving the company focused on its 72.1 6. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 2.8 8. the emphasis on broking.

metabolic disorders and inflammation. Novartis's decision to undertake pivotal/Phase III studies of its mGluR5 NAM.2) (4.0 12m (71.5 3m (34.Edison Insight Sector: Pharma & Healthcare Price: CHF11.5 4. Meanwhile. which we expect to close in December.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. compounds which offer significant potential advantages over classical agonist/antagonists.9) (2. ADX48621 in Parkinson’s disease levodopa-induced dyskinesia (PD-LID).4) (28.15 Market cap: CHF72m Forecast net cash (CHFm) 73.7) (2.7) 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 . Romania and Australia. Elsewhere the company launched the expected IPO of its Australian mining assets.5) (39.0) 0.0) (42.9 4. 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. The announcement confirms the understanding of geology and the larger resource makes the possibility of commercialising the combined Lambouka and Dougga prospect more likely. 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. exploration plays remain attractive. Addex's partner J&J has confirmed plans to start Phase II studies with ADX71149 in schizophrenia and anxiety in early 2011.3 EBITDA (CHFm) (21.10 A$34m 0.0) (39.0 N/A EBITDA (A$m) (2.0) (25. none of which is currently in the share price.4 1.0 0.4 0. Y/E Dec Price performance % Actual Relative* 1m 1.9 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.4) (0. offshore Italy. Company description Addex is engaged in the adaptation and expansion of its allosteric modulator discovery platform for targets in central nervous system (CNS).3 Revenue (A$m) 0.5 5. Along with strong farm-in partners and stable operating regimes.9) N/A EPS (c) (1.2) (38.3 1. Recent presentations to the Society for Neuroscience served to reinforce the strength of the allosteric modulation technology. AFQ056.1) (72. Addex should have two programmes in Phase II studies.7) (2.0) 2008A 2009A 2010E 2011E Revenue (CHFm) 26.0 0. in Fragile X and PD-LID further endorses the potential of the platform. The group also has mining interests which are in the process of being demerged. Y/E Jun 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m (1.9) EPS (CHFc) N/A N/A N/A N/A P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Robin Davison Sector: Oil & Gas Price: Market cap: Forecast net cash (A$m) Forecast gearing ratio (%) Market Share price graph (A$) A$0.1) (9. By early/mid-2011.4) PBT (CHFm) (22. INDUSTRY OUTLOOK Addex has established a world-leading position in the identification of allosteric modulators. INDUSTRY OUTLOOK With oil prices remaining in the $70/bbl to $80/bbl range.8) (40. ADX has every chance of success if it finds commercial quantities of hydrocarbons in its prospects.3 3m 25.1) N/A PBT (A$m) (2. 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.1) 12m 4.

For the year to June 2010 revenue grew 65% and adjusted PBT 35%.7) 3m (4. New distribution is driving strong growth.5) PBT (€m) (18.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (€m) Forecast gearing ratio (%) Market Share price graph (€) €3. For now we maintain our revenue expectations.4) (48. having recently amended its development programme.0 2.6 6. the insurers have been slow to pay and have challenged claims.4 5.6 144.7 91.5) (30. Y/E Jun Price performance % Actual Relative* Analyst Martyn King 1m (6.0 0.7 4.3 EPS (p) 2. Net debt is higher than we expected but we foresee sufficient resources to fund expected growth.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) 22.9) (5.1) 12m (1. the former remains on track to report at the end of 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 (1. built around credit hire and credit repair.0 EBITDA (€m) (19.3 131.4 7.1 P/E (x) 9.5 N/A FRA Agennix (AGX) INVESTMENT SUMMARY Agennix is developing talactoferrin for two major indications.9 127.1) 12m 44.3 4. cancer and sepsis. but there is significant competition in oncology and sepsis is difficult to treat.7 3.7 0. Its product set and low-cost strategy align it better with the motor insurers than many peers.2 6. starving the industry of cash.4 2009A 2010A 2011E 2012E Revenue (£m) 55.6) (10.7) (91.2 5. Typically.8) (9. Its lead product talactoferrin is being developed for the treatment of cancer and sepsis. Agennix raised €76m in equity in October. to 'non-fault' drivers and the insurance companies of 'at fault' drivers.4) (5.9) EPS (c) (254.8) (29. which should be sufficient obtain top-line data from the first NSCLC trial and the initial part of the severe sepsis trial.66 €152m 50.9) (109. Ai Claims' lower cost.6) (132. more insurer-aligned offering is serving it well. It is now planning to start a Phase II/III trial in severe sepsis at the end of Q111.2) 3m (7. 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 drug could generate peak sales of $2.2 4.4 3.7 PBT (£m) 2.3) (48. both better than expected. Talactoferrin has the potential to become a complementary treatment in oncology to the current treatments without competing directly against other drugs. 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.3 P/CF (x) N/A N/A N/A 2. Y/E Dec Revenue (€m) 12. costs and restore their own profitability. In this environment.0 4.3) (7. It represents non-fault drivers and insurers of at-fault drivers. but increase our PBT expectation by 6% and EPS by 8%.0 AIM Ai Claims Solutions INVESTMENT SUMMARY (ACS) Ai Claims provides accident management solutions. with further strong 39% growth this year.0p £13m 24.5bn.3) (19.8 * % Relative to local index 2 December 2010 23 . small sales forces.6) (27.7 5.5 EBITDA (£m) 3. and to be widely used in the treatment of sepsis. 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.3 30.

4 P/CF (x) N/A 30.7) (475.6 3m 45.1 N/A N/A Price performance % Actual Relative* 1m 25.2 7. Algeta is the world leader in the development of alpha-pharmaceuticals for cancer.4 EPS (øre) (1034.0 12m 103.9 3m 87.3) 16. Alpharadin is in three clinical studies including the pivotal ALSYMPCA Phase III monotherapy trial in prostate cancer bone metastases.04 0. with projects located in the central west region of New South Wales in Australia.1) 42.8 0. Three deep drill holes were also announced for the McPhillamys project.6) 2.8 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.8) EPS (c) 0. Company description Alkane is a multi-commodity explorer.7 9. 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.9 (6.0 84. A definitive feasibility study for the Tomingley Gold Project is being finalised. The next data is likely to be from the Phase II study in breast cancer bone metastases in H111.6 PBT (NOKm) (170. This study is expected to complete enrolment around the end of the year and should render initial results in the first half of 2012.71) P/E (x) 2100.3 202.8) (164.9 21.Edison Insight Sector: Pharma & Healthcare Price: NOK124. held with JV partner Newmont.91 per share.177/oz for valuing the gold assets.7 202. supporting the initial 2. Alpharadin is enjoying good visibility.1 30. INDUSTRY OUTLOOK Company description Algeta is a Norwegian listed biotech company.6 (2.8 43.6) 0.0 579.9 8. We have used a long-term gold price of US$1.7 2008A 2009A 2010E 2011E * % Relative to local index Analyst Robin Davison Sector: Mining Price: A$0.99 1. which should open the way for a Phase III trial start in this indication in 2011. It recently recovered its first yttrium heavy rare earth product and a light rare earth sample from its DZP Pilot Plant.9 57.1 2.94 (2. INDUSTRY OUTLOOK Recent increases in the price of REEs point to potential annual revenues of between US$135m and US$196m (company announcement). Y/E Dec Revenue (A$m) 2.3 EBITDA (NOKm) (180.1) PBT (A$m) 0.4 P/E (x) N/A N/A 289.4 4.3 N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (0. Alkane intends to use TGP revenues to re-invest into the DZP. We value Alkane's assets collectively at A$0.9) (154. with the LREE sample process being tested before it is added to the production circuit.1 Forecast gearing ratio (%) N/A Market OSE Share price graph (NOK) Algeta (ALGETA) INVESTMENT SUMMARY Algeta's investment case firmly centres on Alpharadin. The YHREE sample will undergo further testing to develop a marketable product.96Moz resource estimate.8 189. Y/E Dec Revenue (NOKm) 0.4 6.00 Market cap: NOK4900m Forecast net cash (NOKm) 502.5 0.84 Market cap: A$210m Forecast net cash (A$m) 10.9) 6.2 2008A 2009A 2010E 2011E * % Relative to local index Analyst Charles Gibson 24 2 December 2010 . The drug is partnered globally with BayerSchering.3 26.2 EBITDA (A$m) (0. although Algeta intends to co-commericalise in the US.6 105.0 31.0 12m 75. with studies showing 400koz Au recovered over six to eight years. its alpha-emitting drug for the treatment of bone metastases.

It is now on a stronger financial footing.5) 3. Its products usually have few direct competitors and are low priced to encourage high prescription take-up. 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.0 257. since the company has drawn down just £2m of the revolving credit facility.5x.2 43.0 EBITDA (£m) (3.3) (44.8 PBT (£m) 2.0 0. This compares favourably with existing vaccines (typically requiring 16-50 injections under specialist supervision pre-hay fever season) and with comparable efficacy.3) 2009A 2010A 2011E 2012E Revenue (£m) 37.1 * % Relative to local index Analyst Robin Davison 2 December 2010 25 . having posted its maiden operating profit in FY10.4 * % 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) 34.1 36.1 EBITDA (£m) 6.4) 3m (11.8 40.5 11.3p £29m 10.9) 0.7 6.1) (4.0 5.6 16.1 8.0) (4. the level of debt appears to be well within the expected covenants.0 2.3 P/CF (x) N/A 26.3 P/E (x) 21.5 2008A 2009A 2010E 2011E Revenue (£m) 21.5 8. Allergy is moving from single-product promotion to a product portfolio in Europe. Y/E Dec Price performance % Actual Relative* 1m (5. and should be able to take advantage of M&A opportunities for further revenue growth.6 4.8 31.4 18. well-established. markets and distributes pharmaceutical products.6 45. by exploiting the evolving commercial opportunity for registered finished products over the next five to 10 years.4 P/E (x) N/A 31.0 AIM Alliance Pharma INVESTMENT SUMMARY (APH) Alliance's renegotiation of financing indicates that an acquisition is possible.3 0.7) 12m (38. The company achieves growth by a combination of product in-licensing and organic sales.3 EPS (p) (13. any potential product acquisition would need to enhance earnings so that debt/EBITDA ratio would not fall below 2. It aims to be among the top three global players in allergy immunotherapy.4) (4.8 5. The financing is around 5% lower rate of interest than previously and at present.3 83.7 4.0 N/A 23.1 P/CF (x) 10.0 13. off-patent sales. allergy vaccine given as four shots over three weeks.5) 12m 51.3) 1.5 PBT (£m) (10.3 (0. however we had factored this in to our 2011 revenue well in advance.8 40.8p £82m 25.0 AIM Allergy Therapeutics INVESTMENT SUMMARY (AGY) Allergy Therapeutics’ investment case is geared to M&A and to German regulatory approval of Pollinex Quattro Grass.3 14. smoothing seasonal revenue fluctuations.7 5.7) 3m (8.9) (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.6 EPS (p) 1.2 5. The entrance of a competitor to Deltacortril has now been confirmed. due in early 2011.0 N/A 10. Y/E Jun Price performance % Actual Relative* 1m (5.7) 0.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 9.7 8.2 50. If Alliance exercises the full £20m RCF.0 3.

We consider both estimates and valuation to be undemanding. The Gold Ridge mine is still on-track to produce its first gold in Q211.Edison Insight Sector: Mining Price: 33.0 N/A P/CF (x) 18.6 127.5 (1. Healthroster's headroom for growth is starting to reduce. 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. Y/E May Revenue (£m) 15.2 40.5 67.0 28. INDUSTRY OUTLOOK On an EV per resource basis Allied Gold is trading at a value that equates to US$68/oz. adding 120koz pa after ramp-up to Allied's annual production.6 31.5p £48m 5. Ten.0 N/A EPS (fd) (p) 5.5 5. extensive resource drilling is planned for 2011.2 2009A 2010A 2011E 2012E * % Relative to local index 26 2 December 2010 .1 N/A P/E (x) N/A N/A 49.5 12m 55. A Q2 update is due mid-December following a positive Q1. This is a 44% discount to the industry average for AIM-listed gold companies (US$121/oz).and nine-year mine lives currently exist for Simberi and Gold Ridge respectively.2 2009A 2010A 2011E 2012E Revenue (A$m) 77.6 N/A EBITDA (£m) 2.3 5. multi-skilled workforces.7 (2.0) 12m 31. 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.7 3.4) 31.8 N/A Price performance % Actual Relative* Analyst Dan Ridsdale 1m 3. 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.6 N/A P/CF (x) 10.2Mtpa to 3.5Mtpa.3) (1. lifting production from around 73koz to 100koz during 2011.0 3. INDUSTRY OUTLOOK Company description Allocate Software is the leading provider of software applications designed for workforce optimisation within global organisations employing large. which reported good deal flow across the portfolio.2 Forecast gearing ratio (%) 10. Further.4 6.5 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. The recent oppointment of a Director of International Marketing signals increased confidence in the ability to expand overseas. ASX.3 N/A PBT (£m) 2.8 22.9) (19. A growing proportion of international and SaaS revenues also adds robustness to Allocate’s revenue profile.9 N/A P/E (x) 14. Allied intends to proceed to BFS-stage with an investment decision regarding the sulphides in 2012. Both the expanded plant at Simberi and Gold Ridge should produce a total of approximately 220koz pa from 2012.4 3m 64.2 12.8p Market cap: £351m Forecast net debt (A$m) 38.2 N/A EBITDA (A$m) 18.6 3. Y/E Jun Price performance % Actual Relative* 1m 18.0) 46.9 8.9 19.7 N/A EPS (fd) (c) (0.2 N/A PBT (A$m) (2.1 8. Within the UK.0 Market AIM.4 19.8 3m 5.1 13. A PFS on the sulphide ore at Simberi identified that a further 100koz pa could be added mid-decade.7 5.4 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. but Allocate has built a very solid platform for expansion through product diversification and progress overseas.2) 1. UK public sector spending concerns still cannot be ignored.

This. INDUSTRY OUTLOOK Company description Altona holds a 49% interest in three exploration licences covering 2.6) (1.0 EBITDA (£m) (1.1) (0.9% year to date at the end of October 2010.3 0. Y/E Mar Price performance % Actual Relative* Analyst Neil Shah 1m 0.4 0.5) (0.Edison Insight Sector: Financials Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 64.1 PBT (£m) (0. 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.2) (0. Y/E Jun 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m 9.6) (1.8 3m (1. In addition to supplying local demand for fuel and power (including potentially BHP Billiton’s nearby Olympic Dam project). the JV is also looking to export fuel and possibly coal to the Asian markets.1) 0. coupled with the strong performance of the Winton and IKOS funds.8 1.7) EPS (p) (0.5) (15. which will result in a minimum of $800k of revenues being paid to Alpha in the year to 9 July 2011.8 10.1% in October 2010 and Company description Alpha Strategic plans to pool a portion of the revenue streams from several single strategy hedge funds. 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).38) (0. The third-largest state-owned oil company in China.0 EBITDA (£m) (0.3) (2.1) 2. The BFS commenced last month and is expected to take around two years.6 3m 36.5) (0.5p £3m 1. 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. which commenced in October this year.6) (1.5) (1.3 95. Its immediate focus is completing a bankable feasibility study for a coal to liquids plus co-generation facility. +7.3) 12m 116.0 N/A 11.3) (37. Since then there has been little movement in the share price.5 151.1) 0.0 N/A AIM Altona Energy INVESTMENT SUMMARY (ANR) In early November.4 (13.7) PBT (£m) (1.4 N/A AIM Alpha Strategic INVESTMENT SUMMARY (APS) On 28 October Alpha amended a management agreement held by its 100% subsidiary ACME Advisors Limited.3) 12m (30.1 EPS (p) (4.31) (0.4 * % Relative to local index Sector: Mining Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 11.3p £47m 1.500km square in the north of the Permian Arckaringa Basin.5 Revenue (£m) 0.0 0.64) (0.41) 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 . led us to raise our forecasts marginally last month. CNOOC.9) (9. although the Winton Futures Funds continues to grow assets under management based on newsflow we have seen.0) 2009A 2010A 2011E 2012E Revenue (£m) 0.4) (1.0 0.0 0. South Australia. has agreed to provide $40m for a bankable feasibility study (BFS). The HFN Hedge Fund Aggregate Index was +2.0 0.3) (2.0 P/CF (x) 71. INDUSTRY OUTLOOK The hedge-fund industry has nearly recovered from all its investment losses sustained during the credit crunch.3 P/E (x) N/A N/A N/A 28.

0 EBITDA (£m) (0.3p per share to 7.9 PBT (£m) 2.0 0.6 19.2 3.2 10. which saw revenues grow 15. INDUSTRY OUTLOOK Company description Animalcare markets and sells licensed veterinary pharmaceuticals. It is about to commence production.6 3.9 P/E (x) N/A N/A N/A 15. 25% rise in earnings for Anglesey from 6. It is aiming to launch five new products per year.5 11. 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 2010.6) 4.0 9.3 13. TSX LIM. The main growth driver was the companion animal division.7% and generated 83% of EBITDA. The growth is being sustained by the public continuing to care deeply for their pets. with the money from the disposals being used primarily to pay down its outstanding debt. 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. and are talking with interested parties.6 6. which highlights its resilience. this equates to around U$120/t FOB. Wales.5p £25m 2. With shipping rates at $40/t. animal identification products and animal welfare goods for the companion animal market across the UK.6 2009A 2010A 2011E 2012E Revenue (£m) 17.9p per share. all with potential peak sales of over £100.3) (0.6) (0.0 N/A AIM Animalcare Group INVESTMENT SUMMARY (ANCR) Animalcare reported revenue growth of 12.0 3.4 3. which has resources of 150Mt of direct-shipping hematite iron ore. A 10% fall would see a drop of around 27%.9% to £19.2p.4 EPS (p) (0.5 EBITDA (£m) 2. It also owns 100% of the Parys Mountain zinc-copper-lead deposit.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) 123.2 Revenue (£m) 0.6 3m 24. Animalcare is now focused solely on the companion animal market. Its products are sold in Europe through distributors.25m in cash.3) PBT (£m) (0. which has resources of 150 Mt of direct-shipping hematite iron ore. INDUSTRY OUTLOOK The most important factor is variation in the price of iron ore.Edison Insight Sector: Mining Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 45.6 3.4) (0.8 EPS (p) 6.8 (5.9 12.3) (0.5 39.5) (0.000 to sustain its growth. Y/E Jun Price performance % Actual Relative* Analyst Mick Cooper 1m 0.9 P/E (x) 19.5 13.7 168. when spring arrives.5 12m 196.4) 2.6) 12m 23.9 P/CF (x) 7.6 P/CF (x) N/A N/A N/A 26.8) (0. and the increasing numbers of new treatments and products.9 3m 90.3p £69m 0. Y/E Mar 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m 54.7 8.0 0.2% in 2009. and subsequent sale of Travik to Aquajet for an undisclosed sum.9 7.2 3. This was part of the rationale for disposing of the livestock divisions (Ritchey and Fearing) to Tru-Test for £3.0 0. The companion animal market in the UK grew by 8. The company remains confident that commercial production should begin in April.6 N/A FULL Anglesey Mining INVESTMENT SUMMARY (AYM) Anglesey has a 41% interest in Labrador Iron Mines Holdings. The company believes there is significant value in its 100% owned Parys Mountain zinc/copper/lead property.7 55.5) (0.4 11.8 * % Relative to local index 28 2 December 2010 .5 8.8 1.9m for the year to June 2010.5 13. Current comparable spot prices are strong at U$160/t (62% fines CFR Chinese ports). with EPS before exceptionals up 56% to 11.

4) (28.2) (18.9 592.6 EBITDA (£m) (22. Y/E Jun 2009A 2010A 2011E 2012E Revenue (£m) 25.1p Market cap: £1521m Forecast net cash (US$m) 152.1 N/A FULL Antisoma (ASM) INVESTMENT SUMMARY Antisoma faces the dilemma of when.1) 12m (2. with five mines in southern Africa: Kroondal (50%). Furthermore. we believe platinum prices will continue to recovery in early to mid-2011 as auto producers restock ahead of forecast increases in vehicle production in 2012.3 0.9 P/CF (x) 65. Marikana (50%).Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 6.1 3m 0.0 EBITDA (US$m) (0. and if. Negative ACCEDE data would leave Antisoma with limited options other than a distressed trade sale.3) (12. Blue Ridge (50%) Everest (100%) and Mimosa (50%) as well as tailings retreatment operations and exploration projects. ATTRACT-2 data revealed as expected that ASA404 provides little benefit in NSCLC. Market research indicates global AS1413 sales potential of $440-580m in secondary AML.0p £38m 4.7 19. or up to $670m including de novo AML.5 133.3 1. remaining capex from previous development (of R70m) and new capex of US$40m. One option is for Aquarius to provide additional funding and dilute the BEE partners.3 30.4) * % Relative to local index Analyst Lala Gregorek Sector: Mining Price: 329. We remain cautiously optimistic about the current outlook following recent positive US automotive sales.8 17. it should partner AS1413 in relation to read-out of the Phase III ACCEDE study.0 7.1 Forecast gearing ratio (%) N/A Market FULL Share price graph (p) Aquarius Platinum INVESTMENT SUMMARY (AQP) Aquarius has now closed its Blue Ridge mine until mid-next year to implement a redevelopment plan.3) PBT (£m) (18.5 15. It has ambitions to establish a US sales franchise in oncology products.9 111.8 16.6) (12. Management remains confident that a post-positive data deal represents the best risk/reward trade-off for shareholders. Positive ASA404 news from Novartis would represent upside. INDUSTRY OUTLOOK Company description Antisoma is a UK biotech company specialising in the development of drugs for the treatment of cancer.5 P/E (x) N/A 31. It has a broad R&D pipeline with a lead product licensed to Novartis. but would be negotiated against the tight deadline imposed by the cash runway (FY10 cash of £32.3) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 0. A pre-data deal in H111 would be worth less than one afterwards. Y/E Jun 2009A 2010A 2011E 2012E Revenue (US$m) 298. The investment case is heavily geared to success of the AS1413 Phase III ACCEDE study and the partnering of this programme.2 20.1) (29.6 0.2) 135. presuming a positive result.2 PBT (US$m) (34.6) EPS (p) (2.5) (2.7) 110.1m should last to mid-/late 2011).6) (19. we estimate total Blue Ridge capex for FY11 of US$56m. 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.2 19.9 457.7 12m (80.6 101.5) (3. which could bring in a substantial sum.3) (28.1 EPS (c) (1.5) (82.9 Price performance % Actual Relative* 1m (13. its BEE partner (Imbani Platinum) may struggle. While Aquarius will have no problem funding its share (US$20m) of the new capex.0) * % Relative to local index Analyst Michael Starke 2 December 2010 29 .9) (4.0) 16.1 33.4 (20.4) (28. INDUSTRY OUTLOOK Company description Aquarius is the world's fourth largest PGM producer.9 141.6) 3m 24.3 683. Including capitalised net operating costs (of R50m).

investment and private banking and other financial services. Management has requested a Type A meeting. It has a development pipeline of late preclinical and early clinical programmes.5 23.9 52. bringing further experience and breadth to this key division. following the negative Ad-Com. The CRL highlighted non-clinical (rat cancer signal and read-through to humans) and clinical issues.2) (95.8 10.4 8.4 30.1) (74.6) (54. Market conditions for investment banking remained tough through the summer and into Q3. which should occur before year-end and should give more clarity on the approval path and time-line.1 6.9 (7.8) 12m 2. including one partnered with Ortho-McNeil-Janssen (J&J). For those with good funding. In Phase III it showed the least impressive efficacy (placebo-adjusted weight loss of 3.1 55.4 EBITDA (£m) N/A N/A N/A N/A PBT (£m) (2. Y/E Dec 2008A 2009A 2010E 2011E Revenue (US$m) 9.7) PBT (US$m) (226.8) 12m (61. and Company description Arbuthnot Banking Group is engaged in retail. Qnexa also received a negative 10-6 AdCom vote in July and a Complete Response Letter. credit conditions appear to have stabilised.5) 3m (78.0 EBITDA (US$m) (213.7 Forecast gearing ratio (%) N/A Market NASDAQ Share price graph (US$) Arena Pharmaceuticals INVESTMENT SUMMARY (ARNA) Arena’s investment case hinges on FDA approval of lorcaserin in obesity.4) (78.07) (309. arguably over-liquid (2010 margin strain led to estimate cuts) and tightly controls costs.2) (12.9) 3m (5. Paul Lynam.2% for Orexigen’s Contrave) but had the best cardiovascular and CNS safety profile.2) 5. Y/E Dec Revenue (£m) 41.6% vs 9.5 7.4 15.2) (10. was appointed CEO of Secure Trust on 13 September. Lorcaserin is one of three FDA-filed obesity drugs. market and credit risk well.7 12.4) EPS (c) (309.0p £57m N/A N/A AIM Arbuthnot Banking Group INVESTMENT SUMMARY (ARBB) Arbuthnot Banking Group has diversified financial earnings.7) (60.6) (0.9 10.3) (63. lorcaserin (partnered with Eisai).69) (309.Edison Insight Sector: Financials Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 391. 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).0 P/E (x) 111. invested in new businesses and controlled liquidity.8) (139.69) (165. The FDA issued a Complete Response Letter.2 38. outlining the deficiencies of the NDA application. It is strongly capitalised. Private banking remains competitive with low interest rates limiting the value of deposits.3 P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (1.0) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Mark Thomas Sector: Pharma & Healthcare Price: US$1. which will adversely affect the results. a risk-averse but innovative management.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. and a high dividend yield (6% on our 2010e) covered by earnings.4% for Vivus’s Qnexa and 5. seeking a more restricted label (especially as lorcaserin is likely to be scheduled).8) * % Relative to local index Analyst Lala Gregorek 30 2 December 2010 . INDUSTRY OUTLOOK Retail lending margins continue to benefit from competitors having limited appetite to lend. Management has sold non-core assets. it is an excellent time to lend. is pending FDA approval for the treatment of obesity. INDUSTRY OUTLOOK Company description Arena's lead project.7 16.7 EPS (p) 3.41 Market cap: US$171m Forecast net cash (US$m) 110. ex-MD of small businesses for RBS retail.7 60.5) (113.

Tigris is a exploration stage company with interests in south-east Turkey. to yield a profit before tax of c US$8.0 0. during bull markets silver nevertheless tends to outperform its yellow companion.5 769.2 EBITDA (US$m) (3. through its wholly-owned Turkish subsidiary Galata Madencilik San Ve Tic.0 EBITDA (£m) (0.8 7.19/oz. specialises in Mexican silver deposit exploration and development.Edison Insight Sector: Mining Price: Market cap: Forecast net cash (US$m) Forecast gearing ratio (%) Market Share price graph (p) 31. To this must then be added the likely value of exploration success. Y/E Dec 2008A 2009A 2010E 2011E Revenue (US$m) 0. and Proccea incorporate a Turkish joint stock company named Zenit Madencilik San Ve Tic AS.3) EPS (p) (0.3 2.6 16.4) (2.5m per year and earnings between 2. we estimate a US$10m exploration programme should delineate a resource valued at 88-195p per AGQ Company description Arian Silver. Ariana is continuing with its BFS and EIA on its flagship Kiziltepe Sector. in which each may own a 50% interest.1 Price performance % Actual Relative* 1m 60.9 N/A AIM Ariana Resources INVESTMENT SUMMARY (AAU) Ariana has recently announced that it has subscribed to 2.3 61. Y/E Dec Price performance % Actual Relative* 1m (5.1) (0.6) (0.0 7.7) (0.1 191. share in current money terms.7 17.0c per share over the mine's official four-and-a-half year life.0) 1. Assuming that Arian delineates new resources at the same rate per km of exploration drilling as in the past. listed on AIM and TSX. The JV agreement has seen Ariana.2 P/CF (x) N/A N/A 38.6 N/A AIM Arian Silver INVESTMENT SUMMARY (AGQ) Arian has announced that it has commenced commercial production at its 100%-owned San José mine. Zacatecas.000. At a silver price of US$27.7) (2. giving Ariana 15% of the total shares issued in the company.4) (0.5) 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 . we see Arian turning cash-flow positive by year-end. Its other three projects are Calicanto and San Celso.7m. part of the Red Rabbit JV with partner Proccea. Arian has the ability to generate revenue of up to US$18. In the short term.177/oz.7c and 3.57pps.5 46.0) 3m 37. sectors.4) (0.1) 0.5 2008A 2009A 2010E 2011E Revenue (£m) 0. with ore being stockpiled for delivery to the mill from around mid-November.0 0.1p £9m 2. INDUSTRY OUTLOOK Our valuation uses a long-term gold price of US1.0 0.4) (0.7) (2.7m shares in Tigris Resources for a total consideration of C$115.8 PBT (US$m) (3.9 P/E (x) N/A N/A 166. Mexico.7) (5. 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.3p £85m 11.4) PBT (£m) (0.0m per year at a gross cash cost of US$6.5) (0.5 3m 184. currently MD Dr Kerim Sener.3 12m 17. As part of the arrangement Ariana is entitled to appoint one non-executive director to the board.6) (0. INDUSTRY OUTLOOK Often know as 'poor man's gold'.9 6.9) 0. We currently value Ariana's assets at 5. and Tepal in Michoacan.0 3.9 18. located in Zacatecas.3) (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. Its San Jose mine is expected to enter production soon.0 0.9 EPS (c) (2.6 12m 861.

reflecting the consistent investment in the group's brands. despite positive action by management.44 1. Competitor therapies to EG011 for refractory angina are mainly stem cell therapies. human IgG1 antibody.2 26.3 0. Y/E Aug Price performance % Actual Relative* 1m (2. Y/E Dec Revenue (£m) 0.6 11. However.9) (2. as well as potential wound care and manufacturing deals.0 PBT (£m) 1.2) PBT (£m) N/A N/A N/A N/A EPS (p) (6.1 2. with gearing maintained below 20%.6 57.2) 12m (88. experience shows that businesses which invest in innovation and quality consistently outperform their peers. while EG016 is a novel approach in peripheral vascular disease. Net borrowings are still under control.0) (7.0 EBITDA (£m) 3.1 EBITDA (£m) (18.4) 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 (15.9) (9. as reinforced by last month's results announcement.4) 3m (19. 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.3) (15.9 3.0 59.1) (56. The adverse share price reaction reflects natural caution about UK consumer trends and.1 * % Relative to local index Analyst Nigel Harrison 32 2 December 2010 . However.0 AIM Armour Group INVESTMENT SUMMARY (AMR) Trading conditions remain challenging. and Armour Auto supplies in-car communications and entertainment components and systems. more significantly.0 6. there is an asset value of 44p per share.6 EPS (fd) (p) 1.6) (4. profits remain under pressure. Deal execution that releases value from the pipeline should ensure end-June cash of £14.8 2.1) (14.1m is sufficient into 2013. but we remain optimistic that Armour can deliver meaningful recovery over the medium term. Estimates have been lowered across the sector. 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. The company is a leader in the field of gene-based therapies. The focus remains on product development and tight internal controls as key factors in driving the business forward.0) (18.5 3. and has in-house manufacturing capabilities.1) 12m (45.9 6.3) (8. cancer and wound care.0 2. Further updates on the core pipeline.38 0. confidence seems likely to remain low following the government Company description Armour Home designs and distributes a comprehensive upmarket range of home entertainment products.5p £6m 6. Large pharma interest in foetal growth restriction (EG013) is evidenced by Pfizer's Phase II/III sildenafil trial. although the situation remains fragile.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. MNRP1685A.5 P/CF (x) 0.6 56.0 20.74 P/E (x) 5.7) (43.1) 3m (27.4) 2009A 2010A 2011E 2012E Revenue (£m) 51.2 1.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 4.0) (89. spending review.0 0.0 3.5 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.0p £8m 7.8 3. INDUSTRY OUTLOOK There has been some improvement in the macro environment.0 3. are expected over the next six months. manufacturing collaborations and pipeline licensing).2) (50.32 0.

5 4. 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.5 4. ie Chengdu. There is no shortage of demand for modern healthcare facilities.7 N/A N/A Price performance % Actual Relative* Analyst Roger Leboff 1m 0.4 N/A PBT (£m) 5. the management of assets and clinical services.6) (67.0 N/A N/A PBT (HK$m) 247.0 0. The recent trading update showed operational progress.0 0. more detail on budgets and responsibility for investment decisions awaits publication of the healthcare bill.3) (30.2 5. Y/E Dec Revenue (HK$m) 1508.8 3m (6.Edison Insight Sector: Construction & Blding Mat.0 151. ongoing bid for property partner AHMP should help investors to re-evaluate Ashley House's inherent value.0 4.0 N/A N/A EPS (c) 0. An existing pipeline delivered the first scheme.8) 12m 13.0 N/A EBITDA (£m) 5.0 6. The valuation.7 N/A P/E (x) 3. originally announced in May. despite recent moves by the PRC government to discourage speculation in residential property and similarly motivated moves in Hong Kong. The drivers for the group's schemes remain sound. Resolution of the latest.0 N/A Price performance % Actual Relative* Analyst Roger Leboff 1m 0. It adds delivery of community mental health and associated infrastructure. Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 30. often a component of large integrated developments.0 0. INDUSTRY OUTLOOK Company description Ashley House supplies project management and consultancy services.3 4.0 (17.1) 2009A 2010A 2011E 2012E * % Relative to local index Sector: Property Price: Market cap: Forecast net debt (HK$m) Forecast gearing ratio (%) Market Share price graph (p) 25.9) 12m (63. with stable gross rents from investment properties in Hong Kong and China.0 N/A N/A EBITDA (HK$m) 303. but clients have been more reticent to commit to new projects until the government's NHS spending plans are clearer.0 7.8 3m 0. well balanced portfolio of investment and development assets in mature and emerging markets and a measured and affordable approach to new development. These are primarily allied to the delivery of new medical facilities for NHS-led primary care.5p £226m N/A N/A AIM Asian Growth Properties INVESTMENT SUMMARY (AGP) H1 saw 15% y-o-y revenue growth to HK$306m. but an emphasis on cash preservation saw October’s final dividend delayed.0 N/A N/A P/E (x) N/A N/A N/A N/A P/CF (x) 3. fits with a strategy to reduce dependence on NHS revenues. is at odds with conservatively financed growth plans.0 517. Nanjing and Guangzhou.1 5. Each project is phased and budgeted to achieve satisfactory returns at prices supported by occupational demand.0p £17m 0.0 89. at c 68% below NAV.3 2. In that respect.4 2008A 2009A 2010E 2011E * % Relative to local index 2 December 2010 33 . a £5m development of 28 assisted living units for adults with learning disabilities. mainland China.2 N/A AIM Ashley House INVESTMENT SUMMARY (ASH) Completion of the acquisition of Strategic Property Solutions.0 39. 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. Y/E Apr Revenue (£m) 23.0 N/A EPS (p) 10.9 29.5 N/A P/CF (x) N/A N/A 3.8 24.

2 Forecast gearing ratio (%) N/A Market TSX Share price graph (C$) Aurizon Mines INVESTMENT SUMMARY (ARZ) Despite its first disappointing quarter in Q310. we believe that as the industry understands what is required and enforcement improves.0 AIM Augean (AUG) INVESTMENT SUMMARY The most significant short-term driver for Augean will be the outcome of the LLW appeal. in politically stable. Despite the impact of the poor weather in early 2010.6 134. pro-mining jurisdictions.5 P/CF (x) 1. while treatment was flat and the progress in developing the asset base and success in new target markets was important. with the result that earnings have the potential to rise by almost 100%. exploration drilling has increased in-pit measured and indicated resources at Casa Berardi's Principal Area by 690.0 P/E (x) 3.1 54.2 33.1 1. volumes will become increasingly predictable.9 68.8 17.9) (4.3) (37.7 3m (1.5 PBT (C$m) 21. INDUSTRY OUTLOOK There is an increasing trend towards treatment.9 35.4 11.2 * % Relative to local index Analyst Charles Gibson 34 2 December 2010 . Meanwhile.8 0.0 P/E (x) 75.1 92. Its aims to become an intermediate producer focused on favourable geological trends.5p £26m 5.5 4.9 31.8 5.9 28.8 72. Portugal) tensions.6 EPS (fd) (c) 9.350/oz is consistent with the US's additional QE2 stimulus.9 EBITDA (C$m) 59.9 22.35 is possible at the current gold price.5 P/CF (x) 15. Q2 landfill signals turned positive. close to infrastructure. Y/E Dec Price performance % Actual Relative* 1m 1.0 9.1 31. elsewhere intersections as high as 112g/t have been recorded.9 9. While new regulations since 2004 initially caused confusion. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m 11.0 5. Company description Augean is a United Kingdom-based waste and resource management company. we see 2010 as a year of consolidation as demonstrated by the interims. Longer term.7 14.44 Market cap: C$1202m Forecast net cash (C$m) 145.7 N/A 26. quarter-on-quarter. The current gold price of US$1.3 26.8 10. Spain. while upward pressure on prices will continue to be exerted by geopolitical (eg Korea) and economic (eg Ireland.9 EBITDA (£m) 10.4 32.1) 12m (30.3 0.4 6. including hazardous landfill and treatment services.9 2.0) 2008A 2009A 2010E 2011E Revenue (£m) 40.5 4. It provides a range of services to the hazardous waste sector. recovery and recycling within the waste hierarchy as highlighted in the government's Strategy for Hazardous Waste Management. Operationally.8 20.9 12m 42.0 11.0 EPS (p) 7.0 1. we do not expect a meaningful contribution until 2011. the decision of which is expected in the new year.3 91.6 PBT (£m) 4.Edison Insight Sector: Support Services Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 26. INDUSTRY OUTLOOK Company description Aurizon is a Canadian gold company with three major assets in Canada's Abitibi region.5 175.0 1.6 * % Relative to local index Analyst Roger Johnston Sector: Mining Price: C$7.6 182.0 1.6 234. we estimate that annual EPS of C$0.0 5. Although these will open up significant opportunities.3 3m 13. the tribulations of Q310 were temporary and we anticipate a full recovery in Q410.000oz (or 94%).2 Revenue (C$m) 144. 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. Meanwhile.5 31.

7 12m 113. Y/E Mar Price performance % Actual Relative* 1m (11. Support Services (33%) and International (15%). With the integration of VT well on track and synergies starting to come through.9 134.0 FULL Avon Rubber INVESTMENT SUMMARY (AVON) Results from Avon Rubber were ahead of expectations. In addition.4 20.3 P/E (x) 12. underlying operating profit up 38%.8 EPS (p) 41.5 P/CF (x) 18.7 63.7 * % Relative to local index Analyst Roger Johnston 2 December 2010 35 . new banking facilities in place and the pension issue under control.9 93.6 10.4 52.9) 2009A 2010A 2011E 2012E Revenue (£m) 1901.9 51.7 13.9 * % Relative to local index Analyst Roger Johnston Sector: Aerospace & Defence Price: 527.8 9.7) 12m (15.0 P/E (x) 13.1) (10. With operational performance consistently improving. which caused us to progressively upgrade throughout the year.3 P/CF (x) 7. However. Defence(18%). the protective nature of Avon's products provides resilience.3) 3m 5. PBT up 27% and EPS up 24%.7 Forecast gearing ratio (%) 85.1 7.Edison Insight Sector: Aerospace & Defence Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 200.7 61. this provides opportunities for outsourcing and.9 402. 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.1 3.9 117. 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.3 3m 70.8) (23. the US DoD contract supports demand over the long term.3 EPS (p) 14.2 9. Y/E Sep Price performance % Actual Relative* 1m 19.6 125.8 12. defence and dairy sectors.1 145. the emerging portfolio effect should enable continued growth.1 4.5 2998. combined with a significant order book and expanding pipeline.5 327.0 186. providing a Company description Avon Rubber designs. focus on supporting operations.9 295. we believe Avon is set to benefit from a period of sustained growth.3 2009A 2010A 2011E 2012E Revenue (£m) 100.9 1895. we feel the rating is being unduly discounted for general government spending fears.4 PBT (£m) 6.0 10.4 6.8 7.0 16.3 10. INDUSTRY OUTLOOK Despite the pressures on defence budgets. 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%).2 62. Its major contract partners are defence and national security and safety organisations.9 27. develops and manufactures products in the respiratory protection.8 224.5p Market cap: £1891m Forecast net debt (£m) 816.1 PBT (£m) 121.0 EBITDA (£m) 169.6 15.0 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%. base to target buyers including other security and safety agencies and international militaries.0 31. with contributions from both Dairy and Protection & Defence (P&D).1 7.0p £61m 9.6 3502.5 (15.5 21. leaves Babcock well placed to benefit in a cost down environment.0 8.8 4. While the timing of such inroads is difficult to predict.8 7. when combined with growth in international and recovery in non-defence markets.8 EBITDA (£m) 9.

0 EPS (p) 37.8 45.0 2328.0) (2. medium and long term.0 2179. which we estimate should rise to c 340Mt at 27.2) (1.1) N/A EPS (p) (1. Company description Baobab Resources is focused on developing its Tete iron-vanadium-titanium open-pit project in central-western Mozambique.1 42. 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. INDUSTRY OUTLOOK The UK's Strategic Defence and Security Review re-prioritised BAE's programmes. In addition.0 2467.4) (1.4) 3m 13. the cancellation of Nimrod MRA4.1p Market cap: £11593m Forecast net debt (£m) 98.0 2004.3% Fe.0 EBITDA (£m) 2096. Y/E Jun Revenue (£m) 0.5 P/CF (x) 6.1) N/A PBT (£m) (1. Baobab does not intend to develop its mine alone and is looking to take on a partner before completing a BFS. 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. Pro-rata the higher resource estimate implies a share price of c 65p (49p after dilution).9) (1. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (2. retirement of the Harrier fleet and the decommissioning of HMS Ark Royal. Australia and now India. underestimated by investors. including Company description BAE Systems is a global defence company with activities spanning production and support across air. A pre-feasibility study is expected in mid 2011. US.) BAE Systems' 9 November investor day highlighted the benefits of its international focus and home markets strategy. sea and security markets.1 40.8 7.9 * % Relative to local index Analyst Roger Johnston Sector: Mining Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 11.2) Revenue (£m) 18543. land.8 (6.3 (4.0 N/A EBITDA (£m) (1.3 26.0 Forecast gearing ratio (%) 2.0 22929.5) (2.4 6.0 0.Edison Insight Sector: Aerospace & Defence Price: 340.0 21990. the balance across air.7Mt at 25.0 23119. land and sea in both original equipment and support provides an inherent robustness.4 5.53/t).0 Market FULL Share price graph (p) BAE Systems INVESTMENT SUMMARY (BA.0 5. rising to over £1 at the industry average rating.0 PBT (£m) 1795.6 2009A 2010A 2011E 2012E * % Relative to local index Analyst Charles Gibson 36 2 December 2010 .6) (2.8p £19m 2.3 12m 84.2 8. Sweden. Kingdom of Saudi Arabia.5 7. we believe the business is capable of delivering sustained growth over the short. The company’s currently declared JORC resource is 47.0) (2.3 66.4) 12m 3. Its announcement of a £5m equity facility leaves it funded until c FY14. in our view. With negotiations still to be conducted. The group has operations in the UK. This was demonstrated with the post-SDSR IMS highlighting the impact on EPS growth due to programme cuts would be c 2%.7 3m 34. However.9 7.3 0. INDUSTRY OUTLOOK Baobab has an EV equivalent to c US$2/t JORC iron (cf an industry average of US$3.4 P/E (x) 9.3) 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 6.1 N/A AIM Baobab Resources INVESTMENT SUMMARY (BAO) Baobab's focus is the Tete Fe-Vn-Ti project close to Cahora Bassa in Mozambique.3% in due course. 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. The current rating still appears to apply an arbitrary 'defence cuts' mentality.0 2509.0 2077.

Edison Insight Sector: Mining Price: Market cap: Forecast net cash (US$m) Forecast gearing ratio (%) Market Share price graph (p) 66.6) 3m 63.9m.0 0. the company had a net cash position of £1.4) (24.0 0.9) (4. 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$40. West Africa. As of that date.3) (12. Meanwhile. Meanwhile.4) (21.9) EPS (p) (2. The company's strategic review of this project.0 EBITDA (US$m) (14. It was founded in November 2007 and listed on AIM in April 2010.1) (1.3 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 2.0 25.4) (0. In recent days.3 N/A AIM Bezant Resources INVESTMENT SUMMARY (BZT) Bezant Resources has released its annual report for the year to 30 June 2010.0bt of magnetite and 2.6) (3.8) (3.4 12m N/A N/A Revenue (US$m) 0. Also expected before the end of the year is a potential maiden JORC probable reserve at Mankayan.2) (1.2 (2. is ongoing.0 0.9) Revenue (£m) 0. the Mankayan scoping study remains on track with results expected before the end of the year.9) PBT (£m) (1. benchmark prices of iron ore have hit six-month highs (of around US$170/t) on the back of healthy demand from Asian steel mills and lower iron ore exports from India.55bt of oxide.0 EBITDA (£m) (1. In Tanzania.000.2) (1.5) (14.5p £351m 39.5) (22. in Tanzania Bezant has fully earned-in a 50% interest in nine early stage but highly prospective gold tenements covering a total of 2.7) PBT (US$m) (15. Declining Chinese copper imports and lower global inventories of the metal highlight the impact of higher prices on restocking. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (0.0p £15m 1.4) (0. Its estimates suggest Kalia hosts an attributable iron ore resource of 10. Meanwhile. Looking ahead. it has a 46% stake in a joint venture with AngloGold Ashanti. Assuming recent drill holes were stopped once they had drilled through the oxide (which outcrops at surface). we believe the longer-term fundamentals remain robust.5) EPS (c) (3.7) 12m 0. including discussions with various third parties.116 square kilometres. Y/E Jun 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m (13.55bt).9) (0. INDUSTRY OUTLOOK Company description BZM is focused on developing its Kalia iron ore deposit in Guinea.0 0. we estimate an average thickness of 70m (based on 309 holes for 21.8) (0. Nevertheless.0 3m 22. assuming the ore body is tabular with a density of 3kg per cubic metre.8 (8.0 0. the outlook for 2011 remains positive.8) 0. and other exploration tenements.0 0. We derive an approximate resource by applying this thickness to an area of 2km squared.530m). isolated incidents of election-related unrest have not affected the company’s ongoing operations in Guinea.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) 31.7) (21.2) (4.8) (1.1) (16.8) 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 .

1) (0.6733 BTG shares per Biocompatibles share (41m fully diluted). shareholder meetings in early January and completion by early February.1) 0.2) N/A N/A PBT (£m) (0. Bioplastics are still more expensive than petroleum-based products.9 (4.3) (1.5) EPS (p) (0.0 N/A AIM Biome Technologies INVESTMENT SUMMARY (BIOM) A Q3 trading update highlighted ongoing business development.2p £12m 3.7) (1. net cash at the end of Q3 was unchanged from the end of H1.2 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) 0.7 26.0p £146m N/A N/A FULL Biocompatibles INVESTMENT SUMMARY (BII) An agreed Class 1 bid from BTG was announced on 19 November.7 12m 56. and Licensing.8 17.5 41.4) Revenue (£m) 14.9 12.8 (3. It is expected that the actual timtable will be that documentation is posted by mid December. The conversion of these prospects into orders and revenues would provide a strong validation of Biome’s product and technology offering.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 370.4m.8) (1.3 3m 39.2 EBITDA (£m) (2. However.6 N/A N/A EBITDA (£m) (2. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (23.9) 12m (42. operating via two divisions: Oncology Products. 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. A BTG circular will be published by 18 December and an offer document by 21 January 2011. A range of third-party estimates indicates CAGRs of 12% to 20% in the coming years for the industry.3 23.0 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 .1 N/A N/A N/A P/CF (x) N/A 1079.4 Revenue (£m) 17.4) (3. INDUSTRY OUTLOOK Around Europe.1) (0.5) (2. by targeting niches where packaging is a small proportion of the overall cost of a product.1) (3. Encouragingly.6 36.56 (50p) if the AstraZeneca license option on CM3 is taken up. compared to a theoretical bid price of 430p (based on the BTG share price prior to the bid).4) (1. at c £4.7) (2. The parties aim to complete the offer by 24 March 2011.1) N/A N/A EPS (p) 0. including CellMed and PC Licensing.1) (22. including Bead Products and BrachySciences. INDUSTRY OUTLOOK Market reaction has generally been negative. plus either 10p cash or €0.Edison is a connected party in the transaction. The bioplastics division produces an organic-based resin (rather than oil based) for use in the production of plastics.0) PBT (£m) (2. and the consumer appeal of being eco-friendly adds enough differentiation. with Biocompatibles' shares trading at 370p Company description Biocompatibles is a leading medical technology company in the field of drug-device combination products. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* Analyst John Savin 1m 22.5 16.5) 3m 53. growth is being achieved Company description Biome Technologies (previously Stanelco) is focused on two areas: bioplastics and radio frequency (RF).7) N/A N/A P/E (x) 411. The updates on identified trials seem positive so far and we await news on further new major account wins.9) (48. This is structured as a scheme of arrangement for 1.

1) PBT (A$m) (6.4 EBITDA (€m) (4.2) (7.8) 3m (19. NASDAQ Share price graph (A$) 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. misusers in the major markets. The outcome of these will coincide around the same time as results from two Phase Ib studies of its anti-anxiety compound BNC210. 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. These data are all likely to be important in Bionomics's efforts to establish a development/marketing partnerships for the drugs.8) EPS (c) (5.6) (35.5) (2. although almost completely undeveloped. The anti-anxiety drug BNC210 could have a competitive advantage over existing anxiety treatments in terms of speed of onset.3) (8.0) (2. attractive profile with a possible direct anti-tumour effect as a single agent. Y/E Jun Price performance % Actual Relative* 1m 16.6) (7.7) 12m (12.9) PBT (€m) (5. Its lead programmes are a VDA and an anxiolytic compound. nalmefene would enter a potentially large. epilepsy and multiple sclerosis.5) (6.1) (6.2) (6. ronomilast and BTT-1023.37 €65m 21.9) (12.4 3.8 3m 20. Its lead project.5) (13.8 3.2 1. would trigger an offer for the company. market with little competition on the horizon.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 .5) (7.3) 12m (27.5) 2009A 2010A 2011E 2012E Revenue (A$m) 4. Positive results would trigger up to €72m in milestones from partner Lundbeck (presumably on approval and launch .4) (38.2) (12.4) (6. The company is funded into 2011 and can raise further sums under its Yorkville SEDA (equity line). of which only a very small proportion is currently treated with the available treatment options.potentially in 2012). There are >50m alcohol Company description Biotie Therapies is a Finnish biotech company with a focus on clinical programmes in CNS and inflammatory disease.5) (2.8% stake.2) (11. memory or motor impairment and risk of habituation.Edison Insight Sector: Pharma & Healthcare Price: A$0.1 17.4 99.6) (0. the absence of sedative.1 5.32 Market cap: A$104m Forecast net cash (A$m) 3.3 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.6) (12.1) (5. if successful.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. INDUSTRY OUTLOOK If Phase III trials are successful. which.4 (4.6 3. Bionomics is approaching interim analyses in its Phase II trials of BNC105 in renal cell carcinoma (due in Q111) and mesothelioma (in H111). anxiety. The product could become a very significant advance in this area.8 EBITDA (A$m) (5. Y/E Dec Price performance % Actual Relative* 1m (2.6) (7. for the treatment of alcohol dependency. is partnered with Lundbeck.4) (8.8) 2008A 2009A 2010E 2011E Revenue (€m) 5. nalmefene. A restructuring has reduced costs by >€4m pa and positioned Biotie to exploit its two un-partnered Phase II-ready assets.4 Forecast gearing ratio (%) N/A Market ASX.7) EPS (c) (2.

while the economic backdrop is challenging. copper fell sharply and is trading at US$8.5) (0. With constantly developing technology and a growth profile that is expected to continue.0 0. Zambia and South Africa. where contacts within end-users Company description Blue Star Capital invests primarily in unquoted homeland security companies with significant dual-use commercial market opportunities.1% of the project and a further US$30m in project finance.89) (3. 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.0 (29.3) (4.0 N/A EBITDA (£m) (2.4) (48. This was highlighted within the UK's National Security Strategy and the SDSR with £650m of additional funding in the area.6) (0. Overall. Glencore will provide US$50m for 50.5) N/A EPS (p) (1.72) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (19. management believes the benefits of the company’s growing US relationships.8) (0.Edison Insight Sector: Mining Price: Market cap: Forecast net cash (A$m) Forecast gearing ratio (%) Market Share price graph (A$) A$0. Y/E Jun Revenue (A$m) 0.72) (9.05) (1. Y/E Sep Price performance % Actual Relative* 1m (4.0 0. will become increasingly visible over the next six to 12 months. After rising to almost US$9.5) (0.3) (18. effective and rapidly deployable system to protect mobile and fixed assets with initial deployment in 2011.4p £4m 0. Blackthorn Resources has announced a JORC code-compliant mineral resource of 139koz of gold at their Guido prospect.0 0.3) EPS (c) (0. INDUSTRY OUTLOOK The zinc price lost ground in November falling to US$2. including revenue and operational opportunities.300/oz.0 EBITDA (A$m) (2. Note.67 A$72m 3. The contract is to develop a low-cost.1 N/A AIM Blue Star Capital INVESTMENT SUMMARY (BLU) The October announcement that Zimiti has secured an ongoing contract with BP highlights the potential of Blue Star's homeland security-focused investment strategy. Company description Blackthorn Resources is an Australian exploration company with projects in Burkina Faso.0) 12m (5.1) 3m 7.3) PBT (A$m) (0.0) 2008A 2009A 2010E 2011E Revenue (£m) 0.0) (4.0) 0. INDUSTRY OUTLOOK Homeland security is a large but highly fragmented market. construction and development has commenced and production of zinc concentrate is expected by the second half of 2012. the company aims to become a self-funding exploration and mining company. The company held its AGM on 25 November and all resolutions were passed.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. By focusing on priority projects.3) 3m 0.000/t in mid-November.0) (3.2 (9. this provides unique investment opportunities.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 .0) (10.093/t but the long-term price outlook remains positive.1 (0. Also in Burkina Faso. Gold remains at record levels above US$1.254/t.7) N/A PBT (£m) (1.0 0. forecast net cash excludes liquid investments. As a result.6) (4. are vital.6) (2.0 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) 2.8) 12m (42.1) (2.5) (4.

7 1.4x EBITDA. Brady's shares trade below its peers.5 2008A 2009A 2010E 2011E * % Relative to local index Analyst Fiona Orford-Williams 2 December 2010 41 . Unilever UK Holdings has been scaling back its initial investment.6 PBT (£m) 1.3 1.7 4.7 P/E (x) 19.3) (9.3) 3m 13.4 9.1 12. comparatives being poor.5 1.0) 3m (8. it has raised £15m (before expenses) through a share placement to fund the acquisition and position the group for further bolt-ons.0p £25m 2.9 2. Industry techniques are evolving rapidly and the group is at the forefront of developments harnessing emotional as well as rational response.0 10.8 9.5 PBT (£m) 1.7 12.9 3.0 P/CF (x) 7.9 P/CF (x) 22. risk and connectivity software solutions to the global commodity Company description Brady plc provides trading and risk management software for global commodity markets. market – miners.9 22. particularly with its tools designed to garner emotional as well as rational reactions.7 8. fabricators. including some of the largest financial institutions and mining corporations.1 2.8) (5. However.2 10.2 N/A AIM BrainJuicer INVESTMENT SUMMARY (BJU) BrainJuicer’s interim figures confirmed the growing US contribution.3 EPS (fd) (p) 7.3 11.9m. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 6.7 EBITDA (£m) 0.0) (4.2) (20. and regulators are seeking increased reporting and accountability across the industry.1 4.4 1.7 1. multinational companies.1) 12m (12.7 Price performance % Actual Relative* 1m (5.1 18. improving liquidity and broadening the shareholder base. selling 2. leaving it with a holding of 14. a greater proportion of revenues derived from the innovative ‘Juicy’ products. recovery in the UK and strong cash flow.9 1.4x enterprise value to our FY11 sales forecasts and 7.7 15.2%.7 13. further broadening the solutions it can offer clients into the energy vertical. which will boost the group's revenues by more than 50%. COO Alex Batchelor has now been appointed to the Board. GfK and Synovate's Q3 revenues both made double-figure gains. strengthening the group’s position in Europe.9 N/A AIM Brady (BRY) INVESTMENT SUMMARY Brady has announced the conditional acquisition of Viz Risk Management Services AS for £9. and lifting recurring revenues to more than 50% of the total. We view the acquisition as another excellent fit.9 2. Further.2 8. BrainJuicer continues to differentiate itself and to challenge traditional market research approaches and methodologies.9 20. INDUSTRY OUTLOOK Trading updates from industry majors have had a more positive tone lately.0p £17m 6.5 39.7) * % 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. It has more than 20 years of expertise and more than 500 users worldwide.4 12m 55. Y/E Dec Revenue (£m) 9.9 Price performance % Actual Relative* 1m (5.1 19.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 61. enabling far richer and more valuable insight for corporate customers.0 EBITDA (£m) 1. INDUSTRY OUTLOOK Brady provides trading.0 13. banks etc. Volatile commodity prices and potential general delays in clients’ decision making add some short-term uncertainty to the sales cycle.2 EPS (p) 3.1 1.5 P/E (x) 26.6 11.4 1.8 4. on 1.8m shares.6 18.8 3.8 15. helped by Company description BrainJuicer carries out quantitative online research using innovative.0 15.5 40. bespoke software to produce insightful market research for large. the target market is underinvested in IT and auditors.

2 44.5 P/CF (x) 10. discretionary funds up 3x advisory. Online competition remains Company description Brightside Group’s principal activities are insurance broking.7 (2. The outlook for the premium finance business is likely to be enhanced at least in line with the growth in the insurance broking business.0 2.Edison Insight Sector: Financials Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 139. although Brightside continues to expand market share. Equity markets remain volatile with sovereign risk concerns on top of stock-specific issues such as BP.6 74. charities and pensions and has an investment banking division. advice-rich products. It has consistently grown FUM faster than benchmark indices and margins are helped by an improving product mix.9 9.7 50.7 9.8 2.5 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. BD's results on 1 December confirmed positive business trends with total FUM up 13% v benchmark 8%.4 9.1 8.5p £130m 14. the provision of premium finance and medical reports.5) (21. and the provision of debt management solutions.9) 2008A 2009A 2010E 2011E Revenue (£m) 33.2 EBITDA (£m) 7.6 16. Strong growth continues with a 24% increase in revenue and 33% increase in PBT. Company description Brewin Dolphin is one of the largest independent private client investment managers in the UK and manages around £23bn. especially with an announcement of a review of pension contributions.1) (16. and will be accretive to our estimates for 2010 and 2011.2) 12m (12. with underwriters becoming more selective in their risk profiles and some withdrawing from specific lines of business. Rising premium rates translate directly into higher commission levels in cash terms.6 12. lead generation.5 N/A P/E (x) 12. It provides a complete service for private investors.5 9.6 N/A AIM Brightside Group INVESTMENT SUMMARY (BRT) Brightside reported interim 2010 results in September. costs 14% and pre-tax profits up 43%.1 18. INDUSTRY OUTLOOK Tax increases in the post-election budget are likely to help move customers to higher-margin.6 3m 17.6 3m 1. on an attractive valuation. Our forecasts are under review.9 475.6 6.8 11. The purchase of eBike and eCar completed in June.7 EPS (p) 2.3 * % Relative to local index 42 2 December 2010 .8 2.4 17.0) Revenue (£m) 212.0 P/E (x) 14.7 14.2 N/A EBITDA (£m) N/A N/A N/A N/A PBT (£m) 32.7 60.0 13.3 13.9 276. income up 18%.3 250. Y/E Sep 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m 1. INDUSTRY OUTLOOK Motor industry premiums continue to rise. Y/E Dec Price performance % Actual Relative* Analyst Martyn King 1m 1.9 N/A EPS (p) 10.5p £321m N/A N/A FULL Brewin Dolphin INVESTMENT SUMMARY (BRW) Brewin Dolphin (BD) offers geared equity-market exposure in high-growth wealth management.9 12. The 2010 dividend yield is around 5% and well covered by normalised earnings.4 PBT (£m) 7.3 3.1 37. Investors may be more cautious on high-margin equity-related products as a result.8 (9.1 2. The group is expanding its panel of underwriters to allow for further growth.8) 12m (8. although it could also stimulate greater demand for advice. fierce. due to its widening product range and competitive pricing.

Edison Insight Sector: Basic Industries Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 249. seen in some resin grades in the early part of H2. Yield attractions remain.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) 11.5 3. However.7 424.7 34.7 15. The merger.8 13. The enlarged company would have a pro-forma market capitalisation of more than £700m and should have at least £63m cash.4) 2008A 2009A 2010E 2011E Revenue (£m) 480. 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.2 25.0 * % 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) 219.8 5.7 5. representing a sustained (near peak) level.7 456.7 N/A N/A P/E (x) 122. the acquisition will create a UK-based speciality pharmaceutical company with a marketing presence in US acute care medicine and interventional oncology sectors.2 PBT (£m) 8. CytoFab (AstraZeneca). with small increases more recently.1 20.4 16.2 EBITDA (£m) 27.4 12m 34. INDUSTRY OUTLOOK BTG has a mixed speciality pharma/biotech model with direct sales and internal R&D programmes.7 0.6 44.1 21.2 2009A 2010A 2011E 2012E Revenue (£m) 84.3 1.8) (8.3 N/A N/A P/CF (x) N/A 73.1) 3m 5. abiraterone (J&J).1 N/A N/A * % Relative to local index Analyst Robin Davison 2 December 2010 43 . INDUSTRY OUTLOOK Market polymer prices (input costs) rose sharply in H1. otelixizumab (Tolerx/GlaxoSmithKline) and ONYX-0801 (Onyx Pharmaceuticals).5 31.8 98.9p £567m N/A N/A FULL BTG (BGC) INVESTMENT SUMMARY BTG has made an offer for Biocompatibles. (Genzyme).7 42. It also has a number of partnered programmes. is expected to complete in February 2011.6 P/CF (x) 2.3 N/A N/A PBT (£m) 5.8 8.5 EPS (fd) (p) 22.7 148. which has been recommended.4 470. management continues to exercise tight operational control supplemented by strategic actions taken in the UK.0p £66m 48.3 5. which remains subject to shareholder approval.2 2.3 12m (7. leaving our FY estimates intact.1 43.5 3.5 N/A N/A EBITDA (£m) 8. Y/E Dec Price performance % Actual Relative* 1m 2. particularly in the areas of neuroscience and oncology.3 3m 9.1 N/A N/A EPS (p) 1. It is also Europe's largest recycler of waste polythene film. including Campath for MS Company description BTG is a UK company specialising in developing and commercialising pharmaceutical products.3 15.5) (16.2 32. plateauing/softening was been Company description BPI is the largest manufacturer of polythene film products in Europe. If consummated. Y/E Mar Price performance % Actual Relative* 1m (8.5 16. That said. Limited polymer price visibility is likely to inhibit significant share price progress for now.

5) (4. The main challenge for such innovators is to convince major industry players of the efficacy of their technology.1 (0.3) 0. 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.Edison Insight Sector: Media & Entertainment Price: Market cap: Forecast net cash (US$m) Forecast gearing ratio (%) Market Share price graph (p) 5.0p £16m 2.3 5.6) (0. need to Company description Burst is a global provider of media.3 31.7) (1. The recent interim results showed relatively modest underlying revenue growth. Revenues above $50m would give a very different scenario on profits and rating. technology and professional services to online advertisers. leaving less unsold and driving up publishers' revenues.0) (45.0 EBITDA (£m) (2. under pressure from rapidly-developing Demand-Side Platforms (DSPs).2) (0.4) (1.2) 0.1 PBT (£m) (2. While many products tend to promise chemical Company description Byotrol has developed and patented specialist technology for the safe eradication of harmful microbes. INDUSTRY OUTLOOK The global market for specialist antimicrobial technology is enormous.9) 0. meanwhile. as the various relationships are translated into revenue-generating products.8) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Nigel Harrison 44 2 December 2010 .8 3m (2.7 P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 0. fungi and virulent diseases such as MRSA and C-difficile.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. solutions (sometimes solving one problem to create another). Publishers.9) 0.8) (1.7) (1.5) (2. healthcare and agricultural sectors all point to an exciting next two to three years. food processing.1 N/A AIM Byotrol (BYOT) INVESTMENT SUMMARY Byotrol is ready for take-off. Y/E Mar Revenue (£m) 0.1 2. a product that can damage the reproductive capacity of various types of bacteria offers considerable attractions to the user.9) (0.2 0.1 N/A AIM Burst Media INVESTMENT SUMMARY (BRST) Burst continues to put clear water between itself and commodity ad networks.9 3.0 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 (18.2) 3m (12. as awareness of new infections and diseases continues to increase.3) (0.1) EPS (fd) (p) (4.6) (59.5) (1.8) (18. budgets and timescales.0 0.4 44. maximise revenues while ensuring they display no inappropriate content.4 41.7m fund raising point to a rapid rise in revenues. otherwise threatened by the market changes.8) 12m (40. These include a variety of bacteria. Good technology and exclusive relationships are the 'must haves' for ad networks. The group is concentrating on growing the top line while protecting margins. The appointment of an experienced and motivated new chief executive and the subsequent £3.5) 12m (55.1 P/E (x) N/A N/A N/A 84. publishers and ad networks.6 EBITDA (US$m) 0.3) (35.6 PBT (US$m) (0.0) (0.3p £4m 1. Y/E Dec Revenue (US$m) 27.3) 0. INDUSTRY OUTLOOK Audience fragmentation underpins the need for ad networks to deliver the reach sought by advertisers with varying needs. but the more coordinated response to the series of successful trials in the consumer products. algae. DSPs and real-time bidding have emerged to provide a less ‘clunky’ mechanism for placing inventory.1 EPS (c) (0.

9 9.9 597.5 1.7 5.9 15.4 2.9 (4.9 (16. Y/E Oct 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (5.8 308.6) 12m 9. In FY10. Co-labelling growth in H2 was 65% and this is expected to continue.8 6. now 63% of sales.3 13.8 P/CF (x) 8. More important.0 Price performance % Actual Relative* Analyst John Savin 1m (3.1 2. generating overall 18% volume growth.3) 2009A 2010A 2011E 2012E * % Relative to local index 2 December 2010 45 .6) (2.1 212.2) (4.2) 12m 5.1m revenue was achieved despite an H1 manufacturing reorganisation.6 1. INDUSTRY OUTLOOK Many investors still view Chemring as a pure war stock and that.7 8. supports our fundamental investment case for growth. peacekeeping and conflict. up 44%.0 EBITDA (£m) 94. the SatinFlex alloy stent saw good growth in Brazil.5) Revenue (£m) 354. in our view. this accounts for less than 2% of our previous forecasts.5 EPS (c) 6.0p Market cap: £1037m Forecast net debt (£m) 310. manufacturer and supplier of medical devices.4 P/E (x) 4. Manufacturing capacity is being further expanded. more innovative peripheral catheters. revenues will simply plummet. It is a testament to management that this is only described as satisfactory. the group’s balance between front-line and training.2 24.6 119. are expected to boost gross margins to c 40% in FY11.5 6.0 P/E (x) 18.6 128. €15. primarily supplying home governments and NATO forces. Co-labelled peripheral products are sold by Cordis (SLEEK and Savvy range and Bard (UltraVerse range.2 102.0 153. ClearStream now has four production lines running two shifts.2 5.0 (1.6 10.5 1.0 804. 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.1 24. Peripheral products.0 Market FULL Share price graph (p) Chemring Group INVESTMENT SUMMARY (CHG) Despite the difficult defence contracting environment.Edison Insight Sector: Aerospace & Defence Price: 2939.9 0. which completed on 30 September).5 P/CF (x) 11.4 13.2 503.1 190.3 EBITDA (€m) 2. Cardiac products are also doing well. Chemring's pre-close statement highlighted that it generated 18% top line growth.4 EPS (p) 160. co-labelled peripheral products grew 65% in H2 and this should continue with a further product launch in H111.0p £12m 0.5) 3m 11. It has activities in the US.1 19. launched March 2010).2 Forecast gearing ratio (%) 95.7 245.0 9.0 (20.8 28. is that new safety measures are in place and the £803m order book.1 3. Net margins should rise to the low 40% range due to a more profitable mix and lean production. as hostilities in the Middle East wind down. and acquisitions provide new opportunities (Mecar – non NATO and Roke – counter-terrorism and electronics.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. INDUSTRY OUTLOOK Company description ClearStream Technologies is a developer.8) 3m 8.1 151. Y/E Jul Revenue (€m) 13. UK.1 5. While incidents at Kilgore and Mecar have slipped £7m of revenues and £3m of profit from FY10 to FY11.8 12.0 3. Italy and Australia.0 AIM ClearStream Technologies Group INVESTMENT SUMMARY (CTN) ClearStream has changed significantly as its underlying business mix is now dominated by higher-margin.1 PBT (€m) 1.9 PBT (£m) 74. an argument: timescales of withdrawal are difficult to predict.

0 2108.9 21.0 Market FULL Share price graph (p) Cobham (COB) INVESTMENT SUMMARY The 30 November investor seminar provided greater clarity over the structure. CoAL announced plans to acquire Chapudi and a number of other thermal and coking coal projects for US$75m from the Rio Tinto/Kwezi joint venture.3) 3m (1. INDUSTRY OUTLOOK With 78% of Cobham’s business related to defence and over 60% derived from the US.4 18.0 389.1 5.2 15.7) 113. which is masking some good underlying growth.0 EPS (c) (3.1 111.8 5. Y/E Dec Revenue (£m) 1467. We are reviewing our forecasts. Y/E Jun 2009A 2010A 2011E 2012E Revenue (A$m) 23. Cobham also indicated that order delays have to a large extent continued.4) 3m (4.3) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Roger Johnston 46 2 December 2010 .0) 12m (11.2 6. management has indicated active portfolio management relating to c 10-15% of the technology division's revenues. Meanwhile. The company plans to apply for a New Order Mining Right at Makhado before the end of the year.Edison Insight Sector: Mining Price: 73. the company is awaiting regulatory approval before it recommences development.7) (38.5) (22.0) (16.3) 12m (22. In addition.0 EBITDA (£m) 283.4) (29. Meanwhile.2 P/CF (x) 7. £65m of annual benefits will be accrued by the end of 2013 at a total cost of £131m. which should start production in H111 and H113.0 9. we Company description Cobham is an international aerospace & defence equipment supplier with businesses across avionics & surveillance.040Mt and is contiguous with Makhado where the results of a Definitive Feasibility Study are due in early 2011.0 EPS (p) 15.0 295.0 311. At Vele. Earlier in 2010.0 338.0 423.8) 82.8p Market cap: £391m Forecast net cash (A$m) 46.9 10.0 PBT (£m) 244.0 350. feel the business will remain resilient to slowing defence spend.3 P/E (x) N/A N/A 10. thermal coal leaving Richard Bay is currently priced at c US$100/t. phasing and financial impact of the Excellence In Delivery (EID) programme.8) (20. Thanks to robust demand from Asia's steel mills.8 P/CF (x) N/A N/A 11.2 EBITDA (A$m) (20. defence systems.6 Price performance % Actual Relative* 1m (15.3 118.5) (12.4 Price performance % Actual Relative* 1m (17.0 453.2) 11. INDUSTRY OUTLOOK Company description CZA's Mooiplaats Mine began production in 2008.6 7. respectively. The steel and power generation industries are driving M&A in the sector as both look to secure supply of key raw materials. ASX.8 417.8) * % Relative to local index Analyst Michael Starke Sector: Aerospace & Defence Price: 198.9 Forecast gearing ratio (%) N/A Market AIM.0 1880. CZA acquired NuCoal’s producing mines for ZAR650m.7p Market cap: £2294m Forecast net debt (£m) 248. Coal of Africa’s Mooiplaats Colliery has continued to operate unaffected by the issuance and subsequent withdrawal of a pre-compliance notice in October. mission systems and aviation services. 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.0 Forecast gearing ratio (%) 24. JSE Share price graph (p) Coal of Africa INVESTMENT SUMMARY (CZA) Earlier this week. although the timing of orders has been slower than anticipated. Chapudi has a JORC resource of 1.8 19.6 4.9) (15.8 151.0) (22. Where this is the case. In other areas underlying growth is expected to be slower.0 1982.6 10. coking coal prices are expected to increase c 10% in Q111 from current levels of around US$210/t.6 P/E (x) 12. It is also developing its Vele and Makhado coking coal projects.0) (113.5 PBT (A$m) (12.

4 25. that still leaves 60% under pressure.1 127.5 48. through a lack of financial control. INDUSTRY OUTLOOK Consort designs.9 6.6) (0.3 12m 30.3 118.3 7.8 10.1 EBITDA (£m) 25.1 42. It operates through two divisions: Bespak (inhalation and injection technologies) and King Systems (airway management products).3 17.2 P/CF (x) 4.4) 12m (47.5 PBT (£m) 5.6 EPS (p) 45. dividend-paying growth opportunity for investors and.0 5.5 44. This is Consort Medical’s most recent product launch. although more are anticipated over 2010-13.4 7.5p £137m 37.1 10.9 16. there are good parts to the business and. With a growing focus on export and non-defence opportunities across space and transportation.1 20.0p £34m 5. we are concerned by the eventual impact of Company description Cohort is a UK-based provider of services and products into the defence industry.8 5.9 19.6 6. the embedded value should become apparent. However. the issues at SEA highlight there is further rehabilitation to occur.6) 2009A 2010A 2011E 2012E Revenue (£m) 76.0 FULL Consort Medical INVESTMENT SUMMARY (CSRT) King Systems unveiled the King Vision video laryngoscope at the American Society of Anesthesiologists’ annual meeting. The business operates through three divisions: SCS (34% of FY10 sales).2 21.1 10. Mass (27%).5 11.6 4.5 7. cuts. Anticipated near-term newsflow includes US launch of the VAL410 MDI valve and FDA approval of Dr Reddy’s Autoinjector INJ300.7 6. New product launches (from Bespak and King) plus new auto-injector device contracts.9 28.6 P/E (x) 10.2 * % 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. improved margins and synergistic acquisitions should support Consort’s target of double-digit profit growth. Y/E Apr Price performance % Actual Relative* 1m 19. if management can steer the group through the current difficult market unscathed. Although the recent trading statement and contract announcement have helped ease some concerns.4 7.7 2009A 2010A 2011E 2012E * % Relative to local index Analyst Lala Gregorek 2 December 2010 47 . Consort offers a defensive.8) 3m 15.6 9.7 P/CF (x) 5.8 79. Company description Consort Medical is an international medical devices company. These have leading positions in strong defensive.8 4.1 77.1 EPS (p) 12.6 P/E (x) 6.Edison Insight Sector: Aerospace & Defence Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 84. there are signs of hope.0 5. markets.8 EBITDA (£m) 6.6 120.2 5.8 11. INDUSTRY OUTLOOK With 73% of revenues derived from the UK MoD.4 25.7 78. develops and manufactures high-margin disposable medical devices through its Bespak (inhalation/injection technologies) and King Systems (airway management) divisions.0 46. but relatively fragmented. Interims are due 2 December.1 3m 13. Y/E Apr Revenue (£m) 120.9 16.3 PBT (£m) 17.2 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.5 (28. now finds it difficult to follow that strategy and needs time to demonstrate it can deliver consistent results. and SEA (39%). despite solid share price performance.8 7.3 8.5) (52. While management has indicated 40% of its MoD revenue is not subject to spending constraints.8 Price performance % Actual Relative* 1m (1. pipeline clarity could prompt upgrades.

0) 3m (8.future revenue growth depends on Cyan winning significant volume orders in the AMR and lighting control markets.3 P/E (x) N/A 22.2) (3. there are over 600 voice product resellers and over 1.5 N/A * % Relative to local index 48 2 December 2010 .9 7. Any progress on cross-selling into FY12 will be key to reducing the c 40% discount we see currently to fair value.1 0. although admittedly the industry is highly fragmented with not only low entry barriers but also ongoing price deflation. Furthermore.9 44.4 5.0) (2.2) (3.0) (2. Y/E Mar 2009A 2010A 2011E 2012E Price performance % Actual Relative* Analyst Neil K Shah 1m (6.5) (0. However.800 data resellers .0 AIM Daisy Group INVESTMENT SUMMARY (DAY) Daisy is proving itself adept as a consolidator in the SME telecoms space. we expect that Cyan will receive orders for the rest of the programme.1) (7. It does not own any network infrastructure and resells services over other operators’ networks.6) N/A EPS (p) (1.a key opportunity for Daisy as consolidator. The order should start to ship this year and represents c 10% of the customer's installation programme.7) (6. R&D investment in the industry is relatively low.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 0. As sole source. Importantly.0 313.8) 12m (58.000 unit production order for its wireless lighting control solution for use in the Indian outdoor lighting market. In Company description Daisy provides unified communications to the SME and mid-market sectors and offers a full suite of network services.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. INDUSTRY OUTLOOK The MCU market is dominated by large players.5 N/A AIM Cyan Holdings INVESTMENT SUMMARY (CYAN) H1 results showed margin improvement and tight cost control .6 EPS (fd) (p) N/A 4.7 EBITDA (£m) N/A 11.9 9.5) (62. the SME space. utility metering and industrial telemetry.5) (6. stable market shares and often low performance requirements mean Company description Cyan is a fabless semiconductor company delivering flexible wireless solutions for lighting control. although the £40m EBITDA expectation in the market is still very much within reach.0 (5.6) N/A PBT (£m) (4.4 272.6 15. the growth and profitability dynamics of the market. they also offer a configuration and software tool set and a module strategy that enables the rapid development of customer applications. mobile.4) 3m 3.6) (13.1 N/A EBITDA (£m) (4.6) (0. Daisy itself sees an incremental £500m opportunity to cross-sell additional services to its existing base.1 9. systems services and data solutions. The upcoming H1 interim statement is likely to show a seasonal weighting of the FY11 results towards H2. Y/E Dec Price performance % Actual Relative* 1m (8. On 11 November Cyan announced it had won a 10.9p £6m 1.5) 2008A 2009A 2010E 2011E Revenue (£m) 0.5 12.0p £249m 20.1 PBT (£m) N/A 9.8) Revenue (£m) N/A 134.0 39.6 P/CF (x) N/A 8. Opportunities abound. most likely from FY11.1) 12m (4. INDUSTRY OUTLOOK Ofcom estimates that SMEs spent £4bn on telecoms services in 2008.1 0.8 34. and a successful integration of the just-announced £33m SpiriTel deal (its second-largest ever) would go some way to reassuring investors further. Cyan's solutions offer very high performance.7 49.

9) (1. Y/E Dec Revenue (£m) 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) 0.6m.0 AIM Deltex Medical Group INVESTMENT SUMMARY (DEMG) Deltex’s interim results show steady growth at 13%. sub-optimal intra-operative fluid management. PC.8 51. Y/E Dec Revenue (£m) 5. This supports NHS adoption. Evidence is emerging that competing arterial pulse pressure monitors may not reliably track the haemodynamic status of patients in surgery. DDD has good growth possibilities in the 3D TV.0) 0.2 7.4 3.4) (0.6) (0. However.5 2008A 2009A 2010E 2011E * % Relative to local index 2 December 2010 49 . mobile and content markets.4 EPS (p) (1.2) 12m 25.5) (0.0 EPS (p) (1. While we expect good growth in the 3D TV market and sizeable 3D PC shipments to commence.9) (3.1) 0. INDUSTRY OUTLOOK There is solid evidence.0 EBITDA (£m) (1.0p £21m 0.2m loss. TV and mobile handset screens. that doppler monitoring improves recovery from major surgery.8m. which has real time 2D to 3D capability.6 6.6) (0.0 P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A 71.4) (0.5 N/A AIM DDD (DDD) INVESTMENT SUMMARY DDD’s FY10 interims were as expected.3 P/E (x) N/A N/A N/A 53.3) 0.1 26. However.8) (1.7) 3m 56. 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. INDUSTRY OUTLOOK Company description DDD develops and sells software and services for the generation of three-dimensional (3D) pictures and video for PC. we estimate break-even for FY11. Last month.3 P/CF (x) N/A N/A N/A 494.4) (0.2 5.5) (3.8p £25m 2. purchasing is subject to budget factors. while Movidius launched a video processing chip in its Myriad 3D range.4 1.0) (1.0 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) 16.0 13.4) (0.3) (41. NICE guidance now supports this.2) 0.0 PBT (£m) (1.5 PBT (£m) (1.1 12m 48. This is needed to meet increasing demand. as the NHS National Technology Adoption Centre pushes hospitals to use Deltex’s technology in major surgery for optimal fluid management and patient recovery.5 EBITDA (£m) (1.2) 0. scheduled for launch by year-end.8 34.9 Price performance % Actual Relative* Analyst John Savin 1m (4.1) 3m (1.6m before a deliberate building up of probe stocks by £0.3m to £0.9) (1. confirmed by NICE.5) (0. The 3 November R&D day showed impressive results from the combined arterial pressure and doppler monitor in initial Beta testing. In October Toshiba unveiled a range of glasses-free 3D TV models at CEATEC 2010. with operating losses cut by 46% to £0. Cash outflow was £0. prompting a reduction in our FY10 estimate from break-even to a £1. an availability delay of third-party graphics hardware in its PC segment is likely to result in licensed product missing important PC launch windows.8 Price performance % Actual Relative* Analyst Martin Lister 1m (3. IMS Research estimates that over 218m 3D TVs will ship by 2015.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 18.6 1.

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.7 3.9) (5. DBAY should receive £205m on completion of the sale in mid-January or February. 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’.1 690.9 11.6 10.9 13. and there is potential for some distribution to shareholders.2 39. Y/E Dec Price performance % Actual Relative* Analyst Neil K Shah 1m 12. 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.0 11.9 6. equivalent to a c 34% IRR over the two-year period since its acquisition.9 N/A Price performance % Actual Relative* 1m (5. a c 7x ex-cash P/E and a 7% yield seem far too cheap.6 2008A 2009A 2010E 2011E Revenue (£m) 4.0p £10m 1.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 175.0 15.6 3.2 1.8 2.0 N/A PBT (£m) 6.4 P/E (x) 10.9 11. Post sale it will have over £185m of equity. to France’s Norbert Dentressangle.4 1.0 N/A EBITDA (£m) 10.1 11. TDG has demonstrated management’s skills and provided a platform for future fundraisings and gradual dilution of Laxey’s dominant shareholding.3 1.0 4.0 37. It is used by 12 of the world’s 20 largest executive search practices. We note that Bond International's recent acquisition of VCG is likely to mark a trend of further consolidation in the space.4 4.3 1.7 19.0 1. 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. or 16p/share in liquid assets. INDUSTRY OUTLOOK Dillistone is a developer and vendor of software to the executive recruitment sector.7 8.1 EBITDA (£m) 1.2 7.8 * % Relative to local index Sector: Basic Industries Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 8.8 3m 20.4 12m 48.0 AIM DouglasBay Capital INVESTMENT SUMMARY (DBAY) The group has announced the disposal of its largest investment.5 1. We have removed forecasts after the current year.1) 3m (15.7 2008A 2009A 2010E 2011E * % Relative to local index Analyst Roger Leboff 50 2 December 2010 .1 16. Y/E Dec Revenue (£m) 176.3) 12m 28.0 6. an integrated client management tool that delivers major productivity gains. INDUSTRY OUTLOOK Company description DouglasBay Capital (formerly LIT) is a holding company for investments in quoted and unquoted small to medium-sized businesses.1 662.2 1.7 13. value-driven growth strategy to acquired businesses.7 4. Dillistone is demonstrably outperforming its peers and has an impressive return on capital and cash generation. Stripping out the cash on the balance sheet. The bulk of DBAY assets will shortly be turned into cash and there is no visibility regarding contribution from new operating companies.5 PBT (£m) 1.1 1.8) (23.5 14.9 34.7 P/CF (x) 4.0 N/A EPS (p) 0.7 15. Selling into the global recruitment market. strong following among the largest executive recruitment firms across the globe. logistics business TDG.7 N/A P/CF (x) 8.0p £107m 3.2 N/A P/E (x) 26.2 EPS (fd) (p) 17. well above the current share price.

55 (approximately 97p) per share and is expected to raise gross proceeds of C$302. Underlying diluted EPS at 5.2 Revenue (US$m) 114. It has an 87.2 2.8 3m 33.5%).9 19. has been priced at C$1.25m (£190m) through the issuance of 195m new shares (excluding a 15% over-allotment option).3 5.8 0. investment.2 N/A PBT (£m) 2.3 P/CF (x) N/A N/A 26.4 152. The critical mass that the recent large acquisition of Xtreme brings to the group makes Ebiquity’s marketing and media monitoring and analytics businesses attractive to companies that are intensifying their focus on value and effectiveness of their media spend. Y/E Apr Price performance % Actual Relative* Analyst Martin Lister 1m 18.8% in 2010 and 4.2 15.0 15.2 72.5% in 2011.6 * % Relative to local index Analyst Michael Starke Sector: Media & Entertainment Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 85.0 N/A EBITDA (£m) 2.5 45. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (3.1 23.0p £48m 3.9 EBITDA (US$m) (286.0 Forecast gearing ratio (%) N/A Market AIM.0 EPS (c) (30. 2012.2) (2.9) 0.4 21.9 16.2 N/A EPS (fd) (p) 5. The deal is expected to close by 8 December.6 5.4) 3m 55.1 10.5% interest in the Crocodile River Mine in South Africa. Mareesburg (75.3p Market cap: £678m Forecast net cash (US$m) 25.4p to reflect higher operating profitability for the enlarged group offset by more shares outstanding.5%). The placement.6 2009A 2010A 2011E 2012E Revenue (£m) 18. 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. IDC estimates that business analytics could see compound annual growth of 7% between 2009 and 2014.3 69.Edison Insight Sector: Mining Price: 99.6p from 5.4%). media owners and PR professionals in the UK and is growing these services in both Europe and the US.0 AIM Ebiquity (EBQ) INVESTMENT SUMMARY Ebiquity announced its FY10 prelims in July.2 42. DGV (87.1 12m 87. JSE.7 111. Furthermore.6) 17.4 29.6 N/A P/E (x) 16.8 33.8 12m 47.5%) and Kennedy’s Vale (87. It also has four development projects. primarily due to better than-expected operating profitability. Spitzkop (93.4) 8.2) (0.4 264.3 1. analysis and consulting services to advertisers.7 53.0 15. 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. Warc has recently increased its international adspend forecast for the 12 major markets to 4.5 P/E (x) N/A 198.1 2. the company’s first since March 2007.8p estimate.2 N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index 2 December 2010 51 . TSX Share price graph (p) Eastern Platinum INVESTMENT SUMMARY (ELR) Eastern Platinum plans to raise c C$300m to fund the first phase of the company’s Eastern Limb development plan and provide general working capital.3 PBT (US$m) (298.6p came in ahead of our 4.6 3. We raised FY11 EPS to 5.1 232. INDUSTRY OUTLOOK We remain 'cautiously optimistic' about the current outlook following recent positive US automotive sales.5 4.

Y/E Jun / Sep 2008A 2009A 2010E 2011E Revenue (£m) 0.7) (0.4) (3.6) (22.5) (3.0) (46.7 P/CF (x) N/A 13. there is a growing Company description Eco City Vehicles has exclusive distribution rights to the Mercedes Vito in the London market.5m. further equity dilution).3m.6) EPS (p) (3.0) (3. the operator of the Copper Flat project in southern USA. INDUSTRY OUTLOOK Our discounted dividend valuation assumes a long-term copper price of US$6.3m stands at a 52% discount to a sum of the parts valuation of £13. which is developing the Copper Flat copper project in New Mexico.Edison Insight Sector: General Retailers Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 5.0 AIM Eco City Vehicles INVESTMENT SUMMARY (ECV) The autumn interim results announcement confirmed progress in the face of a challenging trading climate.06 0.9 12m (41.0 24.1p if its convertible bond is converted.6 30.1 5. to which an additional £3.3 4. The group provides a one-stop new car.9) (2.4) 0.5 30.0 EBITDA (£m) (0.0) (12.8 35.1 PBT (£m) (0. and interests in Paniai Gold.0p per share (4. with sales of the Mercedes Benz Vito taxi continuing to increase. which owns key engineering patent related to the Vito taxi. 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.3) (3.6 55.1) (3. Silver Swan and gold exploration projects in Argentina.6) * % Relative to local index Analyst Charles Gibson 52 2 December 2010 . but excluding any Company description Electrum Resources is a mineral development company with a substantial interest in THEMAC Resources Group. Considering all other assets and liabilities.6p £6m 1.2) 0.1 85. ACS Asia and Paniai Gold.0 4. While the recession continues to undermine the market for new vehicles in the short term.3 22. point to a strengthened business into the future. used car and after sales service through its subsidiary KPM Taxis in the London market.3 EBITDA (£m) (1.8 12m (14.23) (0. we calculate that ECR’s net asset value could almost double to £23m or 6. Assuming THEMAC re-rates to the NPV of the discounted dividend flows available from the Copper Flat project. It also has a majority shareholding in Thai metal-products company ACS Asia.0 AIM Electrum Resources INVESTMENT SUMMARY (ECR) Electrum's principal asset is an interest in TSX-V listed THEMAC Resources. INDUSTRY OUTLOOK London's 22.7 26.000 licensed taxis carry 1. we estimate ECR's market cap of £6.2 0.76/lb).6 N/A 20.8 million people every week. The value of its holding in THEMAC is c £5.5 1. Plans for strategic group moves into adjacent markets will involve a combination of accurately assessing market needs and sustaining relationships with OEM partners.4) PBT (£m) (1. Last month's fund raising and concurrent purchase of a controlling interest in One80.26 P/E (x) N/A N/A 98.8 3m 129.0) (1. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 19.8) * % Relative to local index Analyst Nigel Harrison Sector: Mining Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 1.06) 0.2m can then be added for its warrants.289/t (US$3.79/lb) compared to a current price of US$8.8 EPS (p) (0.9p £20m 2.3) 3m 14.2 Price performance % Actual Relative* 1m (13. and holdings in Silver Swan Group.1) (0.7) (1.2 0.151/t (US$2.8) 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. pent-up medium-term demand related to environmental/political pressures and preparation for the 2012 Olympics.6 6.

4) (2.9p £38m 8.8) 3m 23. INDUSTRY OUTLOOK After rising to almost US$9.8) N/A EPS (c) (3.9) (8.9) (9.9) (8.75/lb) used in our valuation. the company has discovered a 1.6) (1. Y/E Dec Revenue (£m) 207.2 221.4 5.0 N/A EBITDA (€m) (4.8 EBITDA (£m) 8. Europe.2) (9.6 18.2) 12m (27. with a strong rebound on top of continuing structural changes increasing the penetration of temporary recruitment. ROW). although with the earnings number restrained by a higher assumed tax rate.9 31. The company also has a 20% stake in Kefi Minerals plc.0) 3m (10.2 7. Gold is trading at record levels of over US$1.9 8.0 AIM EMED Mining INVESTMENT SUMMARY (EMED) At an EGM held on 22 November. taking its holding to 94%.7 PBT (£m) 6.3 12m 35.9 P/CF (x) 3.3 EPS (fd) (p) 8. 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.8 83.6 2008A 2009A 2010E 2011E * % Relative to local index Analyst Fiona Orford-Williams 2 December 2010 53 .9 Price performance % Actual Relative* 1m (2. 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.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) 57.6 3. INDUSTRY OUTLOOK Larger staffers are seeing the benefits of operational gearing on a reduced cost base driving their renewed profitability. The group bought in 28% of the minority in Fastrack. This is expected to fully fund the equity component of the cost to restart the Rio Tinto Copper Mine.2 7. Company description EMED Mining aims to restart copper production at its 100% owned Rio Tinto Mine (PRT) in Spain. its UK construction and engineering subsidiary. Y/E Dec Revenue (€m) 0.4 3. for £1.4 9.0 0.2 3.7 22. the copper price fell sharply to US$8. In Spain.1 6.6 4.5 234.2 P/E (x) 6.7) (3.1) (3.0p £25m 6.300/oz. The company recently acquired an option over an exploration permit covering a known tungsten deposit in Portugal. driven by some pockets of real recovery in the economy.6) (34.0 AIM Empresaria INVESTMENT SUMMARY (EMR) Empresaria's September interims showed strong performances in each of its geographic regions (UK.9 7.0 20.6) 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. it plans to evaluate the property before considering its option to purchase the asset for shares or cash.9) N/A PBT (€m) (5.2 7.7) (2. The current spot prices far exceed the life-of-mine price of US$6.2 6. across its operations: UK. The momentum continued into Q310 and we raised our expectations for the full year and for 2011. Shareholders approved an issue of shares for this purpose at the EGM.7 195. In Slovakia.1Moz (JORC) gold deposit.063/t (US$2.Edison Insight Sector: Mining Price: Market cap: Forecast net debt (€m) Forecast gearing ratio (%) Market Share price graph (p) 8.000/t in mid-November. operating in 16 countries.79m cash (+£163k deferred). it expects to be producing copper concentrate from its Rio Tinto mine in late 2011.1Moz Detva Gold Project in Slovakia.254/t. Germany. and it is progressing through permitting and feasibility of its 1.3 4.0 0. with a pick-up in permanent recruitment.

0 FULL Entertainment One INVESTMENT SUMMARY (ETO) eOne released an excellent set of interims on 17 November.8 1. with EBITDA up 34% to £12.7 93.3p £200m 77.2 480.5m.2 9. 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. This is bringing Endace to the fore and our research suggests that major customers are deploying Endace’s technology on a much broader basis.0 65.6 12m 113.a view that was reinforced by the multi-million dollar order with a global financial services firm.0 EBITDA (£m) 25.6 11. issues can be overcome.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) 113.5 12.9 1.6 34.1 * % Relative to local index Analyst Jane Anscombe 54 2 December 2010 .6 P/CF (x) 4.2 20.0 PBT (£m) 16.6 444.0 3.0 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.5 5.7 Price performance % Actual Relative* 1m 19.1 EPS (fd) (p) 8. with a fundamental competence and ability to capture all of the packets flowing through high-speed data networks.Edison Insight Sector: Technology Price: 345. It is incorporated in Canada and moved from AIM to the Main Market on 15 July 2010. the box office has remained strong in 2010.4 1. the availability of reasonably priced on-demand entertainment through a variety of new channels should continue to drive market growth and library values.0 35.0 60.4 22.1 35.8 17.8 EBITDA (US$m) 7.6 40. deploying Probes in 15 data centres and at all levels throughout the bank.6 P/E (x) 27.0 41.3 36. production and distribution of film and television content across all media.3 12m 39.7 10.1 1.4 8. helped by the popularity of new 3D films.3 34.4 26.5 42.3 P/CF (x) 21. Hollywood has historically profited from technological change and.5 6. Meanwhile. The broader network security market is also one of the most corporately active globally.0 2009A 2010A 2011E 2012E Revenue (US$m) 30.9 9.0 13.2 51.1 3m 53.1 30. although the cost implications are as yet unclear. 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. Y/E Mar 2009A 2010A 2011E 2012E Revenue (£m) 342. Our research indicates that the technology is set to be deployed in a much broader range of applications . assuming piracy Company description eOne is a leading international entertainment company specialising in the acquisition. eOne's balance sheet is strong and year-end debt should be below £80m.0 EPS (fd) (c) 20.1 PBT (US$m) 5.4 31.0p Market cap: £52m Forecast net cash (US$m) 2.7 16.0 490.2 P/E (x) 13. the library was recently valued at $250m (14% up on 2009). We expect above-average organic growth to be augmented by acquisitions at some stage.4 15.1 41.3 39. INDUSTRY OUTLOOK Our Review of 13 October included a feature on the implications of the shift to digital in the film industry.0 7.4 3m 119. The recent launch of a Latency Monitoring Service is early stage but could help reduce barriers to deployment and add recurring revenue streams. architectures start to fall down.8 15.1 13. Y/E Mar Price performance % Actual Relative* 1m 35.7 2.

However. there is likely to be increased share price volatility as a lock-up agreement lapses on 14 December 2010.9 (13.9) 12m 47. 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. A novel desktop Point-of-Care DNA test system.4) (14.38 N/A P/E (x) 329.5) 12m (4. and manufacturers Company description Evolva is a Swiss synthetic biology company.8 3m 17.3) 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 (14.9 2008A 2009A 2010E 2011E * % Relative to local index Analyst Mick Cooper 2 December 2010 55 .9 18. are competitive with Roche.4) (27. work is behind the original research plan so any deals are unlikely until H211. The Company description Founded in 2000.5 42.4) (9.9 18. Evolva's platform has already created several first-in-class drug candidates.7) (22.2) EPS (CHFc) (38.2 N/A PBT (£m) (0.6) 0. Biomarkers had £0.0 4. of nutritional products for cheaper production methods.79 0.9m of sales.8 EBITDA (CHFm) (6.1) 3m (7.7) (19. The company is seeking an acquisition to help GeneDrive commercialisation.2 N/A EBITDA (£m) (0.5 N/A P/CF (x) 16.2 3.02 Market cap: CHF282m Forecast net cash (CHFm) 30. INDUSTRY OUTLOOK Biomarker sales are did well but have not yet broken through into mainstream clinical use. Y/E Jun Price performance % Actual Relative* Analyst John Savin 1m 4.5 0.7) 0.2m but with higher margins.4 0. Y/E Dec Revenue (CHFm) 11.2 104.3) (19. This could prove very versatile in the market but needs validation.5) (29. is being prepared for Beta testing. Epistem has a contracts services operation. prototype GeneDrive testing instrument may create new growth expectations but the initial markets.3) (31. The nutritional products strategy means that Evolva has a lower risk profile than it would if it was a pure drug discovery company. the shares have performed very strongly so that Evolva appears to be fully valued. INDUSTRY OUTLOOK The pharmaceutical industry is continually searching for novel treatments. which it uses to develop novel drugs and new methods of making nutritional and consumer health products.0 N/A EPS (p) 1. Partnering revenues will fall from March 2011.8) (25.0) 2009A 2010A 2011E 2012E Revenue (£m) 4.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 395. an emerging clinical biomarker technology and a therapeutics discovery unit. GeneDrive. However. We are currently reviewing our forecasts. For liquidity reasons. The Novartis deal will proceed as planned until February 2011.2 N/A AIM Epistem Holdings INVESTMENT SUMMARY (EHP) The final results showed contract revenues up 10% to £5.2 1039.8) (6.1 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.0) PBT (CHFm) (8. It has developed a technology platform.8) (14. The platform's potential has been validated by several partners including Roche.6 N/A N/A N/A * % Relative to local index Sector: Pharma & Healthcare Price: CHF2. with some use in clinical trials.7 5. Novartis has until February 2013 to use its exclusive option.0p £31m 4.8 19. due to a better product mix.0 5.0) (14. particularly sexually transmitted disease testing. there is also one product in Phase I development.

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.9 648. INDUSTRY OUTLOOK Ferrexpo achieved a price of US$131/t for its pellets in Q210.2 81.0 PBT (US$m) 442.4 12m 89.2 970.1 * % Relative to local index Analyst Charles Gibson 56 2 December 2010 . Y/E Dec Revenue (€m) 39. The outlook remains promising with the order book 31% higher in October than it was last year.8 29.2 436. Revenues increased 33% during the first nine months of 2010 and Evotec has been profitable for the last two quarters.7) (1.4 443. 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.4 501. surpassing FY08.7) (21.8 38.5 12m 34.7 133.7 482.6 12.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (€m) Forecast gearing ratio (%) Market Share price graph (€) €2.7) (0.0 Forecast gearing ratio (%) 19.8 N/A FRA Evotec (EVT) INVESTMENT SUMMARY Evotec continues to make significant progress to becoming a sustainably profitable business by 2012. On the basis of a long-term pellet price of $100/t.5 P/E (x) 12.3 9.5) 0.1) (20.7 53. Prices rose 5% in Q3 and look likely to fall c 10% in Q4 for an average for the year of c US$118/t.2 3m 12. Backed by one of the largest iron ore resources in the world. The strategic acquisition of DeveloGen in September added a late Phase III product to the pipeline and expertise in the field of metabolism and diabetes.1 2.6 P/CF (x) 7. At present.1p Market cap: £2173m Forecast net debt (US$m) 154.2bn.2 63.2 Price performance % Actual Relative* 1m 20.3 9. it aims to realise the potential of its unique resource and to be a globally recognised iron ore pellet supplier. In the meantime. However.4 9.5) EPS (c) (52.7 1096.3 16. the company is on course to report a record full-year set of numbers.70 €312m 53.0 6.4 59.1 61. of c 644pps. 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. Y/E Dec 2008A 2009A 2010E 2011E Revenue (US$m) 1116.4 48.6 PBT (€m) (47.2 EBITDA (€m) (40.3 10. 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.4) (0. Evotec's growth depends on it being able to provide a high quality integrated service that cheaper service providers are unable to deliver.6) (1. 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'. Management has approved a budget of $647m to achieve the first phase of this development.3 9.5 13.9) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A 44.3 71.1 2008A 2009A 2010E 2011E * % Relative to local index Analyst Mick Cooper Sector: Mining Price: 369.7) (15. which is driving the growth of companies that can provide these services.6 42.2 3m 32.0 Market FULL Share price graph (p) Ferrexpo (FXPO) INVESTMENT SUMMARY In its interim management statement.0 EPS (c) 47.8 Price performance % Actual Relative* 1m 8. The second phase will cost an additional c $1.9 EBITDA (US$m) 494. improve their productivity and decrease the fixed costs associated with them.

6 1.2 2.1 0.1 P/E (x) 9.7 3m 15.8m. and stabilisation in raw material costs.4 6. Working capital expanded due to lower upfront payments on some contracts. Hygiene business will benefit from a solid performance in the consumer markets.8 454. continues to see good volume growth in its end markets.1 12m 35.4 P/CF (x) 1.3 P/CF (x) 35. construction products and protective clothing.3 0.3 0. and net cash slipped to £1. helped by Company description Fiberweb is engaged in the development.2 2.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 8. Margins have been affected by higher raw material (polypropylene) costs.2 15. we expect working capital to normalise in H2.2 56.8 2. INDUSTRY OUTLOOK FFastFill’s software enables banks and other financial organisations to trade exchange-traded derivatives across a number of exchanges.9 12.0 28.4 7.6m. with the potential to add a range of asset classes.6 * % Relative to local index Analyst Toby Thorrington 2 December 2010 57 . such as baby nappies.4 14. higher volumes and a growing number of exchanges all contribute to a resilient outlook for the group against a tough economic backdrop. with SaaS revenue growing 8% to £5.5 0.8 EBITDA (£m) 0.4 1.2 12.7 P/E (x) 86.9 92.7 12m 11.2 468.2 14.0 3.7 17.0) 3m 33.0 EBITDA (£m) 48. In addition. a strong performance in the FitesaFiberweb joint venture.0 EPS (p) 8.3m. expansionary investment within the JV in both the Americas and Asia is reinforcing the company's global consumer credentials.5 PBT (£m) 10. Company description FFastFill provides SaaS solutions for trading and risk management on electronic markets. Operating profit (prior to a small asset sale and share-based payments) rose 13% to £0. P&G. although this has relented more recently.4 16.0 506.2 49. The shares trade on c 12x our FY12 earnings. Nonwovens are used in a range of products.6 6. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 512.4 N/A AIM FFastFill (FFA) INVESTMENT SUMMARY FFastFill reported a 4% increase in H1 revenues to £7. 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. INDUSTRY OUTLOOK We continue to expect robust volume growth within the industrials business.5 14. The group achieved growth despite losing its biggest customer last year. Fiberweb's principal customer.1 6. saving institutions the cost of investing in and maintaining their own technology infrastructure and staff department. filters.7 Price performance % Actual Relative* 1m (3.9 1.3 28. improving global industrial activity.8 8.2 1. The SaaS offering and the straight-through processing capability enable customers to achieve significant cost savings.5m.0 Price performance % Actual Relative* 1m 7. FFastFill had 10 contract wins in H1 and the SaaS order book jumped 12% to £11.9 EPS (fd) (p) 0.8 3.6 22. Fiberweb has been substantially re-shaped and reorganised and now operational performance improvements are coming through.6p £34m 2. industry trends towards electronic trading.3 15.6 12.0 FULL Fiberweb (FWEB) INVESTMENT SUMMARY Building on progress made in the first half.5 16.2 11. These services provide full application functionality.0p £96m 156.6 * % 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) 78.4 10.7) (3. manufacturing and supply of nonwoven fabrics.7 2. Additionally. Y/E Mar 2009A 2010A 2011E 2012E Revenue (£m) 14.6 50.5 PBT (£m) 0. fabric softeners.4m.

including shooting 3D seismic over and around Sampaguita and 2D seismic over existing leads.2) (26. a 3tcf find would be one of the largest in the last 25 years.7) (1.4m programme net to Forum will cover all pre-drill commitments.8 2008A 2009A 2010E 2011E Revenue (US$m) 0. Y/E Dec Price performance % Actual Relative* 1m 24.177/oz.8 2. and has a total gold resource base of 4.8 * % Relative to local index Analyst Ian McLelland Sector: Mining Price: C$9. Similar to Shell's adjacent Malampaya field.9) (58. In the context of the UK sector Company description Forum Energy.8) (2. With mean GIP of 3.3g/t Au over 50.5) 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 17.0 0.4tcf and 20tcf upside. see a positive re-rating once a revised economic assessment on Long Canyon is published in 2011. The $7. 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 .50 Market cap: C$1430m Forecast net cash (C$m) 104. Y/E Dec Revenue (C$m) 0.8 3m 18. The company announced in November a $10m facility to fund its share of a first phase work programme over SC72 (containing Sampaguita).7 12m 108.6 25. high quality gold deposit that FRG hopes to have in production in the next two years using existing cash sources.3) (10.6) (3. and is in JV with Newmont and Agnico Eagle on another two promising projects. registering 12. FRG is developing its Northumberland gold project in Nevada USA.0 0.6) PBT (C$m) (23.0ps in 2016 as Nevadan production increases.0 47.7 1. is an AIM-quoted company developing oil and gas assets.5) 12m 71.2) (23.5p £23m 5.8 2. Along with Long Canyon. Our total valuation for FRG's assets is US$6.0 EBITDA (C$m) (26.3 54.3 EBITDA (US$m) (4.6) (23. assuming a normal 60% recovery rate this would imply a world-class resource. INDUSTRY OUTLOOK Our valuation uses a long-term gold price of US$1.0) (56.4) PBT (US$m) (4.6) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A 7991.1) (25.0 0.4) (41. with gold-copper projects in Turkey and a uranium project in Canada.7) (2. such a find would be the foundations of an LNG project.1) (8.71Moz gold.5) (26.8 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.Edison Insight Sector: Oil & Gas Price: Market cap: Forecast net cash (US$m) Forecast gearing ratio (%) Market Share price graph (p) 68.0ps rising to US$8.7) (2. focused exclusively on the Philippines.8 85. where current step-out drilling is taking place.8) (17. Long Canyon is a high grade. INDUSTRY OUTLOOK The Sampaguita field is a potential company maker for Forum. a high sulphidation copper-gold project in Turkey.8) (11. US.7 15.1 Forecast gearing ratio (%) N/A Market TSX Share price graph (C$) Fronteer Gold INVESTMENT SUMMARY (FRG) Fronteer recently released its highest-ever drill result at its Long Canyon project. We Company description Fronteer Gold is a multi project gold and uranium developer with a core of near-term producing assets in Nevada.2) EPS (c) (16. of the North Sea.3) EPS (c) (23.5) (3.4m with indications that the deposit is starting to thicken to the north.5 3m (8.1) (8.

1 0.3) (2.9) (1.3p £45m 0.2 Price performance % Actual Relative* 1m 4.7 3.6) (0. but with a commercial deal on TPR100 (GSK) and potentially PET500 in H210. premium pricing potential and Reckitt's marketing muscle.5 EBITDA (£m) (2.1 P/CF (x) N/A N/A 562. addresses potentially large but underdeveloped OTC markets (eg.5 0. Y/E Dec Revenue (US$m) 0. The company intends to use the loan to purchase equipment for its Benkala project.7 3m 59. INDUSTRY OUTLOOK Futura's development pipeline of products based on its proprietary DermaSys delivery platform Company description Futura Medical is engaged in researching and developing pharmaceutical products and medical devices.0 PBT (US$m) (4.4 29. CSD500 has a good chance of generating significant revenues: Futura's high-teen royalties should push it into profit from 2011.6) (0.0 2.300/t.1) (1. is a development stage mining concern with two licences in Kazakhstan.4 5.4 12m (7.8 18.9 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).3) 1.4) 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) 66.2) 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 17.3) (0.8) (0.5) (0. 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$6. and their commercial exploitation through out-licensing.4 85. erectile dysfunction and topical pain relief). Mining at Benkala is planned to start H211. Futura should unlock value through accelerating their development and launch.9) 1.4 12m 105. Further development has been constrained by its cash position.6 65.5) (16.3 5. and at least 10koz on the leach pads by end 2010.2) (1.1p £56m 28. revised 6koz of gold produced.4 1171.0) EPS (p) (3. With mass-market appeal. Given positive EU regulatory opinion for the constituent drug (2008) and submission of the updated regulatory dossier.9) PBT (£m) (2.6 2008A 2009A 2010E 2011E * % Relative to local index Analyst Lala Gregorek 2 December 2010 59 .Edison Insight Sector: Mining Price: Market cap: Forecast net debt (US$m) Forecast gearing ratio (%) Market Share price graph (p) 6. Y/E Dec Revenue (£m) 0.4) (2. 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. incorporated in Delaware.2 EPS (fd) (c) (2.4) (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).1 3m 16.9) 22.000tpa at a cash cost under US$1/Ib. with cathode capacity planned of over 20.1) (1.9 7.000/t and after capex of US$55m). INDUSTRY OUTLOOK Copper currently trades at an LME spot price of around US$8.2 0.2 48. Gold production at the Koskuduk heap leach plant is ongoing with a Company description Frontier Mining. the CE mark issuance is expected in Q410.8) (5.8 EBITDA (US$m) (4.2) (1.6 P/E (x) N/A N/A N/A 6. We value FML on an EV/resource multiple at 12pps. Commercial launch preparations are under way at SSL.

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

Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 105.8 52. hopefully.1 5. 2) the execution of Phase III studies in cancer pain.5 3m 10.8 5. indications from most leading groups suggest they will deliver profits progress in both 2010 and 2011. oral cannabinoids next year. build their downstream activities.3 P/E (x) 36. Maserati. which Company description GWP is a UK pharmaceutical company focused on development of cannabinoids.4 1.3 * % 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. More significantly.0 129. and is in development for cancer pain.5 129. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 144.5 (4. Rolls-Royce.0 26. Ferrari. anti-psychotic-induced dyslipidaemia and a yet-to-be-determined inflammatory indication.0p £136m 5.3) 1. Lamborghini.3 9. Y/E Sep 2009A 2010A 2011E 2012E Revenue (£m) 24.1 3m 1. the appointment of a new high-profile CEO from outside the industry suggests a potentially exciting immediate future.8 0.7 26. H R Owen is conducting a strategic business review.7 EBITDA (£m) 2. Bugatti and Alfa Romeo.1 3. We estimate that Sativex will achieve 5-10% in the indications that it has been approved (spasticity in MS [UK.2 3.4 4.0 6.8 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.0p £22m 1. SMMT forecasts on new vehicle registrations are still looking optimistic.4 148. Nevertheless.4 P/CF (x) N/A 1.8) (3.8 P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 8. fatty liver disease. have the potential to treat a broad range of indications and to become novel pharmaceutical products.4) 4. but used car values have recently started to drift downwards. published with the preliminary results announcement in spring 2011.7) PBT (£m) 1.6 129.5 * % Relative to local index Analyst Nigel Harrison 2 December 2010 63 .4 PBT (£m) 0.2 12m 68. INDUSTRY OUTLOOK City sentiment towards the motor distribution sector remains cautious.4) EPS (p) 125.2 10.2 (2.8 0.7 2. including the possible investment of the substantial liquid funds. This review should be completed early next year and. BMW/Mini and Lotus.4 17.8 N/A 22. has been approved in some countries for the treatment of neuropathic pain and spasticity associated with MS. It also operates aftersales franchises for Audi. INDUSTRY OUTLOOK GW Pharmaceuticals is a leader in the field of cannabinoids (there are >70 in cannabis). Spain. Canada.0 EBITDA (£m) 2.0 3.9 (1. New Zealand] and neuropathic pain in MS [Canada only]).6 (1.5 125. 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.8 0. Its lead product.3 0.6 P/E (x) 0. These will be in ulcerative colitis. Sativex's UK commercial launch appears to be going well and the launch in Spain is on track for early 2011. Sativex.1 5.0 155. HR Owen principally comprises its luxury cars business involving franchises for Bentley.0 N/A FULL HR Owen (HRO) INVESTMENT SUMMARY October's cautiously optimistic IMS reinforced the growing optimism about profits recovery.8) 12m 15. and 3) the expansion of its R&D pipeline.9 Price performance % Actual Relative* 1m 1.1 30.5 (19.4) (4.8 EPS (fd) (p) 2. as fears about recession are seen to have greater prominence than the positive action taken by retailers to Company description Following major restructuring.

INDUSTRY OUTLOOK Since 2004.4) (2.5 EPS (p) 18.4) (2. largely as expected following the earlier profit warning.0) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Graeme Moyse 64 2 December 2010 .5 2.7) (7.6 Price performance % Actual Relative* 1m (4.0 EBITDA (£m) 31.4) (2. Y/E Sep Revenue (£m) 0.6 3.9) 3m (5.6 24.8p £21m 10. develops. The acquisitions. owns and builds biomass generation projects in the UK.6 (4. new CEO Norman Jordan's task is to focus on shaping the business for the opportunities ahead and in creating a performance culture.4) (19.5 PBT (£m) 37.2) (3.0 (52. however.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 5.9 12.1) EPS (p) 42.0 0. Hampson has built up the leading player in the fragmented composite tooling market through acquisitions. We believe at current levels the market is valuing only the cash on the balance sheet and the Stallingborough earn-out.0 3. Our base case valuation of Helius suggests the company could be worth 74p/share. It manufactures highly engineered components and assemblies for airframe and engine applications using advanced lightweight materials.6 N/A N/A N/A P/CF (x) 0.5) PBT (£m) 30.6 32.8) (3.2 2.3 P/CF (x) 1. 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.4 5.1) 12m (57.2 28.5p £80m 85.5 N/A N/A N/A Price performance % Actual Relative* 1m (8.7) P/E (x) 0.6 178.4 (4.Edison Insight Sector: Aerospace & Defence Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 28.6 0.4) (3. B787 and A350 truly start and we believe that Hampson was unlucky with timing rather than strategic direction. 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. With the debt covenants amended. PBT down 64% and EPS down 78%.5) 3m 39.9 20.8 2.5 10. Odyssey. INDUSTRY OUTLOOK Company description Helius Energy identifies.4 36.4 189.5 EBITDA (£m) 53.0 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. Y/E Mar 2009A 2010A 2011E 2012E Revenue (£m) 256.5 37.9) (18.7 8. 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.2) 12m (10.4 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. While revenues increased by 4%. 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.3 170.4 P/E (x) 1.7) (2. we expect biomass generation to play a significant role in helping the UK meet these challenges. As a proven technology.5) (61. these operational difficulties resulted in trading profit declining by 50%.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).7 (3.

4 2.5 3.5 9.8 PBT (£m) 24. 22% Europe and 50% ROW.1 5. retail. Successful re-negotiation of long-term bank facilities is a welcome complement to continued effective cash management (reduced seasonal H1 outflow).2 20.1 3m 15.5) 1.5 PBT (€m) (2.0 33.0 660.9 2.0 EPS (c) (2.7 28.1 * % 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) 34.72 7. We estimate that the stadia/arenas segment is the largest.6 12m (11.5 51.8) (4. According to IATA.3 326.3 44.3 9.50 0. governmental.0 40.33 6. 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.8) 12m (7.6) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Richard Finch 2 December 2010 65 .4p £14m 6.15 P/E (x) 7. while a 12% gain in business travel in September shows August weakness to have been a blip.2 Price performance % Actual Relative* 1m 14.2 15. commercial. While investment in growth is set to curb H2 profit.1 4.2 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.1 2. which is fast approaching. Y/E Dec Price performance % Actual Relative* 1m (4. entertainment and leisure. It would seem that this recovery can be maintained during Q4. stadia/arenas. INDUSTRY OUTLOOK Although HRG’s mainly managed travel income prevents close correlation with air travel volumes. encouraging. 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 €4.67 6. with a market share of around 30%. increasingly favourable market conditions should still underpin full-year returns ahead of expectations (we are raising our PBT forecast by c 10%).8 352.0) (19.1) 3m 1. operating worldwide.0 30.4 31.Edison Insight Sector: Construction & Blding Mat.0 EPS (fd) (p) 4. split 28% US.46) 0. a 10% year-on-year rise in international traffic in October sustained the trend rate of growth since the low point of mid-2009.7) 2008A 2009A 2010E 2011E Revenue (€m) 16.6 2.0 55. designs and installs large area architectural tensile polymer membrane structures for roofs and facades.3p £105m 66. transportation.48 P/E (x) N/A 17.6 4.8 P/CF (x) N/A N/A 6.1 5.3 5.0 EBITDA (£m) 42.3 EBITDA (€m) (2.8 P/CF (x) 1.0 370.4m.7 (12.8) (16.3) 1.1 4.0 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. Price: Market cap: Forecast net cash (€m) Forecast gearing ratio (%) Market Share price graph (p) 7.4 5.95 1. 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. 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. Y/E Mar Revenue (£m) 351. as is the resumption of dividend growth.

software and services.8 3m 0.0 (11. Y/E Dec Price performance % Actual Relative* 1m 0.2 N/A EBITDA (£m) (0.1) (31.0 12m 37.6) (1. the key to validating Idatech's commercial offering will be the launch of its methanol-based product due in December. INDUSTRY OUTLOOK Company description IdaTech develops fuel cells technologies and related applications.Edison Insight Sector: Media & Entertainment Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 33. convenient.revenues in H2 were significantly higher than H1 and the loss for the year was better than our estimates. IdaTech has patented fuel reforming and processing technology that is market leading.0) (36.4 2.8) (7.2) (21. However.1) (1.4) 2008A 2009A 2010E 2011E Revenue (US$m) 5. but could help clarify the company's financial position and augment efforts to raise fresh equity capital in the coming 12 months.1 N/A EBITDA (US$m) (19.3) (19. Y/E Sep Revenue (£m) 2.0) N/A EPS (p) (3.7) 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 43.4) N/A PBT (US$m) (19. from Plug Power.0 AIM IdaTech (IDA) INVESTMENT SUMMARY IdaTech's recent acquisition of the GenSys LPG fuel cell system.9 6.6 5.75m.600 at FY09 year-end.0p £31m 54.3 2008A 2009A 2010E 2011E * % Relative to local index Sector: Electrical Equipment Price: Market cap: Forecast net debt (US$m) Forecast gearing ratio (%) Market Share price graph (p) 60.0) (46. Prelims are scheduled to be reported this month. extends the company's capabilities into the prime power market.9) N/A PBT (£m) (0. With lower costs.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 .1 2. dependable and scalable sources of power. a successful launch of the new methanol-based product will provide not only validation of IdaTech's product range.7 N/A AIM i-design (IDG) INVESTMENT SUMMARY i-design's FY10 year-end trading update was positive . IdaTech seeks to address the growing demand for clean. FY10 year-end cash is expected to be c £0.1) (24.4 109. Through its technology.5 24.5) (1.3) 12m (24. there is high media sales growth potential for i-design to move into sustainable profitability. In our view.2) N/A EPS (c) (38.1) (0. We are encouraged by the expansion of the group’s atmAd licence estate (most recently c 500 YourCash ATMs in the UK and Holland).9) (5.0p £5m 0.6 3m 144. 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.0 0.900.5 44. Although the banking sector remains under the spotlight both politically and economically. The company’s atmAd ‘available for third-party advertising’ estate (once the recent additions are implemented) totals c 9.6) (21. primarily ATM.0 284. INDUSTRY OUTLOOK Company description i-design is a specialist provider of self service devices. as this expands further. It has integrated this capability with fuel cell stacks to make a working system for use in stationary and portable electric power generation. the new fuel cell system should be able to compete with back-up diesel generators and batteries on a first-cost basis. up from 5.

5 PBT (€m) 13. but is unlikely to be material in group terms. There is a possible drag on growth of tax restraint on the highest earners affecting bespoke SIPPs.1 22. and IFG expects to take market share. Material earnings growth will come from the James Hay integration (positive management presentation on 17 November).5m.0 (1. An interesting.9) (6. possibly very valuable.6 Price performance % Actual Relative* 1m 1.2 7.8 (5.4 126. Lupuzor may have Phase IIb data in 2011.1 94. International operations offer trustee and corporate services where CAGR growth for 2000-09 was 21%.0 EBITDA (£m) (4. A Lilly drug. self-provision.9 17.5p £71m 14.5m and cash of £20m.7) 12m (11.140 patient Phase II study.8) (5. It is the largest provider of UK bespoke SIPPs and has a profitable fee-based UK IFA operation.5) PBT (£m) 5. LY2127399 is about to start a 1.9 N/A N/A Price performance % Actual Relative* Analyst John Savin 1m (7.6 3m 14.2 P/CF (x) 7.6 15.75 21. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 0.9 7. Its lead product.2 21. is licensed to Cephalon and is in Phase IIb development for treating systemic lupus erythematosus.32 Market cap: €164m Forecast net debt (€m) 22. observation is that nanoparticles formed from N6L and glycosaminoglycan are potentially ten-fold more effective in killing cancer cells. Lupuzor. INDUSTRY OUTLOOK The UK SIPP market should have mid-teens growth with an ageing population. This indicates a possible Phase III start Q411-H112 depending on trial outcomes.5 8.2 4.4) 10. Phase IIb trials in four cancers may start in 2011.2 29. 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.29 19.4) EPS (p) 6. cancer and pain.25 18.5 12m 10.0 9.3 EBITDA (€m) 20. Y/E Dec Revenue (€m) 105. Company description ImmuPharma is a UK drug development company.1 5.7) P/E (x) 13. Cephalon hopes to start a Phase III on the basis of a 12-week interim analysis of the Phase IIb.5 8.28 P/E (x) 5.0 10.1 EPS (c) 24. with a pipeline of products targeting immune system disorders.8) * % Relative to local index 2 December 2010 67 .5 2. 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. largely held as US dollars.6 (4.0 N/A AIM ImmuPharma INVESTMENT SUMMARY (IMM) H1 results showed minimal revenues with expenses of £2.0 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) 86.0) (6.8) (5. and international corporate and trustee administration services.4 Forecast gearing ratio (%) 23. The trustee and savings is driven by regulatory and tax management opportunities and some competition is reducing as they face conflicts of interest. The 9 December Benlysta PDUFA date could allow sales from early 2011.8 16.0 N/A N/A P/CF (x) 11.0 Market FULL.6 6.3) (19.Edison Insight Sector: Financials Price: €1.0 0. greater Company description IFG provides financial services comprising a pension administration and personal advisory business operating in Ireland and the UK. A residual Irish operation offers some potential as that economy recovers.4 (4. and higher tax rates encouraging tax-efficient saving.3) 3m 21. An NDA is projected for 2014. Cash outflow was £2.8 42.5 141. the advisory meeting is 16 November.0 6. INDUSTRY OUTLOOK Lupuzor addresses a market that could be worth over $1bn.4 10.4 6.1 0.

INDUSTRY OUTLOOK While growth of the global insurance industry is marginal.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. Innovation's revenue model is predominantly tied to claims volumes so financial performance is influenced by economic activity levels.8 15.9 160. 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.9 P/E (x) 27.7 68.8 0.5p £239m 4.3 5.9 173.7 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. The opportunity in optical networking (eg Lightpeak) looks significant and is drawing closer.0 P/CF (x) 5. The shares have moved to a premium rating but upgrade potential still remains and the model is geared. Y/E Sep 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (1.5 38.8 15. Broader recognition of IQE’s market-leader position and growth opportunities should now support a premium valuation. flexibility and efficiency.3 25. With both estimates and valuation looking undemanding.6 13.5 EPS (fd) (p) 0.4 15.2 2008A 2009A 2010E 2011E Revenue (£m) 60. Further conversion of proof of concept trials into contracts could prompt upgrades.4 PBT (£m) 10.6 1.1 77.0) 3m 28. INDUSTRY OUTLOOK We are cautious over semiconductor demand into Q4 and 2011.9 8.8) (1. phone and tablet adoption cycles are undeniable.6 PBT (£m) 3.9 EPS (fd) (p) 0. Y/E Dec Price performance % Actual Relative* 1m 21. The shift towards a BPO model is nearing completion and should make for a much more robust financial profile than in days gone by.4 12m 19.1 11.8 Revenue (£m) 139. supply chain management and technology solutions.0 13.9 139.8 16. the entry of consumer brands and comparison engines is supporting the shift towards BPO.5 147.4 0.1 73. Developments in CPV solar cells and solid state lighting are earlier stage but could also yield significant incremental revenue streams. The raising of £20m will align IQE’s balance sheet with industry demands and could help open up further growth and market share opportunities.6 6.1 8. we feel that Innovation is an becoming increasingly interesting turnaround play.5 1.4 3.9 155.6 24.9 26.5 33.2 * % Relative to local index Analyst Dan Ridsdale Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 46.3 7.1 11.0 P/CF (x) 26.3 7.0 12m 173.8 31.2 20.3 9.6 22.0 0.5p £126m 26.2 1.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 13.5 P/E (x) 58.7 * % Relative to local index Analyst Dan Ridsdale 68 2 December 2010 .0 6.2 16. 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.5 52.5 3m 87.3 EBITDA (£m) 8.2 EBITDA (£m) 12.

5 9.7Moz of gold.0 5.1) 0.8 4.1 EPS (p) 13. 144.1) (5.1) (0.1 9.3 7.000lbs of lead.1) 3m (38.0 P/CF (x) 7.4) 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. INDUSTRY OUTLOOK Company description IS Pharma is a speciality pharmaceutical and medical devices firm focused on the specialist hospital sector.0 0.1) 0.6) (3.0 (3.Edison Insight Sector: Mining Price: US$0. probably due to stocking effects in the last FY. Gold has retraced 3% since its record-high nominal price of over US$1. Episil is now launched in the UK and EU roll out will occur over 2011.6) 2009A 2010A 2011E 2012E Revenue (£m) 12.0 0.8 2.3 * % Relative to local index 2 December 2010 69 .0 EBITDA (US$m) (0.6moz of silver. 1. With £6.8 PBT (£m) 3. Together the projects have the potential to host between 2.1 Forecast gearing ratio (%) 127.7oz/t Ag and 1. estimated at c £15m.000lbs of copper and 832. leading to anticipated high growth in FY12.450oz of gold.1 EBITDA (£m) 3.2 14. located ~90 miles south of Wells. The project appears to have strong anomalous gold and silver mineralization.6 3m 32.8p/share paid in mid-2011.7 3. hardrock target focused on exploring extensions of known veins.421/oz achieved earlier this month. Ironwood Gold has plans to undertake a programme of mapping. cash flows will be strong and freed to invest in growth.6 7. It aims to grow organically and through product and company acquisitions.9) (10. we expect it to outperform industrial metals as the latter are beset by demand-side concerns. Samples from the veins have returned assays of up to 0. We expect a low initial dividend of 0. Y/E Aug Price performance % Actual Relative* 1m (9.8 9.3) (4. making a 1% yield and costing c £400k.6) PBT (US$m) (0.18oz/t Au. the Cherry Creek District has produced 32. Nevada.3Moz and 10.3m of contingent liabilities paid off.0) (91. The Cherry Creek project is an underground. these average about 2ft wide. INDUSTRY OUTLOOK Company description Ironwood Gold is a US-listed gold exploration company with three projects in Nevada. Expected H2 sales growth is driven by Variquel in new EU markets. The portfolio showed a sales decline in H111 vs H210.2 9.3 P/E (x) 6.2 14.2 3.7 17.5m if an acquisition needed additional cash.0 0.9 6. with the capacity and intention to make focused acquisitions.0 18. sampling and drilling. Nevertheless.7 12m (7.6) 2008A 2009A 2010E 2011E Revenue (US$m) 0.07 Market cap: US$6m Forecast net debt (US$m) 3.3 10. is available for growth-enhancing acquisitions as indicated by management.6) 12m (91. Historically. The cash pile. US.5m and could be extended by £2.1) (83.6) (3. A dividend will be paid mid-2011. At surface.7) (16.0 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.3 4. The bank loan is £4.6) EPS (c) (0.0 (3. Y/E Mar Price performance % Actual Relative* Analyst John Savin 1m 1.7 9.8 4.5 4.5p £30m 6.0 AIM IS Pharma (ISPH) INVESTMENT SUMMARY Two successive capital raisings totalling £16m give IS Pharma a strengthened and simplified balance sheet.

0p Market cap: £366m Forecast net cash (US$m) 213.4 4.3x and a yield of 5.5 Price performance % Actual Relative* 1m 10.7) (6.6) 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. it noted the key issue was whether Turkey could grow without excessive deficits.4 101. development and production assets in the UK North Sea.5 42.5 164. Although corporate finance had a seasonally weak Q3.2 EPS (c) (20. Company description Ithaca Energy is a Canadian independent oil and gas company with exploration.5 101.9 P/CF (x) N/A N/A N/A N/A * % Relative to local index Sector: Oil & Gas Price: 143.1 102.1 3m 17.3) 12m 184.6 17.6 (1.3 157.3 (12.7 5.6 P/E (x) N/A 47.2 2008A 2009A 2010E 2011E * % Relative to local index Analyst Ian McLelland 70 2 December 2010 ..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. Y/E Dec Price performance % Actual Relative* Analyst Maana Ruia 1m 6. Opal and Polly.7 3m 28. However. we think the stock is attractively valued. affirming it as BB+ and saying "the revision.6 157. corporate finance. with net profit of TRY46.0) 37.4 57.1 12m 43. improving Company description Is Yatirim Menkul Degerler offers brokerage. public finances and increasing confidence that a lasting transformation in the country's economic prospects".9% of GDP) by year end.8 98.9 127. investment advisory services and portfolio management services. reflects Turkey’s strong economic recovery.40 Market cap: TRY480m Forecast net debt (TRYm) 0 Forecast gearing ratio (%) 0.7 P/CF (x) N/A 12. Fitch forecast a current account deficit of $44bn (5.4 44. This does not include exploration upside available from Garnet. appraisal of the enhanced Stella area and development of the UK gas basin assets.0 11. 2010 P/BV of 1. Y/E Dec Revenue (US$m) 2.1 40.2m YTD and shareholders' equity up 12% y-o-y. INDUSTRY OUTLOOK IAE is building a reputation in the North Sea as a cost-efficient marginal field E&P operator. on a 2010 P/E of 5.9) 50. With the prospects for Q4 looking positive.. Operational and financial performance remains firmly on track with no surprises from previous announcements.3) 4. we expect a record-breaking year for this division as pipeline deals complete before year end.2 5.0 Market IS Share price graph (TRY) Is Yatirim (ISMEN) INVESTMENT SUMMARY ISY has reported Q3 results. Shrewd acquisitions coupled with an exciting portfolio under development point to a positive outlook. Shares currently trade in line with CoreNAV at 138p that we expect has 30p of additional upside as IAE derisks its development portfolio.6 19.2 PBT (US$m) (12.4 5.4 3.5%.7 14. first oil from Athena.8 11.1 4. We expect to update our forecasts once we get sight of the 2011 work programme. The 2011 work programme is now key to determining share price potential. Interest and trading income improved from the weak Q2 levels and brokerage and asset management progressed steadily. The company also advises on IPOs. With significant funds available we await details of an extensive programme that will include incremental production upgrades from Beatrice.4x.8 13.3 EBITDA (US$m) (6.6 P/E (x) 6.4 EPS (Kr) 37. INDUSTRY OUTLOOK Ratings agency Fitch revised its outlook on Turkey long-term from stable to positive.3 116.Edison Insight Sector: Investment Companies Price: TRY2.

2010 data shown here is for 18 months.0 5.7 12.3 Price performance % Actual Relative* 1m 3.7 EBITDA (£m) 6. 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. and other processing industries worldwide. INDUSTRY OUTLOOK Company description K3 provides Microsoft-based supply chain management solutions to SMEs in the retail and manufacturing sectors.2m in cash. although the FY10 result will hinge upon the timing of new business coming in. We see significant potential for K3 to sell its application-hosting services into Panacea’s customer base.6 2008A 2009A 2010E 2011E Revenue (£m) 52. INDUSTRY OUTLOOK KBC is an independent provider of consultancy services and software tools to the energy and refining industry.3 3m 26.3 EPS (p) 7.4 5.6 56.1 12m 72. and evidence suggests MS Dynamics is growing market share during the current downturn. While the current uncertain economic environment will result in a decline in capital investment work.1 5.0 7.6 8.8 PBT (£m) 5. 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.3 2.8 52. focus as clients seek improvements in flat or negative refining margins. The enterprise resource planning market for SMEs is consolidating. Looking towards next year. On 2011 estimates the rating still looks very undemanding.Edison Insight Sector: Technology Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 148.0p £38m 11.8 58. funded by the company's revolving credit facility.3 8. Y/E Dec / Jun Price performance % Actual Relative* Analyst Dan Ridsdale 1m 1.8 6.0 14.2 23.2 6.6 52.2 * % Relative to local index 2 December 2010 71 . particularly licensing deals for Petro-SIM V4.3 6.500 customer base.1 8.7 56.5 10. K3 has paid £2.7 P/CF (x) 4.9 P/E (x) 8. petrochemical.8 5.4 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 26.8p £31m 3.0 9.1 P/E (x) 8.0 AIM K3 Business Technology Group INVESTMENT SUMMARY (KBT) K3 has acquired Panacea.3 24.0 5. and will drive growth in recurring revenues.5 4.0 EPS (fd) (p) 18.8 10.3 7.2 12m 40.5 6. adding 3% to FY11 and 9% to FY12 normalised EPS.1 26.1 6.4 PBT (£m) 6. the major profit improvement project with Mexican refinery group Pemex Refinancion (worth $42m over 30 months) should add substantial underpinning to our 2011 estimates.9 EBITDA (£m) 7.0 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) 56.8 53.3 9.5 59.4 10.6 6.1 3m 34. We estimate that the deal will be earnings enhancing.9 5.5 6.0 6.8 5.3 4. Y/E Dec / Jun Revenue (£m) 39.2 P/CF (x) 4.5 31.4 23. 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.

1) (1.Edison Insight Sector: Technology Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 51. disposal.9 9. supported by a 6.2 4.2 42.8 396.5 44.3 7. and internet and telecommunications services to selected consumer markets.4% dividend yield.1 3.1) 12m (66.06 €13m N/A N/A AIM Kedco (KED) INVESTMENT SUMMARY On 3 November 2010 Kedco announced it had secured £9. The October 2010 approval of the Renewable Heat Incentive (similar to a feed-in tariff) is a further sign of commitment to the sector.6) N/A N/A PBT (€m) (5.8 74.8 3m 12.5 9. Y/E Jun Price performance % Actual Relative* Analyst Neil Shah 1m 41. within the UK.4 12.5 6. there remains strong growth potential on the corporate side. Kedco hopes to be able to complete work on certain pre-conditions and sign terms for the facility in early 2011. It helps companies throughout the UK and Ireland to convert waste into clean energy. suggesting comfortable upside potential. The next update is expected at the AGM on 17 December.0 N/A N/A EBITDA (€m) (4. services market continues to expand. Confidence in the outlook is shown by the company’s dividend policy.7) (69. management can now focus its attention increasingly on delivering organic growth to the business.4 2009A 2010A 2011E 2012E Revenue (£m) 472. 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. pension issues clarified and debt refinanced.8 EPS (fd) (p) 7. Growth is being driven by corporate cost-savings plans and an increasing appetite for simple and flexible solutions.3) 12m 24. INDUSTRY OUTLOOK Two trends are occurring within the UK fixed-line telecoms industry.9m of project finance facilities from Ulster Bank for the Newry project.0 (29.8 PBT (£m) 32. Our revised estimates imply a DCF valuation for KCOM of 64p. call volumes among domestic customers continue their secular decline.0 3.1 405.3 * % Relative to local index Sector: Construction & Blding Mat.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 .0 FULL KCOM Group INVESTMENT SUMMARY (KCOM) With KCOM’s two-year transformation plan complete. Price: Market cap: Forecast net debt (€m) Forecast gearing ratio (%) Market Share price graph (€) €0. Both receive high support from the UK and Irish regulatory regimes.1 69. 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.2 EBITDA (£m) 65. this is the first of many such announcements we expect to see.7 42. as the managed Company description KCOM Group provides a range of integrated IT and communications services to businesses.0 6. Second.2 P/CF (x) 4. Y/E Mar Price performance % Actual Relative* Analyst Alex Gunz 1m 3.8 5.9) 2009A 2010A 2011E 2012E Revenue (€m) 5.6 3.0 308.3 40.3) (3.7 (5.2 P/E (x) 7. Disposal of waste also entails a cost under the EU Landfill directive.2 75. driven by a range of competing services.3 8.3 412.3 3m 0. First.0p £263m 98.

5) PBT (SEKm) (13. Nevertheless.2) (16.9) (1.4 0.8) 2008A 2009A 2010E 2011E Revenue (US$m) 10.7) (1.6) (5.8m (c US$5. Winter planting has also been in line with the expected expansion during the current year. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (17.6 3.1) (20. As expected. outperforming the rain-damaged yields of much of the Ukrainian arable sector. it is also considering a secondary listing. Gross proceeds of the warrant are expected to raise up to SEK36. Currently listed in Stockholm. INDUSTRY OUTLOOK Company description Kopylovskoye is a gold exploration company focused on the development of its six licences in Russia.2 Forecast gearing ratio (%) N/A Market NASDAQ OMX First North Share price graph (p) Kopylovskoye INVESTMENT SUMMARY (KOPY) In mid-November. where it is currently focused on converting its Russian reserves and resources into JORC.4 EBITDA (SEKm) (11.4) (27. Together these cover 225km2 and have C1.5 0.0Moz.4) 12m 7.6 28. by way of a rights issue comprising four new shares at SEK22 for every five shares held.1) EPS (c) (29.5 (2.0) 3m (21.1p £31m 6.5) (9.7) (281. Y/E Oct Price performance % Actual Relative* Analyst Guy Bell 1m (1.421/oz achieved earlier this month. However.Edison Insight Sector: Mining Price: 23.4) EPS (öre) (2. Kopylovskoye announced plans to raise up to SEK64.6 35. The funds raised will be applied to the company’s portfolio of exploration projects in the Bodaibo region of Russia.8) (3. INDUSTRY OUTLOOK Company description Landkom International is involved in arable farming in Ukraine.7 N/A N/A N/A * % Relative to local index Analyst Michael Starke Sector: Food & Drink Price: Market cap: Forecast net cash (US$m) Forecast gearing ratio (%) Market Share price graph (p) 7. C2 and P1 reserves/resources of 2.5) (5.2 * % Relative to local index 2 December 2010 73 .8m (c US$9.2) (442. the Landkom wheat harvest was badly affected.6 14. The first results of this are expected in early 2011.3m). The rich arable land in Ukraine combined with low local costs offer the opportunity to produce crops to satisfy the expanding demands of the worlds food and bio-fuels industries.6) (17.8) 3m N/A N/A 12m N/A N/A Revenue (SEKm) 0.1) (11. we expect it to outperform industrial metals as the latter are beset by demand-side concerns.9) (14.6) (10.4 0.9 PBT (US$m) (57.3m). 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.9) P/E (x) N/A N/A N/A N/A P/CF (x) 1633.3p Market cap: £89m Forecast net cash (SEKm) 12. Gold has retraced 3% since its record-high nominal price of over US$1.8) (4.9) 0.7) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A 18. Rapeseed yields were in line with expectations.4) (0. Shareholders taking up their rights will also be entitled to a warrant (exercisable at SEK25 in May next year) for every two new shares.8 N/A AIM Landkom (LKI) INVESTMENT SUMMARY The first interim results announcement under the new management team confirms that its changes are beginning to have an effect – costs are being contained and solid prices have already been achieved for the majority of the winter rapeseed crop.5) (9.8) (10.0 EBITDA (US$m) (56.

1m. there may be up to $25m of additional US potential.2 P/E (x) N/A N/A 7.8 35.9 PBT (£m) 0.3 30. Spain.2 3.9 EBITDA (£m) 0. A liver transplant transportation unit is under development.2 0.Edison Insight Sector: Oil & Gas Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 3. 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. rather than frontier exploration. Higher use rates Company description Lifeline is a Chicago-based global medical technology company. The stock remains low valued selling on about $1/boe of the potential resources in the shallow plays. LifePort units are already used by 45 of the 56 US organ procurement organisations but for c 26% of US deceased donor kidneys.4m in product sales.0 43.2 N/A N/A P/E (x) N/A 20.1p £23m 0.7) (24.5p £17m N/A N/A AIM Lifeline Scientific INVESTMENT SUMMARY (LSI) Lifeline’s interim results showed H1 revenue at $11.0) (14. A potential joint-venture has recently been announced to appraise the shale gas play at Ayoluengo. The trend should strengthen markedly in 2011/12. tissues and cells for transplantation and medical research. should steadily boost growth. Appraisal drilling of the potential deep oil formation at the same location is a possibility by late 2011.8 1. of vital organs.0 N/A N/A P/CF (x) N/A 38.4 3.3) 3m 48.6) 3. There are producing assets in Spain. Y/E Dec Price performance % Actual Relative* 1m (15. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* Analyst John Savin 1m 13. with $10.1 N/A AIM Leni Gas & Oil INVESTMENT SUMMARY (LGO) LGO has a very active field development and rehabilitation programme. Other papers have shown overall cost savings. We believe this is very much on track and that production is gathering momentum in the closing months of 2010.1 6. INDUSTRY OUTLOOK The 2009 clinical study showed improved clinical outcomes from use of LifePort.8 10.0 0.3) 18.9 * % Relative to local index Analyst Peter Dupont Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (US$m) Forecast gearing ratio (%) Market Share price graph (p) 227.3 24.2) 2.0 0. Lifeline has a high share of the organ static preservation market with its SPS-1 solution. Trinidad and the US GoM and an exploration project offshore Malta.1 2.2) 3. Lifeline experienced a major market shift in 2009 as it moved to commercial pricing. It has developed innovative proprietary technologies to improve the quality.7 0.5 12m 213.6 Revenue (US$m) 8.1 EPS (p) 0.8 14. The strategy applied by Leni can perhaps be best described as a 'vulture' approach and is broadly analogous to that applied by a number of E&P concerns such as Apache in the North Sea. This is up 44% on the comparable period.0 N/A N/A EPS (c) (29. H209 growth vs H110 was steadier at 5%. EU reimbursement is set at national levels and should generate higher sales levels from 2012.0 P/CF (x) N/A 16.3 N/A N/A PBT (US$m) (4.6 N/A N/A * % Relative to local index 74 2 December 2010 . and increase the availability.8 183.3 N/A N/A EBITDA (US$m) (4.3 18.0 6. including 15 new units sold.7) 2008A 2009A 2010E 2011E Revenue (£m) 2.7 3m 35. The deep plays identified earlier in the year offer possible exciting exploration upside medium term. Further growth is expected from the EU (country by country) and from 2011 in Brazil and China.1 (0.1 12m (16.

On the strength of the latest results we increased our estimates marginally. These will affect the other two subsidiaries most. principally the Aorfix stent graft system for the treatment of abdominal aortic aneurysm (AAA). FDA approval would trigger the first $2.0p £36m 7.2 8. The core business.0 70.9 9. the impact on suppliers like Lincat is unclear and instability in the eurozone sustains uncertainty.4 N/A N/A EBITDA (£m) (10.6 3m 10.8 32.4 P/E (x) 8. the underlying reality is still unclear.2 2008A 2009A 2010E 2011E Revenue (£m) 32.3) N/A N/A PBT (£m) (11. Lincat Ltd.3 5.2 6.9 75.5) 0.1 5. The scale of cuts by the new government is now in the open.8) (0.3 33.8 3. Lombard's commercialisation strategy is currently focused on growing the share in five key European markets.3 3m 9. continues to exploit its ‘value’ proposition but uncertainties remain in the economy as a whole.7 EPS (p) 73.0m loan facility payable through a recently signed Japanese distribution agreement for the device.9) 12m 52.8) (7.5 EBITDA (£m) 6. Medtronic is thought to control around 50% of the US market and has been eroding Gore’s dominance there.3 5.6 (1.6 P/CF (x) 4. but any material boost is only likely to be seen over the medium term.9 38.4) 12m (15. Lombard will compete to achieve further penetration in $1bn global AAA market on the basis of its high angle approval for Aorfix.9 5.0) (7.3) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Robin Davison 2 December 2010 75 . Y/E Dec Revenue (£m) 2.0p £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.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.9 5.5m instalment of a $5.5 * % Relative to local index Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 1.6) N/A N/A EPS (p) (6. Most recent reports showed that 111 out of 144 patients had reached the 12-month follow-up stage.5 4.4 66.1) (23.8 5. but believe it prudent to remain reasonably cautious for now.9 30. INDUSTRY OUTLOOK Company description Lincat manufactures and supplies commercial catering equipment for professional kitchens.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. so we would expect to see slightly more volatile performances from them. INDUSTRY OUTLOOK Company description Lombard Medical Technologies is developing a range of cardiovascular devices.8 9.0 2. Despite official figures that the UK is now out of the recession. clinical data. particularly in the public sector.9 6. However. Module four was recently submitted according to schedule and the sixth and final module.1 (17.Edison Insight Sector: Engineering Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 650. is due in H111. Transfer of stent graft production from the Didcot to Prestwick facility is expected to produce significant ongoing efficiencies. The ongoing weakness of the pound continues to be helpful. Y/E Dec Price performance % Actual Relative* Analyst Guy Bell 1m 2. While Cook is the global market share leader.4 PBT (£m) 5.

five divisions that spread both operational and geopolitical risk.0 Price performance % Actual Relative* 1m (1. Short-term growth drivers involve expansion plans focusing on developing tried and proven businesses across the continent.9) 3m 8. Y/E Dec Revenue (£m) 1776.1) N/A N/A EPS (p) (8. although capital will be required to meet these objectives. the group is moving towards profitability.7 (2. continues to achieve impressive results. particularly in agriculture.5) (1.5 PBT (£m) 14.0 1800.3 P/CF (x) 5.0 EBITDA (£m) 42.5m vs a loss of £4. INDUSTRY OUTLOOK City sentiment towards the motor distribution sector remains cautious. indications from most leading groups suggest they will deliver profits progress in both 2010 and 2011.3p £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. SMMT forecasts on new vehicle registrations are still looking optimistic. but used car values have recently started to drift downwards.0 28. In addition. management reinforced the progress being achieved in the current year.1 9.4 P/E (x) 12.3) 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 3.7 31. Operating in 17 countries.7m.3) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Nigel Harrison 76 2 December 2010 .0 3m 47.0 51. the company comprises Company description Lonrho is a pan-African company with a diverse portfolio of investments.9 N/A N/A EBITDA (£m) (36. It focuses on servicing Western investment and African business by investing in emerging sectors across Africa. EBITDA of £9.4m and a reported PBT of £0. Lookers has a clear strategy for earnings growth in a mature market and strong balance sheet providing the funds to take the group forward. we feel 2011 is set to signal further substantial improvement.6 (7.7) (0. The group's specialist aftermarket business.0 1749. The Motor division continues to build after the setback in 2008. INDUSTRY OUTLOOK Lonrho is a play on African development.9 6.6 8.5m.2 8. Management is ambitious and the group is set to grow strongly over the medium term.3) 12m 2.4 4.Edison Insight Sector: Financials Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 16.4 10.3p £227m 63. but also profitably.9) (7.5 43.3 31.6) (6.0 12m 58. with the proceeds of the successful $70m. provide working capital and accelerate the growth of the business. build their downstream activities.0 34. Lonrho has delivered not only growth.7 7. five-year guaranteed convertible bond to be used to repay existing debt.1 90.6) N/A N/A PBT (£m) (36.0 FULL Lookers (LOOK) INVESTMENT SUMMARY At a recent investor day.9 53.2 4. Nevertheless. creating hubs of business through key investments. with investment in downstream activities delivering volume gains at sustained margins.0 1770.4 49. 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.0 33. which provides a unique differentiation.8 5.5 EPS (fd) (p) 4.3 * % 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. With FY revenues up 20% to £107. Y/E Sep 2008A 2009A 2010E 2011E Revenue (£m) 43.1 5. With impressive recent revenue growth.

4 3.7 35.4 56. with new products and markets are also expected to be key drivers.1 5.1 12m 29. LSL has also built on market-leading positions in counter cyclical areas such as asset management and lettings.4 10. Y/E Dec Revenue (£m) 162. Remortgages were however.3) 3m 10.Edison Insight Sector: Construction & Blding Mat.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) 214.2 7.7) 3m (14. above their six-month average. Low & Bonar has delivered a healthy recovery in revenue in the year to date.8 PBT (£m) 16. The outlook for the UK housing market remains weak.5 36.6 EPS (p) 14.5 PBT (£m) 14.0 EPS (p) 7. a resumption of dividend growth.2 34.2 20. while October's acquisition of Advance Mortgage Funding adds to its mortgage and insurance distribution capacity.7 2. With sector diversity.6 8. The level of mortgage approvals hit a 19-month low in October.9 23. while HEAL branches are expected to be profitable in H2. with revenue growth and margin expansion feeding through to a decent earnings uplift and.3 20.0 EBITDA (£m) 20.0 AIM Low & Bonar INVESTMENT SUMMARY (LWB) As the October IMS demonstrated.6 8.5 158. Surveying and agency both increased market share. It operates as two divisions: Performance Technical Textiles (70% FY09 revenues) and Technical Coated Fabrics (30%).5 345. It provides a broad range of services to corporate (mortgage lenders) and retail clients.7 5.0) (6.7 39.5p £223m 0.4 7.0 EBITDA (£m) 41.0 FULL LSL Property Services INVESTMENT SUMMARY (LSL) A recent IMS.2) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Roger Leboff 2 December 2010 77 . with broad expectations of slippage in house prices during 2011.7 19.8 329.0 0.0 5.1 P/CF (x) 17.5) (1. confirmed that the group is on track to meet full-year forecasts despite market weakness.2 23. reflecting tougher requirements for first-time buyers' deposits. These new contracted and counter-cyclical revenue streams enhance LSL's resilience to a difficult market.3 16. with an improvement in operating margin expected to come through in due course. covering the four months to end October.1 10.6) (29. having reinstated an interim payment.5 P/E (x) 15.4 P/CF (x) 1.4 17.8 9.2 42.9 7.7 32. derived from a flagged 10% return on sales and an implied revenue uplift in excess of GDP growth.2 29.0p £124m 90. 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. We expect to see progress at all levels in future years. INDUSTRY OUTLOOK Company description LSL Property Services is one of the UK’s leading residential property services companies and second biggest estate agency chain.2 211.2 304.6 Price performance % Actual Relative* 1m (2. Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 43. Y/E Nov 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m (7. INDUSTRY OUTLOOK Management aims to double earnings within five years representing organic growth of c 15% pa.5 4.3) (31.3 27. 17% like-for-like.9 Revenue (£m) 335. Turnover was up 33% in the first 10 months of FY10.0) 12m (21.0 225.3 26.5 29.4 5.8 P/E (x) 5.

8 4.3 8.9 6.7 11. relationship to GDP.6 8. The valuation is at the bottom of the range of peers and the shares carry a premium.3 12.9 6.1 PBT (£m) 11.3 7. Y/E May Revenue (£m) 56.0 AIM Matchtech Group INVESTMENT SUMMARY (MTEC) Matchtech’s AGM statement indicated no change to full-year numbers. yield.1 (24.0 P/CF (x) 5.1 6. The key projects of the QE class aircraft carriers and CrossRail all survived the government's CSR.3 9.3 26. The company released an in-line AGM trading update and also announced a significant contract win with Addison Lee .3) 12m 1. Vacancies are also on a downward trend of weakening growth. Public sector redundancies are starting to step up and confidence is fragile.5p £22m 9. There has been good progress in expanding the group’s horizons in professional services/ education.6 5.0 0. positioning for cloud computing. 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.6 Price performance % Actual Relative* 1m 4. permanent staff appointments and temporary/contract staff billings. with the full benefits coming through in FY11.London's largest minicab service . Split into four business units.6 26. temporary and permanent staff.9 4.3 EPS (p) 34. Maxima has a high bias to managed services (maintenance and service revenues) rather than new IT spend.5 5.8 EBITDA (£m) 8.9 311.0 53.2 13.0 20.7 31. removing an area of potential concern. In spite of the significant operational improvements and debt reduction.8 P/CF (x) 3.to implement a business intelligence solution based on SAP BusinessObjects Edge technology.4 (16.2 5.3 9.0 52.4 P/E (x) 6.4 8.5 15.0p £52m 5.5 7.6 264.1 Price performance % Actual Relative* 1m 0.3) 12m (14. political uncertainties and the likely ongoing deferral of investment decisions in the short term.0 3m 15. each a solutions specialist in its area of recruitment in providing contract.0) (22.2 13.2 6. INDUSTRY OUTLOOK We expect overall IT spending in the UK to improve modestly in 2010.6 PBT (£m) 6. However.1 EBITDA (£m) 12. such as many of those supplied by Matchtech. but qualified candidates with scarcer skill sets.8 5.9 41. and covered.4 8.2 (8.0 3.3) * % 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. but reiterated that the additional investment in headcount will lead to a greater H2 weighting to profits.5 4. Y/E Jul 2009A 2010A 2011E 2012E Revenue (£m) 269. as well as a diverse customer spread and a broad platform. expanding its facilities in India and renegotiating the group’s banking facilities.6 51.8 10. given the historic Company description Maxima is an IT business systems and managed services company.8 3m 15. professional and outsourcing recruitment groups.6 3.0 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. the shares continue to trade on a modest single-digit P/E.6) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Richard Jeans 78 2 December 2010 .4 290.0 P/E (x) 4. remain in good demand.3 EPS (p) 20.3 7.Edison Insight Sector: Support Services Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 221.

3) (32. Its portfolio includes knee and hip implants. INDUSTRY OUTLOOK Company description MDM Engineering is a metallurgical engineering company established in February 2006. political pressure and technical innovations. and it has accelerated its growth this year with sales up 60% during H110.3 (7. It undertakes mineral resources projects of varying size and concentrates on the gold.7 PBT (€m) 0. In addition.1m in 2009.1 11.0) 8. Its portfolio includes knee and hip implants. however (Repsa and Kalagadi). Its most important product range are the spinal devices from K2M. In the meantime. more cross-selling.9 33. it is concluding studies on eight projects.0 P/CF (x) N/A N/A N/A 15.6x is at a discount to the average of its three principal international peers (Lycopodium. and supplementing its portfolio with innovative orthopaedic products.8x.6 4.1 P/E (x) 45. industrial metals and diamond sectors. when we estimate that it will report a loss.7 13.8 10. MDM has been hit by a strong rand.3 EBITDA (US$m) 10.0 (2.1 3.1 27.5) 2009A 2010A 2011E 2012E Revenue (US$m) 35.0p Market cap: £47m Forecast net cash (US$m) 11.0 4.Edison Insight Sector: Mining Price: 127.5 EBITDA (€m) 1.1 (36.6 21. The Spanish orthopaedic market was estimated to be worth €350m in 2008. on which basis MDM's Y2 EV/EBITDA ratio of 7.8 4. although it should be able to sustain its momentum. In addition. including Goldfields’ giant ZAR8bn tailings re-treatment project at Driefontein. but it will now probably decline slightly because of austerity measures.2 Forecast gearing ratio (%) N/A Market AIM Share price graph (p) MDM Engineering INVESTMENT SUMMARY (MDM) Industry-wide project delays and deferments have resulted in an intensely competitive environment among contractors.0 EPS (c) 7. it has entered into an alliance with GR Engineering Services in Perth to target the c 400 projects in Africa controlled by Australian companies. Our forecasts assume the award of the Goldfields project from August 2011.4 PBT (US$m) 11.0 N/A MAB Medcom Tech INVESTMENT SUMMARY (MED) Medcom Tech is a rapidly growing orthopaedic device distributor based in Iberia.6 P/CF (x) 7.6 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 .1 2.8 EPS (c) 21. The company is scheduled to announce its results on 3 December.0 3m 22.6 5. Ausenco and Outotec) of 7.0 24. INDUSTRY OUTLOOK Company description Medcom Tech distributes a wide range of innovative orthopaedic products across Spain and Portugal.4 N/A 130. Given its two project wins to date in FY11. plates and screws to repair bone and spine fractures.0 32. Y/E Dec 2008A 2009A 2010E 2011E Revenue (€m) 6.2 (3.0 * % 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. Y/E Dec / Mar Price performance % Actual Relative* 1m (0. we estimate that it will recoup approximately half of its H1 loss in H2. The growth drivers offsetting budget constraints are the ageing population.7 20.8) 0. base metals.7 2.9 10. The Spanish government's austerity measures have reduced Medcom Tech's rate of growth. Revenues have increased at a CAGR of 49% since 2003 reaching €10.7) 8. This growth has been driven primarily by the company hiring new sales reps across Iberia.1 9. and advanced types of bone cement.5 35.3 11.3 4.2 14. We had been expecting it to grow at c 5% pa.2) 12m (25.1 14.20 €28m 1. plates and screws to repair bone and spine fractures.2) 16.1 P/E (x) 9.8 N/A 12.

4p reflected a fall in the mark-to-market benefit of its £100m.3 11.0 EPS (p) 26.1 7.0 PBT (£m) 243.3 25.1 (12.0 326. military (43%) and energy & other (14%).3 P/E (x) 12.5 2. With Meggitt’s internal assumptions based on 1% air traffic growth.1 1.3 EBITDA (£m) 4.0 7.3 7.Edison Insight Sector: Property Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 72.9) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Roger Leboff Sector: Aerospace & Defence Price: 337. Results for FY10 are due 8 December 2010.4 23.2 31.0 PBT (£m) 1. with a new focus on greater efficiency within the NHS.0 234. 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. while the new scrip dividend option is also positive.9) 12m (9. but the outlook remains positive for investment in primary care facilities.0) (2.2 12m 42.5p and the dividend yield at 7.1 28.1 P/E (x) 51.4 11. with high barriers to entry and high aftermarket content to secure long-term profitable revenue streams. which accounts for 30% of revenues. Y/E Dec Revenue (£m) 1163.0 352.3 13. INDUSTRY OUTLOOK In our view.88%. A March 2010 BMA report stated that 60% of GPs still work from unsuitable premises.0 Forecast gearing ratio (%) 65.3p Market cap: £2354m Forecast net debt (£m) 813.3 P/CF (x) 24.0 340.3) 3m 1.7 13. 30-year fixed rate debt. was virtually unchanged over the quarter.2 9. INDUSTRY OUTLOOK The government's Comprehensive Spending Review confirmed real increases in healthcare spending in each year of the current parliament.3 10.5 93.9 P/CF (x) 8.6 Price performance % Actual Relative* 1m (3. Y/E Sep Revenue (£m) 8. The detail of new budget responsibility for Company description The MedicX Fund is a specialist investor in primary healthcare property in the United Kingdom.0 238.2 Price performance % Actual Relative* 1m 3. we feel there is room for upgrades with current traffic growth up 3.6% year-to-date. business. Its end markets are civil aerospace (43%).0 FULL MedicX Fund Limited INVESTMENT SUMMARY (MXF) MedicX reported a £211m end Q4 portfolio valuation which. we believe Meggitt is well positioned to benefit from the upturn.6 48. at a net initial yield of 5.3 28.6 4.1 5.4 3m 26.3p £103m 85. With R&D maintained during the downturn and a number of new contracts that will support long-term revenue growth.8 4. in line with recent declines in long-term interest rates.4 2008A 2009A 2010E 2011E * % Relative to local index Analyst Roger Johnston 80 2 December 2010 .0 1156. with 75% unhappy with their premises. H2 should also see improved military revenues with orders now released in the US. 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. All-in NAV per share at 71.0 EBITDA (£m) 341.0 12. The Q4 DCF valuation was 91.8 10.3 13.4 EPS (fd) (p) 1.0 265.3 3.4 2. sensing and defence systems.3% is attractive.0 1151.0 1213.3 6.0 17.4 1.1 7.0 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. GPs should be clarified when the healthcare bill is published.5 25.1) (17.

survival is over 98% with localised disease which is c 60% of cases.3) (1. many patients could use Orazol for five years. Markers (VEGF) show that low-dose weekly ZA impacts tumour growth. Y/E Dec Revenue (€m) 1. and an expected shift in EU indication from bone to breast. pharmaceutical and FMCG industries.0 EBITDA (£m) 6.5) (3.5 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.4) 0. Another adjuvant indication could be prostate cancer.27 Market cap: €56m Forecast net cash (€m) 0. This opens the way to a serious Orazol deal. businesses anticipating and responding to specific customer problems.6) (5. The tobacco products industry is under political pressure in many developed markets.7 5.9 P/E (x) 5.170 women died.5 3. INDUSTRY OUTLOOK The UK capital goods market has changed materially in recent years.3 6.9 P/CF (x) N/A 1.6) (2.650 US women were diagnosed with breast cancer. The recent restructuring shows every sign of delivering improved returns over the medium term.3 4. a 1.1) (0.1 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) 58.1) PBT (€m) (5. some 40. showed that zoledronic acid (ZA) reduced risk of progression by 36%. but worldwide consumption continues to rise.6) 12m 10.4 9. we remain optimistic that management can deliver recovery in 2011.1) (1.6 8.3) (9. the indication agreed with the CHMP. including Molins.3 3.0 88.3 10.0 5.6 6.4 1. In 2009. have transferred their manufacturing operations to lower-cost countries in an attempt to maintain competitiveness. Its lead projects are Orazol. insulin and GLP-1 (in collaboration with Novo Nordisk).6) 3m (18.4 (0.8 85. to adjuvant early-stage breast cancer therapy.7) EPS (c) (0.0 6.0) 12m (4.4 7. Many companies.4 (22. 254.2 6.5p £12m 3. patients.1) (0.6 2.5 83.5 EBITDA (€m) (5.2) 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. INDUSTRY OUTLOOK ABCSG-12.3) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Nigel Harrison 2 December 2010 81 .5 Price performance % Actual Relative* 1m 6. Management responded positively to difficulties encountered in early 2010.1) (1.0) (3. This would be a new and unique indication and a better market position than for only bone metastasis. ideally by mid-2011. Y/E Dec Revenue (£m) 91.0 EPS (fd) (p) 10. 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.5 PBT (£m) 2. with a sound balance sheet showing net cash.8 1. with the more successful Company description Molins is a specialist engineering group supplying processing and packaging machinery.2 3m 5.3) (0.5 7.800 patient study. when several orders were either cancelled or postponed and we have recently lifted our estimates. If approved.4 2. and scientific services to the global tobacco.Edison Insight Sector: Pharma & Healthcare Price: €3. ZA might help immune attacks on cancer stem cells.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.

working with established toy manufacturers as well as broadcasters. handset-based services such as mobile banking continue to show strong growth. music.8) (9.1) (1.0 EBITDA (€m) 0.0) (2.0 12. while Best Buy Europe and Charles Dunstone hold the remaining 60%. new properties take time to build while old library sales are suffering in weak TV markets.1) (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 (8.7) (8.6) 12m (36.7 6. However.0 Market Milan Stock Exchange Share price graph (€) Mondo TV (MTVI) INVESTMENT SUMMARY Mondo TV is making good operational progress. with programme budgets under considerable pressure.0 24.2) (13.9 EPS (c) (265.1 N/A AIM Monitise (MONI) INVESTMENT SUMMARY Monitise announced the formation of the Mobile Money Network joint venture. mobile banking in the UK is showing fast adoption.5) (23. The broadcast market remains very difficult.7 EBITDA (£m) (11.4) (14. supported by Monitise's technology and DeviceFidelity's NFC-based MicroSD card. Further growth is likely from the use of mobile phones for retail payments. Major milestones to watch for in FY11 are the launch of the Monitise service in Hong Kong and India. including a recent multi-territory broadcast deal with Turner for 'Puppy in My Pocket'.2 8. 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.8 P/CF (x) N/A 3.8 2.2) 12m 64.4) PBT (£m) (11.3 21. INDUSTRY OUTLOOK Company description Mondo TV is a leading Italian producer and distributor of animated TV series and feature-length cartoons.1) 1.0 10.0) (14. a pilot launch in China.6 88. It also licenses and merchandises its rights through home video. The network will launch in 2011 and will enable mobile marketing and payments.7) 3m (28.10 Market cap: €22m Forecast net debt (€m) 9.3) (30.8) EPS (p) (3. For example. Y/E Jun Revenue (£m) 2. Y/E Dec Revenue (€m) 38. Q3 results (15 November) were behind budget and the 2010 EBITDA target looks very demanding.4 2. with over three million users. transaction revenues).0 10. in which it holds a 40% stake. the UK reaching cash break even and the launch of the first Monitise-enabled Visa service (and. However. so we have left our estimates unchanged ahead of any year-end trading update.9) (24. US Bank has started a trial contactless payment service.3 19.8) (13.7 3.2 5. INDUSTRY OUTLOOK Company description Monitise provides a mass market technology platform that enables banks.4 6.0 Forecast gearing ratio (%) 44.Edison Insight Sector: Media & Entertainment Price: €5.2 Price performance % Actual Relative* 1m (20.0p £147m 30.0) (1.6 P/E (x) N/A N/A 13.5 PBT (€m) (18. With the number of mobile phone connections topping five billion globally. multimedia productions and publishing.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. Management has not yet published revised budgets.3) (14.9 2009A 2010A 2011E 2012E * % Relative to local index Analyst Katherine Thompson 82 2 December 2010 .0) 3m (3.5) (3.1) 38.2) (9.7 48. 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. consequently. card schemes and other financial providers to offer mobile banking and payment services.

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

automotive sales.6 Forecast gearing ratio (%) 7. appraisal and production of hydrocarbons.3) 3m 6.0 EBITDA (A$m) (12.6) N/A N/A PBT (US$m) (2. Near term.6 N/A * % Relative to local index Analyst Michael Starke 86 2 December 2010 .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. Nighthawk remains a unique AIM play on shale oil.4) (42.6 0.5) (17.Edison Insight Sector: Oil & Gas Price: Market cap: Forecast net debt (US$m) Forecast gearing ratio (%) Market Share price graph (p) 13.3 (23.5) (1. Nkwe announced the preliminary feasibility of a 240-400ktpm underground mine with operating costs between $435/oz and 535/oz and capex of R6.1) (1.0) 2009A 2010A 2011E 2012E * % Relative to local index Sector: Mining Price: A$0.7 3m (42.9Moz (3PGM+Au).4) (66.7) (10. Xstrata’s decision will be based on the viability of the projects.2) (69. with the area of focus being onshore US. INDUSTRY OUTLOOK We remain cautiously optimistic about the current outlook following recent positive US Company description Nkwe Platinum is a platinum group metals (PGM) development company with two main projects.6 Revenue (A$m) 1. Nighthawk has referred to growing interest by oil companies in leasing land in the vicinity of the Jolly Ranch property.4) (37.5 37.3m draw down from its £25m Equity Financing Facility with Darwin Strategic. Furthermore.6) (4. 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 challenge at Jolly Ranch remains to find the most effective method to unlock the complex shale formations on the property.6) (1.9 2. Key companies recently moving into the area include Unit Corporation.5 2. 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.7 0. The main issue now is the time and cost required to commercialise Jolly Ranch.7) 12m (62.3) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A 76. Early this year. one of which is the subject of a detailed bankable feasibility study.3bn.50 Market cap: A$283m Forecast net debt (A$m) 38.4) (4.7) (5.3p £47m N/A N/A AIM Nighthawk Energy INVESTMENT SUMMARY (HAWK) Nighthawk has recently announced a £3. Newfield has commenced drilling of late.6) 12m 36. Y/E Jun 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m (18.0 Market ASX Share price graph (A$) Nkwe Platinum INVESTMENT SUMMARY (NKP) Nkwe had cash of A$4. EOG Resources. Garatau (74%) and Tubatse (optioned stake of 74%) which have total resources of 68.1 N/A N/A EBITDA (US$m) (2.8) EPS (c) (4.9) (9. 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.0 0. Xstrata has an option to acquire 50% of both projects.5bn to R8. Additionally.3) PBT (A$m) (12.9) (9.7) (0. INDUSTRY OUTLOOK Company description Nighthawk Energy is involved in the development. Y/E Jun Revenue (US$m) 0.4) N/A N/A EPS (c) (0. Sundance Energy and McElvain Oil&Gas. Before then. 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 2012.9m as of 30 September 2010 excluding US$5m in receivables and Xstrata's US$10m option fee due before the end of the year.

9 1.6) N/A N/A P/E (x) 81. development and production assets.6 8. The company is well funded with zero debt. 600 allergen range.3m.6 P/E (x) 5. Half-year revenues were £3.1) (35. subject to farm-out.2 2. development.9 73.0) N/A N/A EPS (c) 1. The move into allergy testing from food intolerance allows entry to a £250m global market.6 3m 18.6 P/CF (x) 3.8) (6.6 N/A N/A N/A P/CF (x) 1150. NOP operates in stable Western European countries where there is very low political risk.0 5. as is preparation for drilling its next well in country at La Tosca. NOP also announced in November the spudding of the Markwells Wood-1 well in the UK Weald Basin. the basis of presumed food intolerance. 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. we will update our forecasts once it is completed. In the Netherlands a fourth new gas field.4 6. and tedious to replicate.0 (19.9) 2009A 2010A 2011E 2012E * % Relative to local index 2 December 2010 87 .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) 17.0 12.0 (42. Omega will invest £2. Wijk en Aalburg. the clinical basis of allergy. raising expected production across the company to more than 2. 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.8 N/A N/A Price performance % Actual Relative* 1m 16.1) 3m 3.0 2.5 0. Its tests are now manual and on semi-automated open systems.0) 12m (53.7 (3.5 EBITDA (£m) 0.250boepd. The new subsidiary will remain in Hamburg.Edison Insight Sector: Oil & Gas Price: Market cap: Forecast net debt (€m) Forecast gearing ratio (%) Market Share price graph (p) 105. a new Genarryt allergy screen and detailed new automated tests based on the Immunodiagnostic Systems iSys platform to find the exact allergy.0 10. Y/E Mar Revenue (£m) 5.8 (2. rather than IgG.4) (57.0p £97m N/A N/A AIM Northern Petroleum INVESTMENT SUMMARY (NOP) Northern continues to develop its core Netherlands and Italian portfolio of exploration.0p £4m 0. INDUSTRY OUTLOOK AllergoPharma tests for IgE.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).5 (2.9 0.5 20. interpretation of West of Sicily seismic is ongoing. Our forecasts are currently under review but with P2 reserves in excess of 100mmboe. exploration and asset trading company with a political exposure limited to countries in the European Union.8) 12m (29.8 EPS (p) 3. Y/E Dec Revenue (€m) 7.7 1. INDUSTRY OUTLOOK Company description Northern Petroleum is an oil and gas production.3 5. up 53%.7 1. is due onstream in Q111.9 10.7 1. up 15% with adjusted profit at £403k.1 N/A N/A EBITDA (€m) 2.3) N/A N/A PBT (€m) 2.6 0. Intolerance tests account for over 40% of revenues.2 PBT (£m) 0.7 17. In Italy.9 15. Allergy will be based on three products: an existing general IgE test. the stock appears good value with an EV/2P of less than $1/boe compared with European peers in the $10/boe range. offset by management estimates of £475k in extra profits.1m until March 2012 into automated systems. benefit is its valuable.5 Price performance % Actual Relative* Analyst John Savin 1m (6.2 8.

2 33. for the treatment of a wide variety of human cancers.9) (33.9 12m 53.7) (16.0 0. OptoMap had a 30% greater capability for detecting retinal lesions than traditional exams in patients under 65. including in colorectal cancer where Reolysin has demonstrated anti-tumour activity in a small open-label clinical trial. The drug is in a pivotal FDA and MHRA Phase III head and neck cancer trial in combination with paclitaxel and carboplatin. Distribution agreements and the acquisition of Opto (an Australian design and distribution company) should yield good growth but probably not till H211 and into FY12.6 49. abnormalities are either benign or very rare. aided by a cosmetic $8.6 3m 56. Interim data from the trial is expected in Q111 and the final results in mid-2012.0) PBT (C$m) (18.6 36.0 0.0) (18.6) 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$m) Forecast gearing ratio (%) Market Share price graph (p) 131.2) (16.6 21. Reolysin. INDUSTRY OUTLOOK An Optomap scan can detect 44% more abnormalities than cheaper cameras.3 N/A N/A PBT (US$m) 2. Jennerex.2 106. suggesting a new era in cancer treatment.2 N/A N/A Price performance % Actual Relative* Analyst John Savin 1m 23.0 (4. including BioVex. which will form the basis for regulatory submissions in both US and European markets.1) (28.3 2008A 2009A 2010E 2011E Revenue (C$m) 0.0 * % Relative to local index 88 2 December 2010 .4) 12m 47. This will give a substantial but unpredictable boost to 2011 accounts.1) (18.7 N/A N/A P/E (x) 348.4) (22.6 N/A N/A P/CF (x) 3. many Company description Optos uses a leasing model to place its wide-field laser retinal imaging systems with optometrists. Y/E Sep 2009A 2010A 2011E 2012E Revenue (US$m) 97.1m accounting change in that c 130 systems are now treated as finance leases bringing forward revenues. Instruments are leased at $24k per year and may generate additional per-use revenues over a typical 36-month contract. Reolysin is also being developed for a range of other cancers.0 0. Optos is moving the right direction but accounting complexity remains.9 9. Y/E Dec Price performance % Actual Relative* 1m (5.9 3.6) 3m 50. this gives a better EBITDA estimate that the surface accounts and was much better than the -$23m in FY09. TSX Share price graph (C$) Oncolytics Biotech INVESTMENT SUMMARY (ONC) Oncolytics has recently raised C$28. Genelux and Viralytics. Cashflow before vendor financing was -$13m.8m to maintain its clinical programme with its lead product.1) (6.0p £92m N/A N/A FULL Optos (OPTS) INVESTMENT SUMMARY Prelim 2010 results showed revenues rose to $106m from $97m.0 EBITDA (C$m) (17.67 Market cap: C$317m Forecast net cash (C$m) 34.6 24. a pharmaceutical formulation of oncolytic reovirus.6) (26.1 Forecast gearing ratio (%) N/A Market NASDAQ.3 N/A N/A EBITDA (US$m) 43.3 N/A N/A EPS (c) 0.1) EPS (c) (41. INDUSTRY OUTLOOK Company description Oncolytics Biotech is a Canadian biotechnology company focused on developing Reolysin.9 50. An Icelandic study on 573 patients aged 72 or older found 56% with AMD-related peripheral changes using OptoMap.5 13. cashflows are unaltered.4) (22.Edison Insight Sector: Pharma & Healthcare Price: C$4. Vendor finance provides capital. but there are some interesting viral oncolytic companies. However. Promising interim data could also attract a major pharmaceutical licensing partner. Oncolytics’ current rivals are the companies developing oncology products in the same therapeutic areas.

80 Market cap: US$276m Forecast net cash (US$m) 32.1) 3m 27. Block VI. The FDA has announced that the Advisory Committee Review of Orexigen's Contrave will take place on 7 December this year. INDUSTRY OUTLOOK Company description Orexigen Therapeutics is a biopharmaceutical company focused on developing pharmaceutical product candidates for treating obesity. quantified.Edison Insight Sector: Mining Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 6.0) EPS (c) (259.9 3m 103.2) (0. Contrave is partnered with Takeda (US. Obesity drugs have attracted increased scrutiny from regulators.0) (54. Oracle has commissioned a group of independent consulting companies to carry out the components of the BFS. its main project. 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. Y/E Dec Price performance % Actual Relative* 1m 0. 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.1) (53.1) N/A EPS (p) (0.3) (50. Side effects include high rate of birth defects.8 2008A 2009A 2010E 2011E * % Relative to local index Analyst Warren Johnstone Sector: Pharma & Healthcare Price: US$5.1) N/A PBT (£m) (0. with PDUFA date confirmed for 31 January 2011.2) (0.6 12m 120.8) PBT (US$m) (87. which is due to be completed in 2011. Canada and Mexico). Empatic (zonisamide + bupropion. with Orexigen retaining US co-promotion rights. The money was raised through a share subscription at 5. particularly in view of the high risk profile of the class.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 (1.9 28.5p per share by Regency Mines. The company has raised a further £1m over and above the £1.9p £13m 1. Orexigen has a second anti-obesity fixed dose combination.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 27.0 98. which have the potential to unlock the value of its coal assets in Pakistan.2) (0.8) (51.7) (23. higher risk of kidney stones and suicide.95) (111.1 0. 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.6) (60.2 (0.7 80. has total measured resources (JORC) of 1.1m raised in June.03) (154.2) (0.1 EBITDA (US$m) (88.7) 12m (17.2) 2008A 2009A 2010E 2011E Revenue (US$m) 0.0 0. an AIM-listed mining investment company. which is Phase III-ready but effectively on hold until Contrave is approved).1 0.5) (61.0 N/A EBITDA (£m) (0.62) 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 .1 0.0 0.2) (0.2) (0. The company remains focused on moving ahead with its NDA for Contrave.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). one of three late-stage obesity projects currently under regulatory review in the US.4bn tonnes of lignite coal and is located in southern Pakistan’s Thar coalfield. Y/E Dec Revenue (£m) 0.02) (117.

Neurologix's Phase II PD therapy NLX-101 uses a similar approach.5 4.6) (0.2) (6.6 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.9) P/E (x) N/A 31.7 N/A N/A Price performance % Actual Relative* 1m (7.2) (7. 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. triggering double-digit million-dollar milestones.5p £52m 14. US approval of Dendreon's prostate cancer vaccine Provenge bodes well for cancer vaccines. An associated upfront payment should secure current funds (c £13.1 17. It is focusing its efforts on two clinical programmes: ProSavin and TroVax. 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).5 1.5) (6. with cash into 2012 and €40m of pre-commercialisation milestones payable from 2012 by Lundbeck in connection with successful development of desmoteplase.0 12m 23.4) EPS (p) (0. INDUSTRY OUTLOOK Company description Oxford BioMedica is a UK company with a leading position in cancer immunotherapy and gene-based products. Y/E Dec Revenue (£m) 18.5 2008A 2009A 2010E 2011E Revenue (€m) 3. and StarGen's will be filed by end-2010).60 €65m 6.8) 12m (22.4 19. Only 5% of patients who experience a stroke are eligible for therapy by the time they reach hospital.3) (6.2 1.1) 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 .7m) beyond Q112 to the next major catalyst.5 EBITDA (€m) (12.9) (0.7) (12.9 1.8) 0. because of the low hypothetical probability assumed in valuation models.3 (0.1 EBITDA (£m) (7.8) (13. possibly in H111. Paion is well funded.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 9.5) PBT (£m) (6.5) (7.4) (29.3) (52.3) (9.8) (9. The key near-term catalyst remains partnering of ProSavin.2) (9. but ocular disease is an area of unmet need.5 N/A FULL Oxford BioMedica INVESTMENT SUMMARY (OXB) Oxford BioMedica has started its Phase II TroVax prostate cancer trial. with a presence in the UK. Data from the third cohort (2x dose with new admin technique) is due around year-end. Gene therapy can correct dysfunctional cells and/or create endogenous therapeutic protein factories. and first-in-man studies for two ocular programmes are due to start in the next six months (Retinostat's IND has been approved. It develops drugs for diseases or interventions for which there is substantial unmet medical need.6) 3m (0. further clinical data may trigger conclusion of this.5) (36. Y/E Dec Price performance % Actual Relative* 1m (2. Phase III studies of desmoeplase are due to read out in Q311/mid-2012 and there is considerable upside associated with success.7) (8.8) EPS (c) (59.3) (0. putting it in an excellent position to secure an ex-Japan licensing deal.1 12.4) (15.7 N/A N/A P/CF (x) N/A 56. TroVax mesothelioma and ovarian cancer trials.6) 3m 34.4) (38. the potential exercise of Sanofi’s option to license one or more ocular programmes.2) (5.9) 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 (€) €2.3) PBT (€m) (12.8 10.

3 13.222/oz. We are reviewing our forecasts.5 3.3 P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (8.1 P/E (x) 14. This is achievable as long as its Pioneer mine can process ore at a grade of c 3.5 215.3g/t in Q310).2) 12m (12.7 98. adjusted FY10 profits would be in line with FY09.7 4.0p Market cap: £1988m Forecast net debt (US$m) 207.8p £48m 12. Further. Hence.4m of exceptional losses.5 N/A AIM Patsystems INVESTMENT SUMMARY (PTS) In a trading update. At a share price of HKD1.32 per POG share).Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 25. Longer term. INDUSTRY OUTLOOK Demand in emerging markets is offsetting the subdued environment in western economies.15Moz in FY15. Y/E Dec Revenue (US$m) 381.7 198.8 8. The outlook benefits from the expected launch of more exchanges and trading platforms.0 N/A Price performance % Actual Relative* 1m 7.0) (7. the Argentinian commodities exchange.0 5.7 4.2 139.11 (or £1.6 EBITDA (£m) 3. The company was founded in 1994 and listed on AIM in 2002. Solutions range from plug-and-play modules to complete high-performance trading systems.6) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Charles Gibson 2 December 2010 91 .8 13. we estimate that it should report EPS in excess of US$2 (£1. POG's production guidance for the full year is now 510-530.7 N/A EPS (c) 49.6 22.1 * % Relative to local index Analyst Richard Jeans Sector: Mining Price: 1058.1 23.600oz at the nine-month stage). on which basis. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 19.0 Market FULL Share price graph (p) Petropavlovsk INVESTMENT SUMMARY (POG) After nine months of travails.8 0.4m (vs a profit $74.7) 12m 10. another is expected to be concluded by year end. Patsytems said several Risk Solutions deals have been deferred to FY11 or cancelled. having recently signed an exchange deal with MATba. POG reported an H1 loss of $55.000oz (vs 306.9 3m 3.0g/t in Q409 and 1. 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.2 19.6 Forecast gearing ratio (%) 14. Its risk solutions also benefit from strong drivers.0 17.7 472.3 EPS (p) 1. albeit after US$35.0 7.8 1. We note Risk Solutions is a lumpy business with long sales cycles and Patsystems other units are performing well. we estimate POG's interest in its non-gold division (IRC) Company description Petropavlovsk's principal assets are in the Amur region of Russia.25).4 3.4g/t or above (vs 5.9 26.46.9 2.3) 3m 6. Patsystems still expects to conclude a Risk Informer deployment with a global investment bank in FY10. POG's output is projected to peak at c 1.2 55.8 6. Pioneer and Malomir. comprising the Pokrovskiy mine and associated operations. is worth c $2.4 N/A P/CF (x) 22. Company description Patsystems delivers tailored solutions. built from modular components. The ability to offer a one-stop solution for exchanges helped Patsystems win its latest two exchange deals. Nevertheless.2 (8.1 201. The group has seen strong interest in its XConnect ASP hosting solution and.6 N/A PBT (US$m) 58.4 6. Our FY10 numbers currently assume a gold price of US$1.7 N/A P/E (x) 34. to enhance derivatives trading performance and trade processing.6m in H109).7 N/A EBITDA (US$m) 108.9 PBT (£m) 3.6 10. and pressures to shift OTC derivatives to regulated exchanges may also boost the industry.3 670. INDUSTRY OUTLOOK Performance in H2 should be ameliorated by higher grades and lower unit costs.1) (20.2 30.8 (20.

5 5. We expect initial US trials of Rhucin in antibody-mediated rejection to start soon.2) (9. 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).1) (18.1) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Robin Davison 92 2 December 2010 .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 4.2) 3m 31.3) EPS (p) (4. Cinryze could be EU marketed from May 2011. This makes Pharming the first company with a commercially viable transgenic product to reach the market. and will provide an update on its pipeline in due course.8) PBT (€m) (25.3) (2.1) (17.2) (61. Santarus will co-fund them. 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. Phytopharm intends to use the study results to secure a corporate partnership to exploit Cogane in Parkinson’s and potentially other neurodegenerative conditions.7 1. expression of neurotrophic factors (ie GNDF and BNDF. Finland and Germany. Kidney transplant trials could start soon. EU approval allows a 2010 launch by SOBi in the UK.3 10.0 EBITDA (£m) (3. indicating stocking orders in Q2 but also showing low patient use: 246 patients have Kalbitor available.3 3m (15. a rare hereditary disease. The DNage 51% owned subsidiary is being divested. Some stock orders and royalties should be received. expected in December. identified as a result of research into medicinal plants. Dyax filed an EU MAA for Kalbitor in July so could be EU marketed from H211.3 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. Kalbitor US sales in Q3 fell to $2. Y/E Dec 2008A 2009A 2010E 2011E Revenue (€m) 0.6 0.9) (2.21 €75m 8.6) (31.9m of bonds have been repaid.4) 12m (41.9 0.9) (7. there now seem to be c 550 US patients each taking 1.7 EBITDA (€m) (27.0) (27.0) (3.1 0.7p £27m 21. Sweden.5 N/A AMS Pharming Group INVESTMENT SUMMARY (PHARM) Formal EU marketing authorisation for Ruconest finally arrived on 28 October.5) PBT (£m) (3.9) (25.3) (16.3) (14.0) (7.0) (9.and brain-derived neurotrophic factors).4) (4.3 (51. Ruconest is now EU approved and will be marketed by sobi and Esteve. The company is reviewing the rest of its assets following the appointment of Tim Sharpington as CEO in June. 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.5) (26. INDUSTRY OUTLOOK Company description Pharming has focused on Ruconest/Rhucin for angioedema. a £150m market.2) (5.4) 12m (58.2) (3.0) (7.2) EPS (c) (28.7 doses per week. The September US deal with Santarus will provide a further $5m on BLA filing.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (€m) Forecast gearing ratio (%) Market Share price graph (€) €0. respectively glial. Just as welcome is the €5m Swedish Orphan Biovitrum (SOBi) milestone. especially as €10.4) (47. Y/E Sep Revenue (£m) 2.1 7.5) (20.6m.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 (15.8) * % Relative to local index Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 7.

2 2008A 2009A 2010E 2011E Revenue (£m) 19.5m new shares issued to the vendors at 8.5 N/A EBITDA (£m) (1.3m (28.4 3m 59. PCTs and other NHS entities backed by the UK government.06p) subject to shareholder approval.2) (2.23% pa during the period. let to GPs.4) 12m 13.6) (0. six bingo clubs and four family entertainment centres (seaside arcades).0 AIM Praesepe (PRA) INVESTMENT SUMMARY Praesepe is acquiring 14 more gaming centres from Nobles for £2.9 37.6x EV/EBITDA looks very reasonable.6 P/CF (x) 6. A new £25m 10-year facility adds firepower for acquisitions in line with an investment-driven growth strategy. high street trading remains very tough. The long-awaited consultation to increase permitted 'B3' machine stakes and numbers is now underway and should.0p £200m 266. 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.0 23.5 17.0 FULL Primary Health Properties INVESTMENT SUMMARY (PHP) There were no additions to the portfolio in Q3. Management remains confident that it will continue to secure suitable assets.3 17. and higher VAT/NI from 1 January will be unhelpful. materially boost revenues from mid-2011. Y/E Jun / Dec Price performance % Actual Relative* 1m (3. slightly ahead of the interims in August.36) 0.0 EPS (p) 13.2 P/E (x) 24.3 (3.7) 1. but stable investment yields and rental growth averaging 3.Edison Insight Sector: Travel & Leisure Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 8. More detail should be available with publication of the healthcare bill.1) 1.1 2. The shares have performed well since the mid-year.3 N/A P/CF (x) N/A 32. if implemented.6 7.2 25. The consultation will run to 25 January and there may also be an EU review period. Meanwhile.1 N/A EPS (p) (1.3 19.4 N/A PBT (£m) (1.6 14. with various possible alternatives).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) 319.4 29.8 8.5 EBITDA (£m) 15.3 9.3 27. (from £1 to £2.5 2. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 4. It currently operates 84 adult gaming centres (AGCs) including the Crystal Rooms in London.4 12m 1.0 112.4 7.5 11. which will improve game play and provide greater differentiation from 'C' machines) and to increase the number permitted (hopefully to 20% of the total.7 * % Relative to local index Analyst Roger Leboff 2 December 2010 93 . rather than via an owned development pipeline.7 21. but the yield remains attractive with further dividend growth supported by rental growth.1 12.1 6.1 5. Trading remains tough.2 PBT (£m) 4. but Beacon cost savings (£2m annualised) will increasingly flow through to margins. will have benefited underlying NAV. This tenant profile provides an exceptionally secure revenue outlook.4) 3m 6. INDUSTRY OUTLOOK The government's Comprehensive Spending Review confirmed its commitment to maintained Company description PHP invests in primary healthcare property.0 16.8 19. ie purchases in the open market.9 11. healthcare spending. The sites should deliver economies of scale and the 4.3 168.9 16. which should underpin demand for purpose-built premises.2 N/A Price performance % Actual Relative* 1m 13.5 (8.34) (0.26 N/A P/E (x) N/A N/A 32. July's White Paper 'Equity and Excellence: Liberating the NHS' proposed that GPs take an enhanced role in providing NHS services.1 18.4p £32m 43.

Marketed drugs Actiq and Fentora do not have a risk mitigation and evaluation strategy (REMS) yet.2 13. It is engaged in the development and commercialisation of prescription medicines for the treatment of unmet therapeutic needs in major markets.7 18.1 EBITDA (C$m) (13. the Grifols acquisition of Talecris.7) (1. so 2010 is proving to be tougher than expected. INDUSTRY OUTLOOK Competitive developments include suspension of commercialisation plans for Amorfix's vCJD blood test.9) (3. Following its recent strategic regional partnering deal with Allist Pharmaceuticals for development of novel drugs PBI-1402 and PBI-4419 for the Chinese market.6 3m 13. and safety concerns with Affymax/Takeda's Hematide. and the company is focused on cost control and progressing potential strategic deal discussions which should bring in cash.3 112. ProMetic's Q3 cash of C$1.0) (3.5 (1.6) (2. but Onsolis was approved in 2009 on this basis. confirmation of a three-month Sancuso stock shortage and the CEO's departure. Y/E Dec Revenue (C$m) 10.5) (1.5) (53.6) 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. significant challenges remain for the US business.3m provides funding into 2011.4 24.5) 3m 23.1 1.1) (7.0 TSX ProMetic Life Sciences INVESTMENT SUMMARY (PLI) ProMetic revised its 2010 financial guidance at its Q3 results.0 FULL ProStrakan INVESTMENT SUMMARY (PSK) ProStrakan shares started recovering after September's announcement of a further delay to US Abstral approval.5) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A 40.9) (8.1) (2.4) 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) 86.7 116.3) (2. The FDA is taking a cautious view on abuse/misuse potential and off-label use of rapid-acting fentanyl drugs. Company description ProMetic Life Sciences is a biopharmaceutical business. comprised of a group of companies focused on developing technologies. increasing the expected FY net loss to C$8m. which had an earlier approach rejected. In the meantime.0) EPS (p) (7.6% of the shares. It is unclear whether a full bid for the company will eventually be made by Norgine or another company.9) PBT (£m) (19. revealing that revenues would be affected by a delay to an order for prion reduction resin by partner Octapharma into 2011.1 79.6) (6.6 EBITDA (£m) (15.1) (0.0) PBT (C$m) (16. ProMetic is confident of securing further deals (in either its protein technologies or therapeutics businesses) before the year-end.2) (23. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m 17.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net debt (C$m) Forecast gearing ratio (%) Market Share price graph (C$) C$0. INDUSTRY OUTLOOK Company description ProStrakan Group plc is a European specialty pharmaceutical company.9) (5. which bring pharmaceutical products to market.2) Revenue (£m) 56.7) (3.0 91.4) (5.2 12m (10.7) (2.6) (19.4) (3. The Sancuso shortage will have a £5m negative impact on FY10 operating profit and the FY11 impact is harder to assess. They rose again sharply following the announcement in November that Norgine had acquired 12.8) (10.5p £175m 19.10 C$37m 9.0 N/A * % Relative to local index Analyst Lala Gregorek 94 2 December 2010 .0) 12m (47.8 74. The impact of this delay is a C$4m decrease in H210 revenues.1) EPS (c) (5.5) (6. with a developing US franchise.6 20.

7% 2012 estimate. Psion holds c 7% market share. A novation agreement with Ligand Pharmaceuticals adds a preclinical CXCR4 receptor programme to the pipeline.7 32.0p £138m 40.1bn but is estimated by Company description Psion designs and sells ruggedized mobile computers.0 9. which are used by field workers and in supply chain and logistics functions.5 7.3 185.3 15.2 49. The share price has significantly appreciated since lows of 60p in July.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.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 151.6 3.4) (16. It seeks to create value through consolidation and has a medium-term objective of becoming self funding.7 24. The dividend yield and lowly EV/sales ratio should afford a reasonable amount of downside protection.2 EBITDA (£m) (3.1 P/E (x) 27. Y/E Dec Price performance % Actual Relative* Analyst Dan Ridsdale 1m 2. With £51m of cash at H110. but plans to expand this substantially.1 3.9 3m 4.9) (3.3) 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) 98.5 4.6) EPS (p) (11.1) (8. INDUSTRY OUTLOOK The market for rugged mobile computers is estimated to be worth $2. programmes across CNS.1) (12.7 0. 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.9) (12.8) (10.5p £87m 44. with a longer-term goal of becoming a fully integrated company.5 2008A 2009A 2010E 2011E Revenue (£m) 0. Further evidence that the financial recovery is coming through should be a catalyst for upside especially given the potential for margin expansion beyond our 6.3 0. Y/E Nov Price performance % Actual Relative* 1m 31.2 EBITDA (£m) 11. the channel partner network has been significantly strengthened and the H1 uptick in order book and pipeline suggests a change in momentum is due.1) (19.4 170.1 12.6) (9.0 8.8 3m 42.6 2.4 * % Relative to local index 2 December 2010 95 .0 1.0 65.2 4. These plans revolve around the move towards a modular product architecture and leveraging a network of partners to drive product innovation. with the most advanced in Phase II.0 174.8 12m 37.9 N/A AIM Proximagen Group INVESTMENT SUMMARY (PRX) Proximagen has partnered both clinical assets obtained via the February acquisition of Minster Pharmaceuticals.3) (3.9 P/CF (x) 124. INDUSTRY OUTLOOK Through acquisition.4 EPS (fd) (p) 3.8 12. VDC to be growing at 8-10% per year. 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 2008A 2009A 2010E 2011E Revenue (£m) 199.3 51. The first modular products are being brought to market.1 12m 14. Proximagen still has the means to continue building its pipeline through additional M&A.1 2.6 17.3 23.1 20.7) PBT (£m) (2.7 PBT (£m) 7.9 0.

Y/E Mar Revenue (£m) 1617.1 155.5 3m 8.6 3.) QinetiQ’s interim results lived up to the UK government’s assertion that we live in an "age of uncertainty". for the benefit of both tenant operational performance and portfolio valuations.4 174.4 1737. April’s £24m open offer kick-started a programme to enlarge and upgrade specific properties. However.7m.6% prospective yield justifies an improved rating for the shares.2 P/CF (x) 4. accounting for most of the 6% organic growth.6 16. With the 'predictable' service revenues coming in beneath our expectations. INVESTMENT SUMMARY (PSPI) The interims were typically steady.1 7.6) 3m 1.9 Price performance % Actual Relative* 1m 8. The US appears to have stabilised from last year's delays. PSPI has planned and fully funded investment to enhance the quality and defensive positioning of the portfolio.6 9.5) (34.0 112.9 EPS (p) 7.6 EBITDA (£m) 185. we do recognise the progress made in restructuring and the impressive focus on cash generation.5 EBITDA (£m) 15. That stability and a covered 9. The UK portfolio is let entirely to European Care.4 1710. 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.5 3. however.6 (11.Edison Insight Sector: Property Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 72. services and solutions to customers in the aerospace. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 19.0 10.3 20.5) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Roger Johnston 96 2 December 2010 .0 AIM Public Service Properties Invest.3 11. At the mid-year the portfolio was 100% let with no voids and a 22-year weighted average unexpired lease term.7 110.5 P/E (x) 7.6 8.4 171. confirmed the government's commitment to healthcare spending.7 EPS (fd) (p) 15. good long-term contracts such as the LTPA.8 P/E (x) 10. 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.4 8.5 8.0 4. although we anticipate margins to remain subdued.4 4. predominantly due to the rapid delivery of Q-NET (vehicle survivability product). QinetiQ has seen a rapid fall in profitability and order delays have plagued the wider business.1 13. we remain concerned about visibility.5) 12m (27.3 16.6 8.0p £74m 135.4 (4.9 11.2 85. Cash rents increased by 4% to £8. which make up the majority of the value of its portfolio.1p £767m 309. one of the industry's leading operators.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) 116.6 PBT (£m) 5. annual rent reviews in the UK produced 3. defence and security markets.4) (1. also increasing its weighting in areas such as dementia care and mental illness.3 5.4 115.0) 12m 5.8% average growth up to the end of June. We are moving to a more neutral stance on the business with a revised SOTP fair value of 115p. primarily in the UK and US.0 P/CF (x) 4.9 14.4 8.2 9.6 21.3 4.6 Price performance % Actual Relative* 1m (2.3 1625. with MoD R&D in decline and now fully competitive.3 PBT (£m) 130. with 4% in prospect for FY10.4 22. Its main focus until recently has been on the expansion of its UK portfolio of care homes.5 8.0 FULL QinetiQ Group INVESTMENT SUMMARY (QQ.3 10.7 (4.1 9.6 15.9 59. Revenues were ahead of our expectations.

2 5.4 EBITDA (£m) 22. Its proven success relies on its staff's skills in managing claims and re-insurance.8 10. indicated it being one of the most successful for publishers for several years. at $14.6 P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 0. INDUSTRY OUTLOOK Company description RQIH is a holding and investment company. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 30. and creates books that are licensed to other publishers worldwide.6 32.2 1.3 183.7 6. experience and Amazon’s Q3 statement described print and digital sales both being ahead. not on black box theory.3 EPS (p) 10.0 (20. as purchasers of reinsurance receivables and as consultants for the insurance market. giving us confidence that profits are back on a growth trend.4 N/A 9.5) * % Relative to local index Analyst Mark Thomas 2 December 2010 97 .Edison Insight Sector: Media & Entertainment Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 137.8 3m 0.0 37. the live market and corporates’ self-insurance vehicles (captives).2 1. but there are some opportunities in niche markets and in run-off debt. though.3) 9.3 7.3 8. INDUSTRY OUTLOOK Book sales in the US continued to be weak in September.9 110. this anticipates print sales falling by $2bn over the period and digital/e-books growing by $6bn.0 12m 22.9) 12m (15. eBooks continue to gain share as penetration of reading devices builds.0 P/CF (x) 1. The deals completed on 1 November should enhance full-year earnings by 10%.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. However. despite mixed trading conditions in its key US and UK markets.0 22. Barnes & Noble's forecast is for consumer book sales to grow from $23bn in 2010 to $27bn in 2013.2 3m 9.0 27.6 P/E (x) 8.2 Price performance % Actual Relative* 1m 5. Forecasts are conservative and. Quarto among them. UK and Australia. Reports from the Frankfurt Book Fair.0 26. Y/E Dec Revenue (£m) 112.0p £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.6 107.0p £28m 47.0 0. R&Q has developed a range of new income streams with opportunities for both organic and acquisitive growth.0 PBT (£m) 7. Given its modest scale.0 EBITDA (£m) 8. giving a running total for the year-to-date of -9%.9 7.3 EPS (fd) (p) 26. It publishes under imprints owned by the group in the US. Approval for further syndicate and servicing deals have also been announced.7 106.3) (23. It conducts business in the UK.5 26.8 7.5 1.9 11.8 (0.8 22. despite the better performance.2 P/E (x) 5. Worries about the balance sheet are over done and management is indicating that deals are back on the agenda.5bn.9 36.8 23. US and Bermuda as owners and managers of insurance companies in run-off.0 FULL Quarto (QRT) INVESTMENT SUMMARY Quarto’s Q3 update described a good performance. Europe.4 7. this covers a wide range of Company description Quarto is an international book publisher specialising in illustrated non-fiction books.3 5.8 0. The total yield of around 8% is very attractive and will be nearly twice covered by earnings in 2010.1%. these are available across market conditions. 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. though.4 7. the rating remains miserly. down 12.8 0. Run-off portfolio prices remain high.8 28.3 5.4 6.8 PBT (£m) 8.0 7. As ever.

9 EBITDA (A$m) (3.0 157.8) 1. In the meantime.1-1. ASX Share price graph (p) Range Resources INVESTMENT SUMMARY (RRL) Range has been one of the key junior E&P success stories of 2010.2) (0.9 161.0) (0.1 3m 8.8) (6. from a C$0. Based on an RPS study.1 N/A AIM Red Rock Resources INVESTMENT SUMMARY (RRR) Red Rock continues to advance its lead projects .11 0.2 0.2) (2. They comprise Company description Range Resources has a portfolio of early to advanced stage prospective exploration licences. Y/E Jun 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m 155.9) (4. thereby generating a potential pre-tax dividend distribution to Red Rock of C$10.9 EBITDA (£m) (0.Edison Insight Sector: Oil & Gas Price: 6.2) EPS (c) (3. and more recently by some highly positive news concerning the potential scale of the fold-thrust play in Georgia.6 1. RRR has made a £1.2 47.24) 0. The share price remains largely underpinned by the producing assets in Texas.3p Market cap: £74m Forecast net cash (A$m) 7. which are believed to be analogues of large hydrocarbon basins in the Yemen.0p £108m 0.1 2. located in the autonomous Puntland region of North East Somalia.12) (0. Nogal and Dharoor.2) PBT (A$m) (3. raised $25m in recent months and also farmed-out some of its equity to Lion Energy and Red Emperor Resources.8 PBT (£m) (0.9% interest in the Tshipi manganese project as well as increasing its resources by 145Mt (at 31. reflecting the very active exploration and development programme.7 5. with full production expected from the end of this month (albeit at lower than average grades).5) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 10.4 Forecast gearing ratio (%) N/A Market AIM. Kansai has announced that it intends to sell its interest in Mid-Migori (plus other assets).1 646.most recently by increasing its exposure to MFP in Columbia. We believe the potential for further positive newsflow in the coming months is excellent.7 2.3bn tonne target at 30-40% Fe).4) (6. In Kenya.5 0. where the re-development of the El Limon mine is progressing ahead of schedule.8 EPS (p) (0. The stock has been driven by some savvy investments in production and development assets in Texas and Trinidad.7) (6. Georgia and West Texas.2 11. In the UK.8) 1. Jupiter Mines has confirmed its acquisition of a 49.0 Revenue (£m) 1. Y/E Jun Revenue (A$m) 0.0 12m 188.75% 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 1.3 0.6) (1. 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. primarily in Australia and Africa. INDUSTRY OUTLOOK Range has potentially high impact exploration interests in Puntland-Somalia.5m investment in Ascot Mining.5 59. the recoverable reserves here are put at 613mm barrels gross. INDUSTRY OUTLOOK Red Rock's principle commodity exposures are to gold.2) (5.27 P/E (x) N/A N/A 145.9) (4.7 * % Relative to local index Analyst Charles Gibson 98 2 December 2010 .5m investment. TSX-V listed Africa Oil.7 864.7 43.6 1.9m Company description Listed on AIM in July 2005. iron ore and uranium.0 3m 553. The operator of the projects.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. uranium and gold.3 P/CF (x) N/A N/A 52.5 12m 966.2) (0. manganese. 20% stakes in two onshore basins.

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

2) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Katherine Thompson 102 2 December 2010 .2 P/E (x) 16.9) 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 (13.8) (1. Demand for consumer GPS applications is returning to normal levels after a period of weakness.5 29.8) N/A N/A EPS (p) (1.1 719.8 3.6) (38. It has manufacturing sites across Europe and is c 60% exposed to the food industry and related sectors.3 P/CF (x) 2.4 88. putting RPC well on the way to achieving FY estimates.9 740. Good defensive growth story with financial strength to enhance the rate of progress in due course.0 44. years.8) (42.1 30.4 3.1 79.3) (12.6 12m 28.4 EBITDA (£m) 69.0 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. An H1 update indicated that around a quarter of the product portfolio is enjoying decent volume growth YTD. well-designed antennas in handsets. wireless and handheld devices. highlighting its strengthening position in the high-value military and satellite phone markets. With demand weakening.5 33. 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. Y/E Mar Revenue (£m) 769.7) 3m (27.4 Price performance % Actual Relative* 1m (9. Sarantel has recently reported production orders from military.Edison Insight Sector: Basic Industries Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 276.8 4. Interims due 30 November.1 PBT (£m) 23. The company is in ongoing discussions to target the high-volume handset and camera markets. Plastic as a packaging material is the fastest growing of the high volume materials.7) N/A N/A PBT (£m) (2.5 39.3 765.8 EPS (p) 16.9 N/A N/A EBITDA (£m) (1. 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.0 83. profitability should be similar/modestly better than H2 last year.6) (8.4) (0.5 9.4) 12m (31. 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. Y/E Sep Revenue (£m) 2. with the remainder flat. prices are expected to be depressed. mobile satellite communication and camera customers and announced a new joint development project with a US defence contractor. with regulation the biggest risk.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. This appears driven by plastic's fundamental innovation potential and is a trend we expect to continue.8) (2. Despite material price increases.8p £275m 80.8 2.8 9.1 8.8) 3m 2. and highlighted the need for Company description Sarantel develops and manufactures miniature filtering antennas for mobile.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.3 15.7 8.0 47.1 41.

presenting earnings accretive acquisition opportunities that can be easily integrated into Sceptre's national depot infrastructure.1 12.3 2. Its fifth division provides Company description SciSys provides a range of professional services in support of the planning.5) (44. SciSys now has a more balanced portfolio. Y/E Apr Price performance % Actual Relative* 1m (10.7) 3m (23.0 N/A AIM SciSys (SSY) INVESTMENT SUMMARY Following the governments spending review. the Warrior upgrade programme. 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.7 6.3 EBITDA (£m) 1.6 1. is facing lengthy delays.9 2. We believe the impact of the spending cuts is more than reflected in the shares .5p £15m 13. Defra.1 5.1) 2009A 2010A 2011E 2012E Revenue (£m) 39. Its rental assets are now cash generative and debt is declining rapidly.2m cash and shares).9 Price performance % Actual Relative* 1m (7.4 3. government and media/ broadcast sectors.7 42.0) 12m (13.4 3.2 7. but H2 will benefit from a major new contract with Punch Pub Company. despite asset finance constraints.1 EBITDA (£m) 13.2 P/CF (x) 0. It also supplies lottery vending machines and other gaming products to UK social clubs.Edison Insight Sector: Travel & Leisure Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 26.6 1.5 2.8 13.0 P/CF (x) 7.the enterprise value of £8m looks modest for an international IT services group generating more than £40m of annual revenues.2 42. application support across these markets.0 4.7 1.2 * % Relative to local index Analyst Jane Anscombe Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 37.0 42. development and use of computer systems primarily in the space.4 3.4) (6.5 4.9) (61.7 P/E (x) 7.7 2.0 AIM Sceptre Leisure INVESTMENT SUMMARY (SCEL) Sceptre has just announced another bolt-on acquisition (for £1. the forthcoming VAT rise will not help consumer spending. Meanwhile.1) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Richard Jeans 2 December 2010 103 . market conditions remain very tough and interims (mid-December) are likely to be lower (World Cup and a dip in SWP rental rates). government & defence.5 7. Y/E Dec Revenue (£m) 38. many financially stretched.5) 3m (18.8 44.2 EPS (p) 3.8) (22. 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.8 1.5 2. The industry is fragmented with 570 small operators.2 P/E (x) 9.2) (9.7) 12m (56. Likewise. for which SciSys is part of a consortium bidding for the work. Recent growth has been led by the government and Media Broadcast divisions. Sceptre has successfully increased market share in amusement machine supply.8 EPS (fd) (p) 3.9 6.1 PBT (£m) 0. had its budget cut by 30%.8 7. The 925 amusement machines being acquired (in 277 leisure sites) should slot straight into its national distribution network.8 41.4 3.1 41. which includes the Environment Agency (one of SciSys's main customers). the effect on SciSys' business remains unclear.5p £11m 3.0 88.3 1.8 7. INDUSTRY OUTLOOK SciSys is specialist provider of high value IT solutions with a focus on four vertical markets (space. especially in pubs.7 3. However.9 5.5 2.9) (30.6 7. environment and media & broadcast).0 13.0 PBT (£m) 1.

0) (15. Hence. the underlying business continues to advance. While the automotive fleet opportunity has been deferred by the weak US economy. including automotive and mining (DSS).5) (4.0 PBT (A$m) (0.0 AIM SeaEnergy INVESTMENT SUMMARY (SEA) The disposal of Sea Energy Renewables Limited (SERL) is said to be progressing well and is expected to conclude by the year end. Moray Firth and Beatrice sites. and an agreement with Nantong to develop and market steel structures for the offshore wind industry. is a UK-based company with a 25% stake in three of the largest scale offshore wind projects in Scotland.5) (1.7 12. Sea Energy also continues to develop its marine services business with a Letter of Intent signed with Ulstein for vessels.8 EBITDA (A$m) (0. we regard the group's enterprise value of c £10m as modest.7) 1. fitting out comfortably more than 200 haul trucks.6) PBT (£m) (3.0) (4. The marine services business.8) 12m 123. healthcare (TrueField Analyzer). Company description Seeing Machines is a technology company focused on designing vision-based human machine interfaces.6) (4. will form the core of Sea Energy’s business after the sale.2) (0. with progress reported at its Inch Cape.1 101.4 14.0 0.9 745.5 P/CF (x) 70.6) (6.5) (1.4 P/E (x) N/A N/A 19. SM announced a contract to install the DSS driver monitoring equipment in the haul truck fleet at a mine in Chile.0 0.7) (5. The majority partners are Scottish and Southern Energy and EDPR.3 1. We note SM’s core technology has wide applications.9) (7.5) 0. 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. the mining sector deals have diversified the opportunity and we note the market size in both global road transport and mining operations is substantial. Aside from the sale. Y/E Jun Revenue (A$m) 4. Extending the loan facility with LC Capital Master Fund from £2m to £3.1 Price performance % Actual Relative* 1m 3. which is for an existing client.6 2009A 2010A 2011E 2012E * % Relative to local index Analyst Richard Jeans 104 2 December 2010 .9 EPS (c) (0.0 EBITDA (£m) (3. The new contract.8m gives Sea Energy the financial flexibility to pursue this objective.2 8. includes the fit-out of 32 haul trucks.4 3m 16. and we believe the current valuation can be justified by the mining end-market alone. including road transport. INDUSTRY OUTLOOK SM has exposure to a number of industry sectors.3) (1.0p £15m 5.3) EPS (p) (8.7 10. and computer gaming (faceAPI).6 4.6p £15m 4.4 2.0 (4.6) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A * % Relative to local index Analyst Graeme Moyse Sector: Technology Price: Market cap: Forecast net cash (A$m) Forecast gearing ratio (%) Market Share price graph (p) 3.7) (50. together with the legacy oil and gas assets.8 N/A AIM Seeing Machines INVESTMENT SUMMARY (SEE) In November.3 0.7) 1.9 4.0 0. an Exclusivity Agreement with Amplemann for a bridging system. healthcare and computer gaming. Y/E Dec Price performance % Actual Relative* 1m (2.0) (4.4 N/A 12. Company description SeaEnergy.3) (8.1) 2008A 2009A 2010E 2011E Revenue (£m) 0.Edison Insight Sector: Alternative Energy Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 21. The latest deal takes the total publicly announced new DSS contracts that generate revenue in FY11 to six.4) 12m (44.6) 3m (15.2) (44.

4 1.1 15.3 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).8 Price performance % Actual Relative* 1m (3.5) (12.8 N/A EBITDA (£m) (0.8) 12m (40. property investment management and university IP commercialisation (IPC). The retail market may also see a step change when the government 'popularises' its holdings in banks. of which £2.7 3.4) (39. The shares trade on 19-21x 2010/11 P/E estimates. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 12. Encouragingly.5 16.4 P/CF (x) 33.42 P/E (x) 25.5) (2. INDUSTRY OUTLOOK While the VC market is subject to the health of equity markets and the knock-on effect on exit strategies.9 (1. A high proportion of income is derived from stable fee and interest based revenues.one of the multiple actions being taken to mitigate the lost income when the superbly executed hedge matures in November. many more years of above market growth. There should be long-term market growth from the demographics of an ageing and higher net worth population.9 (1.7) 0.4) N/A EPS (fd) (p) (1.52 1.8 2.2 2.1 17. continue to be difficult.7 (2.8) * % 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%.8 (8.0 14.7 2.8) 3m 3. Returning confidence in equity markets and customer acquisitions have helped.8) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Martin Lister 2 December 2010 105 . Y/E Dec Revenue (£m) 4.4 PBT (£m) 2.07 1.4 N/A N/A Price performance % Actual Relative* 1m (25. sustainable/renewable energy sector is receiving considerable investor and government support. allowing for Company description Share plc owns The Share Centre and Sharefunds. It is positive that the property division strategy is moving to build a more recurring revenue base in FY11. the group had £3.02m is unencumbered.5) 3.0) 12m (3.Edison Insight Sector: Financials Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 27.1 19.4 2.1m loss before tax included £0.0 14.5 18.0p £4m 2.5p £40m 11. Q3 market share data saw particularly big gains. At the half-year end.4 2.2 2. retail buyers outnumbered sellers by over two to one in the commission free scheme.27m cash.7 EPS (p) 1.9) N/A P/E (x) N/A 2.7 EBITDA (£m) 1. The group has enhanced earnings by c 10% through the tender offer/buyback . The £1.3 20.4) N/A PBT (£m) (0.5) 0.4) 3m (29.0) (45.9 N/A AIM Sigma Capital INVESTMENT SUMMARY (SGM) Sigma’s FY10 interims showed that conditions in the group’s primary operations. The Share Centre is a self-select retail stockbroker that also offers share services for corporates and employees. venture capital and property. The Company description Sigma Capital is a specialist asset management and advisory group that focuses on three areas: venture capital (VC) fund management. Its record shows the model delivers strong operational gearing.7m of write downs.4 N/A N/A P/CF (x) N/A 2. attractive early-stage companies are still able to complete funding rounds. The H1 revenues decline from services reflects the absence of set-up fees from new property partnerships. although the rate of increase has begun to slow. INDUSTRY OUTLOOK Share plc still has a modest market share (6% excluding the benefit of the hedge).0) (24.28 1.7 21. 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.

A further two exploration application licences have also been acquired in Western Australia. The company aims to build European critical mass in the domains of dermatology and oral health. There is also growth potential from line extensions. However.4 EPS (p) 1.4) (0.5) 0.8 (0.4 P/E (x) 20.0 0.6 EBITDA (£m) 2. having made headway on gross margin improvement as indicated by its November IMS. It has also entered into a Memorandum of Understanding with Sino-Agri Mining Industry. Y/E Mar Price performance % Actual Relative* 1m 12.5 N/A N/A 77. appointing new management. INDUSTRY OUTLOOK Vancouver FOB muriate of potash currently costs US$320/t.0 N/A EBITDA (£m) (0.8 36. it must align its costs with the industry average to compete with peers.9 4.3 13.8 12m (11.8) (1. Industry benefits from demographic growth trends and Sinclair has a mix of OTC and other more specialised brands.5 (0.5 PBT (£m) 1.0p £57m 0. more focused marketing and a greater investment in its direct sales force. The marketing effort is focused on growing sales in key European markets.9 146.1) (1. rationalisation of SKUs. It has undergone radical change in the last 12 months.4 27.7 12m 28.0p.3 N/A AIM Sirius Minerals INVESTMENT SUMMARY (SXX) Drilling commenced at the company's North Dakota project early last month.7 2009A 2010A 2011E 2012E Revenue (£m) 0. The result of the hole is critical to de-risking the development of any future Sirius potash operation in North Dakota.3) (1. Spain and Germany and distributors in c 85 countries.0 0.9 14.220 acres and now controls over 8.9) 0.2) 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 .8) (0. Australia. INDUSTRY OUTLOOK Company description Sinclair Pharma is a UK-based speciality company with direct marketing operations in France.6 32. Further improvements in underlying margins could be made by gradual rationalisation of production.3) (1.0 15.5) (1.0 (1.8p £71m 0.9) 0.7 N/A FULL Sinclair Pharma INVESTMENT SUMMARY (SPH) Sinclair is at a turning point in its recovery.0 P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m 13.2 3m 93.4) N/A PBT (£m) (0. It sells 45 products mostly in dermatology.645 net mineral acres of exploration leases in North Dakota. 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.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 30. by which time the company will know the extent of any potash present.4) (0. Sirius has acquired a further 1. product acquisitions and equity placing to repay debt.8 3m 14.5) (20.4) N/A EPS (p) (0. Drilling is expected to be completed by end-December. Y/E Jun 2009A 2010A 2011E 2012E Revenue (£m) 30. Italy. We value Sirius Minerals on the basis of its NAV at 8.5) (1. oral health and wound care. which will allow Sino-Agri to look into developing the Adavale project in Queensland. The Flammazine acquisition enhances the wound-care franchise and provides a foot in the door of European hospitals.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.

5 0. probably in 2012/13.12 P/E (x) 21.2 5.Edison Insight Sector: Property Price: Market cap: Forecast net debt (€m) Forecast gearing ratio (%) Market Share price graph (€) €0.0 16. with 87.1 65.9 1. assisted by domestic demand.8 0. There may be RoW opportunities.5m.3 EBITDA (£m) 17. leading to GDP growth forecasts of around 3% for the current year.4 45. Interim results are due on 6 December.4) (10.4 36.5 3m (8.0 2.8 23.5) (4.30 €91m 281.6 4.9) 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. SkyePharma is investigating whether there is a commercially-viable way of developing Flutiform in the US.7 Price performance % Actual Relative* 1m (5.1 PBT (€m) 4.0 134. given a substantial requirement for pre-approval dosing studies and post-approval safety studies. INDUSTRY OUTLOOK Company description SkyePharma is a drug delivery specialist.46 1.000sqm of new leases in H1 signed at average €4.3 (4. However.2 26.3 P/CF (x) 0. after GSK's Advair and AstraZeneca’s Symbicort. Abbott has now returned the US rights.7 44.5 7.8) 3m 20.3 12m 5.9 55. Recent investment in sales and marketing initiatives are gaining traction.4 135.17/sqm vs 45.9) (64. ie 2.9 0.7 20. INDUSTRY OUTLOOK Company description Sirius Real Estate is engaged in the investment in and development of commercial property to provide flexible workspace in Germany. 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. Flutiform remains the possible fourth combination ICS/LABA to reach the market in asthma.2% second quarter growth on the back of resurgent export orders.9 4. bringing clinical and life cycle management benefits. initiated two Phase III studies in November.6 PBT (£m) 1.5p £9m 106.40 0. Merck & Co is due to launch Dulera after receiving FDA approval in June.1 20.7 7.9 22. better cost recovery from tenants and reduced voids. We have cut our FY11e pre-tax profit forecast by £0.0 FULL SkyePharma INVESTMENT SUMMARY (SKP) SkyePharma’s near-term investment case hinges on the EU commercialisation of Flutiform. Latin American negotiations are ongoing and its Japanese partner.5 0. Y/E Dec Price performance % Actual Relative* 1m 3. lower overheads. Kyorin.1) 12m (60. Y/E Mar Revenue (€m) 43.0 0.6 EPS (p) 11.2 P/E (x) 3.7 1.9 59.0 3. Period-end occupancy was 73% vs 71% a year earlier. The local economy has produced the strongest eurozone performance.8 EPS (c) 1. This is combined with its ability to service and/or renegotiate/refinance certain debt obligations. using its technologies to develop new formulations of established drugs.4 * % Relative to local index Analyst Robin Davison 2 December 2010 107 .8 P/CF (x) 4.2 1.2 55.83 0. the MAA is under review and approval is possible in mid-2011.9 0.7) 2008A 2009A 2010E 2011E Revenue (£m) 62. Sirius's properties are aimed at Germany's SMEs.2 6.8 18.0 AIM Sirius Real Estate INVESTMENT SUMMARY (SRE) The trading update showed progress on targeted occupancy and efficiency improvements.0 44.6 27. The shares are at a c 60% discount to NAV.5 EBITDA (€m) 18.7 60.5 3.000sqm in H109.

0) N/A PBT (¥m) (2067.0) (262. INDUSTRY OUTLOOK Online sports-betting revenues are continuing to grow on the back of rising broadband penetration and greater consumer trust.3) (8.2 6.6 6.5 49. and external rights for the Japanese market.0) (293. Y/E Mar Price performance % Actual Relative* 1m (3.0 800. In October 2006 it sold its US-facing business and stopped accepting bets from US residents.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).0) (294.2 10.1p £299m 36. rapid market growth should soon offset this.8 P/CF (x) 15.0 40. It is active in licensing – both its proprietary programmes.7) 3m 33. Spain and Greece) and while this may produce a temporary dip in profits (due to tax and marketing costs).0) (262.4 8.00 Market cap: ¥11438m Forecast net cash (¥m) 1558.5 9.8) 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. as in Australia.0 EPS (fd) (p) 6. Its main markets are in Europe and Australia.0) 12m (18.2 37. Economies of scale also suggest the sector is likely to see continuing M&A activity. Y/E Jul Revenue (£m) 164. However. An increasing number of countries are planning to Company description Sportingbet is an online sports betting and gaming operator.6 7.3) 3m (3.5 PBT (£m) 31.7 P/E (x) 9.1 Price performance % Actual Relative* 1m (9. Japanese approval of SOH-075 is also expected in a similar timeframe. Sportingbet continues to diversify.0 N/A EBITDA (¥m) (2106. longer term.8) (2266.0 N/A FULL Sportingbet INVESTMENT SUMMARY (SBT) Q1 results (24 November) showed further progress with EBITDA up 17% despite unexceptional sports margins.0 208.4 12m 15.4 8. 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.1) (8.0 230. including the Russian B2B deal with Liga Stavok announced mid-November. Sosei currently generates over ¥130m pa from Norlevo (SOH-075) sold by Sandoz in Australia.Edison Insight Sector: Pharma & Healthcare Price: ¥97000. specifically regulate and license online gambling (including Denmark. Our full-year estimates are unchanged.0 6.0 215.0 919. Sosei’s investment case is reliant on the successful development and registration of these assets.0 EBITDA (£m) 39.5 35. Near term.3 2009A 2010A 2011E 2012E Revenue (¥m) 153. with first top-line results from the NVA237 Phase III programme anticipated in calendar Q211.7) (26.0) N/A EPS (¥) (19938. Germany.8) (13.5) 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. which we believe has significant potential.9 9. INDUSTRY OUTLOOK Company description Sosei Group Corporation is a Japan-based biopharma focused on R&D and drug re-profiling.8) (1530.0 52.7 46. Emergency contraceptive SOH-075 may provide further upside as Japanese approval is possible in Q111 (NDA filed Sept 2009).3 6.2 5.

7 N/A AIM SQS Software Quality Systems AG INVESTMENT SUMMARY (SQS) H110 results showed that SQS has returned to revenue growth.8 P/CF (x) 7. The group remains on target for the full commercial launch of its new SaaS product.3 12.9 7.7 EBITDA (£m) 6. INDUSTRY OUTLOOK StatPro's products are targeted at the global wealth management industry.2) 12m (2.8 P/E (x) 5.0 34. While this target market has clearly suffered a fair amount of turmoil over the last two years.7 6.8 8. This is despite challenging market conditions.0 9.7 3.0 8.8 9. partly reflecting that around 90% of testing is carried out in-house.9 31. StatPro Revolution.6 28.1 159. volatility and a Company description StatPro Group provides asset management software and asset pricing to the global investment industry.6 11.0 13. The company also says it has continued to sign up new clients to its StatPro Seven hosted platform.0 16.0p £52m 3. The majority of its revenues are derived from consultancy services to a client base including a long list of blue-chip customers.4 (4.0p £71m 4.0 6.8 6.1 7. With the shares trading on c 12x our FY11 forecasts. with demand strength in both the traditional project-based business and managed testing services.9 134.4) 12m 14.9 (9.1 * % 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. lower interest rate environment should help underpin retail demand for equities and bonds. Y/E Dec Revenue (£m) 27. but the company expects FY10 earnings to be in line with expectations and FY11 to see revenue and margin growth. as SQS works towards its medium-term aim to grow this to 50% of the business.0 EPS (p) 7.9 PBT (€m) 13.9 P/E (x) 16. Market surveys suggest that around two-thirds of IT projects either fail or fall behind time and budget.1 4.4 EPS (c) 43.4 10.9 3m 7.0 8.2 21.2 10. In addition. and therefore the longer-term industry growth profile. failure rate of IT projects.7 9.8 4.7 13.7) (3. we believe the potential for StatPro Revolution continues to be significantly underrated by the market.7 EBITDA (€m) 17.8 P/CF (x) 3.9 7.5 14.6 9.6 8.9 5.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (€m) Forecast gearing ratio (%) Market Share price graph (p) 192. We estimate Managed Services will make up nearly 9% of FY10 revenues (vs 3% in FY09). SQS is well placed to benefit. cost and regulatory pressures all require asset managers to maintain and upgrade their reporting and risk management systems.0 AIM StatPro Group INVESTMENT SUMMARY (SOG) In a short trading update in October.1 22.7 2008A 2009A 2010E 2011E * % Relative to local index Analyst Richard Jeans 2 December 2010 109 .2) Revenue (€m) 142. We have revised up our revenue forecasts while our earnings forecasts remain substantially unchanged. Y/E Dec 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m 4.8) (12.0 8.0) 3m 6.0 Price performance % Actual Relative* 1m (3.3 11. Investment in headcount and infrastructure to support future growth hampered margins.3 150.4 4. StatPro announced that Q3 trading was in line with management’s expectations.5 PBT (£m) 4.7 6. 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. in January. As the global market leader in independent testing. competitive.6 33.

7) 3m 39.0) 7. INDUSTRY OUTLOOK With food.3 14.1 29. we have eased back our FY forecasts. kinase.7 P/CF (x) N/A 32.4 41.2 7.0m.3p.6 (4.2) (0. VAT increases and higher finance charges. INDUSTRY OUTLOOK SuperGen is focused on the development of novel.2 10.8 * % Relative to local index Analyst Robin Davison 110 2 December 2010 .1 Forecast gearing ratio (%) N/A Market NASDAQ Share price graph (US$) SuperGen (SUPG) INVESTMENT SUMMARY SuperGen has confirmed plans to initiate a Phase II study with its DNA repair suppressor/multi-tyrosine kinase inhibitor.1) 13.2 PBT (£m) 23. we believe Stobart's multi-modal model is set to become increasingly attractive. including Eddie Stobart (road haulage.7 EBITDA (US$m) (1. Y/E Dec Price performance % Actual Relative* 1m (1.2 16.1) 12m 14.2p £380m 91. in small cell lung cancer (SCLC). normalised PBT up 24% to £15.1 PBT (US$m) (3. However. Positive results should be a significant value-creating event and provide the basis for a partnering deal.4 * % Relative to local index Analyst Roger Johnston Sector: Pharma & Healthcare Price: US$2.4 EPS (c) (5.5 2009A 2010A 2011E 2012E Revenue (£m) 431.0 14.6 16.2 13.3 12m 2.3 10. Stobart is Company description Stobart Group operates a multimodal transport business.0 EBITDA (£m) 40.78 Market cap: US$168m Forecast net cash (US$m) 113.3 52.8 447. Revenues were up 11% to £243.Edison Insight Sector: Support Services Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 143.9 14. we believe that the strategic developments at London Southend Airport and the recent Biomass expansion support continued long-term growth.8 22. Stobart Ports (3%) and Stobart Air (1%).7 15.8 P/E (x) 18. 82%).4m and normalised EPS up 16% to 4. Stobart Rail (14%).9 38.2 9.1 12.6 3. Y/E Feb Price performance % Actual Relative* 1m (1.6 9.4) (1.3 52. supported by asset developments. Such compounds are attractive as licensing candidates to major pharmaceutical companies and can often be licensed at high values at a relative early stage. marketing partners Eisai and J&J remain committed to submitting registration applications based on secondary endpoint data.8 15. with caution over government spending. amuvatinib.6 32. cell signalling and DNA methyltransferase inhibitors.3 51.7 516. cell signalling and DNA methyltransferase inhibitors for cancer indications.2 EPS (p) 7.3 P/CF (x) 14. underlying EAFFC up 26% to £17.0 558.0 5. drink and other resistant sectors amounting to 85% of goods carried.1 28. 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. usually first-in-class anticancers based on Company description SuperGen is a NASDAQ-listed biotech firm focused on the development of kinase.9 P/E (x) N/A 20.7 8.0 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.4 59.4 10.9 39.0) 7. Following the perceived failure of the Phase III study of Dacogen in elderly AML.1 18.5) 3m 2. With a greater focus on more environmental transportation and the creation of a Biomass JV.7m. pretty insensitive to the UK slowdown. Nevertheless.2) 2008A 2009A 2010E 2011E Revenue (US$m) 38.4 13.8 (11.

9 N/A EPS (p) 0.9 N/A P/CF (x) N/A 27.9) (106.5p £16m 0. it also maintained its financial guidance for FY10.1) 0.3) (24.0 12m 14.6 0.000 visitors getting samples and marketing material at the show. where environmental conditions and legislation are creating positive momentum. the company indicated that it was increasing its focus on belinostat and looking to out-license its other products.9 1.2bn. At its Q310 results.6 EBITDA (DKKm) (192. The d2w droplet logo can also be found on many magazine covers at UK newsagents. such as carrier bags.1 N/A PBT (£m) (0.0 128. which have considerable potential as oncology products because of their epigenetic effects. It is in a pivotal Phase II trial for peripheral T-cell lymphoma (PTCL) and could be approved in 2012.20) (0.4) 0.36) 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 (9.4 7. INDUSTRY OUTLOOK Symphony's main activity is in overseas markets.35 Market cap: DKK444m Forecast net cash (DKKm) 202.6 17.5) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Mick Cooper 2 December 2010 111 . Two such drugs have been approved and nine others are in clinical development.9 44. The company also sells oxo-biodegradable finished product. with 5.3) (50.0 16.3 N/A * % Relative to local index Sector: Pharma & Healthcare Price: DKK3.0 AIM Symphony Environmental Tech.2) 3m (4. Y/E Dec Price performance % Actual Relative* Analyst Neil Shah 1m (8. Company description Symphony designs and globally markets a special formulated additive that makes polythene and polypropylene oxo-biodegradable. leaving further market share opportunities for Symphony. after a strong run that saw shares up 35% over the last six months. (HDACi). Its lead product is belinostat and it has out-licensed its North American and India rights to Spectrum.3 0.2) EPS (DKK) (4. The company exhibited its d2w product at the K Show in Dusseldorf in October.7) (26.41) (0.8 N/A P/E (x) 45. belinostat. The drug is also being developed for cancer of unknown primary (CUP) and non-small cell lung cancer (NSCLC).9 16.8) (15.5) (11.8) 14.68) (1. 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.8 0.0 8.8 90. The North American and Indian rights have been out-licensed to Spectrum Pharmaceuticals and belinostat could generate peak revenues of $1.Edison Insight Sector: Basic Industries Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 13.1) (142. belinostat has a favourable safety profile and could be the first HDACi approved for the treatment of solid tumours.9 3.4 N/A EBITDA (£m) (0. However. Y/E Dec Revenue (DKKm) 43.1) 12m 29. BASF recently moved out of the oxo-degradable market. Products made with Symphony's d2w eco-compatible technology can be found in many large brands. INVESTMENT SUMMARY (SYM) Symphony shares fell 10% over the last month.5 17.5) (42.8) 3m (1.3 (1.8 2008A 2009A 2010E 2011E Revenue (£m) 5.3 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.2) PBT (DKKm) (306.5) (7.

with summer bookings at end-April 30% ahead.0 N/A N/A P/CF (x) N/A 11.9 4. Company description Travelzest is an online travel group offering specialist travel programmes. there are positive implications. sales at its North American operations. south Atlantic.0 N/A N/A Price performance % Actual Relative* 1m (18.8) PBT (US$m) (1.1) (1. the driver of interim profit growth. Namibia has clear company-maker potential for Tower. fine weather and the World Cup.2) (0.0 EBITDA (US$m) (1. the Brazilian junior HRT has recently raised $1.8 3. Significantly.8) EPS (c) (0.3) (1.0) (1. In the half to April. were up 10%. Y/E Oct Revenue (£m) 44.4 18.8 N/A N/A PBT (£m) 3.2) (1. albeit in both cases with a currency boost. which could pave the way for a well by early 2012.0p £42m 1. 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. In Canada.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) 17.3) 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 17.0 0. 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.2) (0.0 0. for Tower offshore Namibia.6) 12m 75. which include a unified UK retail brand.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. We are reviewing our forecasts.1 N/A N/A EPS (p) 6. FY11 should see the full benefit of new marketing and distribution strategies. Processing is expected to be completed by early 2011.0 58.6) (18.1 2008A 2009A 2010E 2011E * % Relative to local index Analyst Richard Finch 112 2 December 2010 .0) 3m (31. More drilling success in the Falklands could stimulate interest in offshore Namibia plays. Early indications suggest the Namibian licence has three giant structures with strong indications of hydrocarbons.8 N/A N/A P/E (x) 2.3 49.1) (2.9 176. 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. albeit tentative.4 N/A AIM Tower Resources INVESTMENT SUMMARY (TRP) Two key items of Tower newsflow are eagerly awaited. the charter market remains highly competitive.4 5. independent oil and gas exploration company with a regional focus on sub-Saharan Africa. Y/E Dec Revenue (US$m) 0.3 41. which benefits Travelzest's agency business. tighter consumer spending. UK tour operations were holding up well. Arguably.5 N/A N/A EBITDA (£m) 5. INDUSTRY OUTLOOK While Thomas Cook and TUI Travel have blamed a marked slowdown in UK summer 2010 trading on airspace closures. London-based.4) (12.2 12m 65.Edison Insight Sector: Oil & Gas Price: Market cap: Forecast net cash (US$m) Forecast gearing ratio (%) Market Share price graph (p) 4.1) (0.0) (2.3 5.0 0.3 3m 33. despite consolidation. suggesting an improved full-year return.5bn partly to finance exploration activity offshore Namibia. The second potential event relates to the results of the 3-D survey offshore Namibia.

25% increase in the benchmark interest rate.2) (23.0 10. INDUSTRY OUTLOOK Company description TCT's main objective is to maximise capital growth from a portfolio of properties in China.4% prospective yield which.6 24. primarily within the UK.5) EPS (c) (29.9% (end Q2: 83. adds weight to the case that TCT is undervalued.3 13. albeit at substantially lower levels.9 Price performance % Actual Relative* 1m (42.6%). The CEO.4 4.2 1.7) P/E (x) N/A N/A N/A N/A P/CF (x) N/A 6.6 6. In November.1 3m 4.5c quarterly dividends put the units on a 6. Radical changes to the role of the state in the provision of public services could present Tribal with myriad opportunities.6) (53.0 0.3 7. Debt is in line.5) 12m (44. This followed October's 0. with the steep discount to NAV. with refinancing completed in H110. is leaving the group at the end of December and progress is being made identifying a successor.0 170.4 11.0 EPS (p) 14.3 21.8 6.2 85.4) (29.3) (49. TCT secured a new strategic partnership that will extend the portfolio into mainly retail property in central and western China. efficiency in service delivery and intelligent investment in technology remain key priorities given curtailed budgets.8 PBT (S$m) (49.0 9. The PRC government's determination to curb inflation pressure and property speculation prompted its fifth increase in capital reserve requirements this year. Post the CSR. The focus is on large scale development opportunities in the commercial sector and on income producing assets such as office.0 26.2 P/CF (x) 1. with the property well on track for full occupation.7 5. support and delivery services focused on improving the delivery of public services.7) 2008A 2009A 2010E 2011E * % Relative to local index Analyst Fiona Orford-Williams 2 December 2010 113 . with new contracts for student management systems in the UK and New Zealand and for mobile learning in the US.8 P/E (x) 2.0) (13.6 13.9) (7.8) (15.0 Market Singapore Exchange Share price graph (S$) Treasury China Trust INVESTMENT SUMMARY (TCT) Operational progress in Q3 included an increase in aggregate portfolio occupancy to 86. outside of TCT's business model. Other news included refinance of the City Center debt facility on improved terms and including development debt for CC3.0 FULL Tribal Group INVESTMENT SUMMARY (TRB) Bid discussions have been terminated and we are now reinstating forecasts.5) (42.5 N/A 2. Much of this is aimed at residential property.7 4. Y/E Dec 2008A 2009A 2010E 2011E Revenue (S$m) 80.9 77.0 Forecast gearing ratio (%) 61.7 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 Tribal provides consultancy.7 178. Longer-term prospects benefit from HMG's intention to reduce public spending through shared service provision.4) (10. Y/E Dec Revenue (£m) 234.57 Market cap: S$377m Forecast net debt (S$m) 575.6 13. logistics and retail properties. It also reported 68% occupancy for its newly refurbished retail podium at Central Plaza.4 3.1 18. Peter Martin.8 77.0 EBITDA (S$m) 4. such as working with GP practices in their envisaged commissioning role.1 EBITDA (£m) 24.Edison Insight Sector: Property Price: S$1.5p £33m 29. Overseas revenues are building.1) 3m (53. This reflects the materially reduced UK government advisory work and continued delays and deferrals in UK health advisory business. A commitment to pay 2.7 10.5 PBT (£m) 18.9 Price performance % Actual Relative* Analyst Roger Leboff 1m 0.0 193.

0p £43m 5.0 713. 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).2 89. INDUSTRY OUTLOOK With end-markets across defence moving towards a greater demand for electronic equipment and information management.6 9. Y/E Dec 2008A 2009A 2010E 2011E Revenue (£m) 515.7 94.1) 12m 33. aircraft & vehicle systems (24%).0 108. With no programme >5% of revenues. They have also created effective logistical services and shifted the emphasis towards more complex products to increase value added.3 116.0p Market cap: £1124m Forecast net cash (£m) 1. 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.7 PBT (£m) 72. Ultra is better placed than most. Trifast is well past the early phases of its restructuring.9 3. developing their own local facilities or supply routes.6 3m 27. The strong first-half performance has encouraged us again to lift our profit estimates.3 11.6 Price performance % Actual Relative* 1m 23.0 15.Edison Insight Sector: Engineering Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 51.93 3.6 20.40 P/E (x) 44.1 2009A 2010A 2011E 2012E * % Relative to local index Analyst Nigel Harrison Sector: Aerospace & Defence Price: 1638. The global recession has caused pain across the sector.5 0.4 4.8 9.3 125.9 (6.4 12m 114.8 9.0 EBITDA (£m) 84. we feel the key themes to come out of the UK's SDSR play to Ultra's strengths surrounding Battlespace IT and security.9 PBT (£m) 2.1 12. frequent upgrade cycles.4 15.5 64.2 EPS (p) 80. In addition.1 114.4 Price performance % Actual Relative* 1m (11. 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.2 5.1 26.8 112. despite the challenging trading climate.1 96. INDUSTRY OUTLOOK The global industrial fasteners market is valued at more than £20bn.2 10.1 105.0 EBITDA (£m) 4.7 * % Relative to local index Analyst Roger Johnston 114 2 December 2010 .15 0.5 2.1 P/CF (x) 11. but provides consolidation opportunities for stronger businesses.5) (10.4 17.3 P/E (x) 20.8) 3m 0.0 P/CF (x) 7. This has been delivered through both organic and acquisitive growth in niche areas of defence electronics across a range of customers. employing more effective internal controls and positioning itself to respond to any stimulus to the global economy.9 104.1 5.68 2. Y/E Mar Revenue (£m) 104.3 651.6 765.5 98. with a toehold in the US. is now looking ahead positively. reinstalled 18 months ago. Principal operations are in Europe and South-East Asia.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 1996.0 EPS (fd) (p) 1. providing a highly visible and predictable revenue stream.9 14.4 103.9 85. The new management team.0 17.6 24.0 FULL Trifast (TRI) INVESTMENT SUMMARY As emphasised by the recent interim statement. and information & power systems (33%). The business is moving ahead.3 75. The recent pull back in the shares caused by sector read-across provides an opportunity to consider the stock again.

0p £217m 80.9) (19. we feel Umeco is well placed to benefit from a recovery in its end markets. although we anticipate that these will ease during H2.2 459.7 P/CF (x) 7. we have increased our FY11 and FY12 EPS forecasts by 3% and 5% respectively.7 31.6 23. as the recent formulation licensing deal with GSK highlighted.9 409.1 30. 60% of the business is in the higher visibility Supply Chain.3 12m 52.7 5. wind energy (5%).4) Revenue (£m) 31. EPS up 18% and the dividend raised by 4%.3 EBITDA (£m) 39. which are now one to three years from the market.3 46.7 12m (6. Vectura offers exposure to potential generic ICS/LABA asthma combinations (despite US regulatory complexity) and novel LAMA (NVA237) and LABA/LAMA combination (QVA149). motor sport (7%).6) EPS (p) (1.4) (15.5p £223m 58.2) 8. launch expected in 2012 and 2013 respectively) and generic projects VR315 and VR632.8 45.5 37.7 3m 4. which could become the first such therapies to reach the blockbuster COPD market. INDUSTRY OUTLOOK Company description Umeco is an international provider of supply chain services and advanced composite materials primarily to aerospace and defence (70%). Y/E Mar Revenue (£m) 410.0) P/E (x) N/A 18. principally the two branded drugs NVA237 and QVA149 (partnered with Novartis.9 26.9 4.5 24.9 3.7 37.4 39.5 11. INDUSTRY OUTLOOK Company description Vectura Group is a product development company focused on the development of a range of inhaled therapies.2 50.Edison Insight Sector: Aerospace & Defence Price: Market cap: Forecast net debt (£m) Forecast gearing ratio (%) Market Share price graph (p) 450.1 PBT (£m) 28. principally for the treatment of respiratory diseases.3 P/E (x) 11.6 39. The recent interims highlighted these markets have moved into a strong recovery mode. As a result of the strong recovery in Composites.3 (10.7 36. a narrower net loss (including exceptional restructuring costs) and an improved cash balance.4) 3. However.3 44.9 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. with delays in aerospace and automotive and wind energy markets essentially grinding to a halt.3) (18. PBT by 12%.6 5.5 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 . a proposed Chinese wind market JV and reduced leverage.2 (10.4 57. 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.5 EPS (p) 39.3 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.7 (1.3 11. The investment case remains geared to the success of later-stage inhaled therapies.5 9.3 3m 38. With the long-term outlook bolstered by a new RR North America contract. Interims revealed increased revenues. While 2010 results were hit by lower composite revenues.4 424.8) PBT (£m) (7.5) 8.0 FULL Umeco (UMC) INVESTMENT SUMMARY Umeco's interims saw revenue increased by 9%. there is also unrealised value in its IP and technology platforms. marine (4%) and other industries (14%).4 EBITDA (£m) (7.3 12.6 Price performance % Actual Relative* 1m 3.4) (5. Y/E Mar 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m 10. Its goal is to improve patients’ lives and generate value for its stakeholders.7 13.

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) 28.0 7. 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.6 3.6 4. build their downstream activities.9 7.6) EPS (p) (128.7) (65.2) (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.6 (27. Nevertheless.9) (12. INDUSTRY OUTLOOK The next 12 months should see Phase II start for V85546 (possibly with a partner). The franchises are led by motivated teams.5p £57m 15.5) PBT (£m) (19.0) (19. rather than achievements. V158866 and V158411 plus Biogen’s A2A antagonist back-up.5) 12m (61.9 EBITDA (£m) (9.5p £31m 28.5) 3m (3.2 2.5) (4.0 P/E (x) 8. having added 16 dealerships this year. supported by fundamental controls from the centre.0 EBITDA (£m) 7.0 PBT (£m) 3.9 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) 12m (26. SMMT forecasts on new vehicle registrations are still looking optimistic.8 13.4 3. Such newsflow should represent the next significant catalyst. INDUSTRY OUTLOOK City sentiment towards the motor distribution sector remains cautious.4 8.0) (32.4) (6. AUY922 proof of concept and full recruitment of the V3381CC chronic cough Phase II is expected by end-2010.0 9.0 N/A N/A N/A Price performance % Actual Relative* 1m (33. Recent share price movements reflect City caution about consumer spending.2 8. Y/E Feb Revenue (£m) 760. However.3 3. but the timing is difficult to predict.6) 3m 8.1) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Nigel Harrison 116 2 December 2010 .1) (24.9 10.5 6.9 930. 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. the rating recognises neither the earnings potential of recently completed deals nor the capacity for further acquisitions.6m in cash at end-October.8 N/A FULL Vernalis (VER) INVESTMENT SUMMARY With £33.0 1000.9) P/E (x) N/A N/A N/A N/A P/CF (x) 1. Vernalis remains well positioned to progress and expand its R&D pipeline through licensing and acquisition.3) (11.7) (4.3) (6.0) (33.5 P/CF (x) 1.2 Price performance % Actual Relative* 1m (12.5 11.1 EPS (p) 3.4) (6. Y/E Dec Revenue (£m) 54. This is being achieved through the completion and subsequent improved performance of a series of acquisitions. but used car values have recently started to drift downwards.Edison Insight Sector: Pharma & Healthcare Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 31.8 818. 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. The group remains acquisitive. indications from most leading groups suggest they will deliver profits progress in both 2010 and 2011.5) (10. entry of in-house programmes.1 12. Additional projects could be generated from the Cambridge research facility.0 13.6 8.

0p £193m 8.6% for lorcaserin).1 17. Inc is a pharmaceutical company dedicated to the development and commercialisation of next-generation therapeutic products addressing obesity.1 14.0) (29.3 22.9 Revenue (£m) 265. Q3 net loss widened from $41m to $59.0 FULL Volex Group INVESTMENT SUMMARY (VLX) Initial recovery phase benefits were clearly visible in strong H1 results.2m in cash & equivalents at the end of the period.5 18. INDUSTRY OUTLOOK Qnexa is one of three FDA-filed obesity drugs.2 50.4 P/E (x) 28. Consequently. Y/E Mar 2009A 2010A 2011E 2012E Price performance % Actual Relative* 1m (2.3 PBT (£m) 8.6m due to higher G&A expenses and absence of recurring revenue from Evamist. investors may need to be more selective on stocks and sub-sectors going forward.01) (90.9 14.9) (2.0 * % Relative to local index Analyst Toby Thorrington 2 December 2010 117 .3 14.6 17.3 11.3 10.19) (66.0 302.6 115.0 P/CF (x) 10.9) (72.2 (48. Vivus held $158. The response is expected to be made during December.4) N/A EPS (c) (8.0 17.1 229. Contrave.2 24.7 N/A EBITDA (US$m) 0.5 10. Y/E Dec Price performance % Actual Relative* 1m (1. Lorcaserin also received a CRL.8) (2.0) 3m 34. In Phase III it showed the most impressive efficacy (placebo-adjusted weight loss of 9.0 EBITDA (£m) 14.7 21.Edison Insight Sector: Pharma & Healthcare Price: US$6.34 Market cap: US$515m Forecast net cash (US$m) 129. It also requested formal submission of the two-year data from the OB-305 (SEQUEL) study. which triggered another round of upgrades primarily driven by higher revenues.1 36.0) (67.7) N/A PBT (US$m) (5. INDUSTRY OUTLOOK A sharp downturn in consumer demand subsequently yielded some healthy year-on-year percentage increases for electronics companies in the early stages of recovery.2) 12m (25. It supplies data and telecom equipment and healthcare and industrial products to large OEMs of consumer electrical and electronic devices.9) 2008A 2009A 2010E 2011E Revenue (US$m) 102. 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.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. These rates are flattening out and the rate of progress is also less uniform going into Q4.7 21.2% for Contrave and 3.2) 3m 17. diabetes and sexual health. it is currently unpartnered. remains the most active region.4% vs 5.0 200.0 322. but unlike Arena's lorcaserin and Orexigen's Company description Vivus.2) (51.0 15.5 EPS (p) 10.3 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).4 (51. while Contrave will face the FDA AdCom on 7 December.6 18.9 12m 233. Asia Company description Volex Group is a leading global provider of power products and interconnect cable assemblies.

9 2.0 71.0) (10. The balance sheet is strong and overheads have been reduced.29 3.5m and operating loss of $5.6 12.6 96. Harlequin. including prestigious universities such as Pittsburgh Medical Centre.000 genes using sensitive quantitative PCR. However.0) (37.0 AIM Walker Greenbank INVESTMENT SUMMARY (WGB) Trading conditions remain challenging. Morris and Sanderson.4 6.4) EPS (c) (33. Two gene expression profiling SmartChips were launched on 10 June: a cancer pathway chip and a miRNA chip (miRNA are gene regulatory molecules).9 6.7 60. We have raised our estimates again following a positive trading statement earlier this week. but the Walker Greenbank brands continue to progress as a result of consistent investment in design and colour. Many brands have failed to grow.5 7.5 5. Leading brands include Zoffany.3 P/CF (x) 6.5 EBITDA (£m) 5.9 5.41 Market cap: US$58m Forecast net cash (US$m) 1.8) (5.4 1.4 68. Multi-sample 384-well capabilities are now available (at an extra $75k).3p £24m 2. the group's manufacturing operations have responded to restructuring and are benefiting from the operational gearing impact on improved demand. enabling high-throughput quantitative analysis.4 12.4m.1 7. Manufacture for the volume segment of the market has largely moved overseas. INDUSTRY OUTLOOK The $150k SmartCycler RT-PCR system and SmartChip tests for 5.2m equity issue was made in July to build working capital.0 EPS (p) 4. Q3 results were in line with forecasts.2) (33. manufacturing facilities have closed down. H1 results showed revenues of $822k.2 2.2 (20. cell biology and stem cell research for the life science and pharmaceutical industries.79 6.1) (31. while several specialist Company description Walker Greenbank is a vertically integrated producer and distributor of high-quality wallcoverings and furnishing fabrics.0 PBT (£m) 3. Kyoto and Ghent and a distribution deal with Takeda Rika Kogyo in Japan.4 EBITDA (US$m) (7. Y/E Jan Revenue (£m) 63.4 4.0) (10. is a leader in the development.8 Forecast gearing ratio (%) N/A Market OTC Share price graph (US$) WaferGen (WGBS) INVESTMENT SUMMARY WaferGen has launched its SmartChip system with 11 early-access customers.8 4.7) (26.9) 12m (21.8) PBT (US$m) (8. cash of $1.5) (9.8 Price performance % Actual Relative* 1m (5. especially in the US and continental Europe.6 0.6 2009A 2010A 2011E 2012E * % Relative to local index Analyst Nigel Harrison 118 2 December 2010 .184 genes in one sample Company description WaferGen Biosystems Inc. Each chip tests 1.0 6. Y/E Dec Revenue (US$m) 0.43 P/E (x) 9. manufacture and sale of state-of-the-art systems for gene expression.0) (11. INDUSTRY OUTLOOK The UK interior furnishing industry has experienced uncertain times for many years under the influence of fashion changes.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) 40.07 5. success is being delivered delivered by operators able to differentiate themselves from competition by consistently offering innovative and high-quality design and products.1) 3m 36. genotyping.4 12m 117.Edison Insight Sector: Pharma & Healthcare Price: US$1.4 5.4 13. 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.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. Meanwhile.7) (9.6 3m 10. A $7.2 4.5) (10.

2 0.9) (12.9 5. Y/E Dec Price performance % Actual Relative* 1m (9. would enable WILEX to capture the value uplift associated with a positive result in the ARISER study.0) (12.3) 12m (34. The balance comprises the provision of close protection services and training. WILEX's cash remains lean. but a €20m equity line and the cornerstone shareholding of Dievini Hopp (35.8p £5m 2. Westminster announced it had raised £1m from a new strategic investor through the issue of 400.5 0. following surgical removal of the kidney. with development potential in most solid Company description WILEX is a biopharmaceutical company listed on the Frankfurt Stock Exchange. UK and overseas customers.1 N/A AIM Westminster Group INVESTMENT SUMMARY (WSG) In October. 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. The financial model has not yet been updated to reflect the acquisitions. as well as a 24/7 alarm receiving centre and control room.2 0. we feel that if the group converts a small proportion of enquiries it could well outperform over the coming years.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. which should put it in a strong position to license Mesupron.49% of the enlarged share capital. 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. in turn.4) (93.2 EPS (p) 1.2) EPS (c) (167. INDUSTRY OUTLOOK Mesupron is an orally-available anti-metastatic drug.7) (34.3 PBT (£m) 0.1) (40.1 0.99 €92m 2.9 (0.2 12m 14.5 1.5) (24.1 11.1 1.5 3.7 1.6) 3m 16. Y/E Nov 2008A 2009A 2010E 2011E Price performance % Actual Relative* 1m 2.9 26. While there is near-term forecast risk due to the lumpy nature of contracts.0 1. tumours.6 P/E (x) 13.1) 3m (5.5) 2008A 2009A 2010E 2011E Revenue (£m) 5.7 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. while providing flexibility to pay-down debt if necessary.1 (6.Edison Insight Sector: Support Services Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 20.5) (137.5) (24. This will be used to deliver further growth.4) (133.6 4.000 shares at 25p/share. representing 16. along with close protection services and training. Rencarex is targeted at adjuvant treatment of non-metastatic kidney cancer.6) (25.0 EBITDA (£m) 0. hence the need for a fundraising.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 .9 1.4) Revenue (€m) 3.8 3.8) (9. increasing level of enquiries and international focus provides substantial growth opportunities. which we believe will remain robust.9 10. the interim analysis of which is now in prospect for mid-2011.0 5.5 7. We feel the combination of Westminster's focus on security. a core activity that represents two-thirds of turnover.5) (25. for which no product is currently approved.5 EBITDA (€m) (20.8 P/CF (x) N/A N/A 5.7%) ensure its financial position.2 13.2 1. This.0) PBT (€m) (20. Rencarex is the leading product in development for this specific indication.

2 39.0 26. labelling and other applications.8 2.5p £422m 23.5 71.5 12.2 12m 145.5) (0.Edison Insight Sector: Technology Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 226.9 24.0 72.5 5.8 8.0p £162m 21.7 18.6 P/E (x) 75.9) (0.0 0. ceramics market is the primary driver. This opens up significant incremental revenue streams for Xaar.2 EPS (p) 3. XEL expects to move to first-stage production by end-2011.3 45. Its Platform 1 products are used primarily for outdoor advertising. All eyes are currently on the 9/3b-6 well flow test with results due in the first week of December. Our current valuation of 235p is based on a conservative 50% chance of success.2 10.9) 30.9) (1.0 5. and its is not until 2013 that we will see a full year's financial benefit from the £22m investment in capacity expansion.2 P/CF (x) N/A N/A N/A 17. The ceramics market is embracing the technology most aggressively at present but the range of potential applications is broad.9 536.2 248. We believe our 19p EPS estimate for 2013 is conservative. INDUSTRY OUTLOOK The market for Xaar's P1 printheads (used in outdoor advertising and case coding) looks relatively stable.1 2008A 2009A 2010E 2011E Revenue (£m) 0.0 66. Platform 3 widens the addressable market to include industrial.6) (2. Management is understandably careful regarding newsflow but has indicated the potential for resources to be higher than the current view of 160mmboe.3 P/CF (x) 26. Y/E Dec Price performance % Actual Relative* 1m (3.9) 3m 52.5 * % Relative to local index Analyst Ian McLelland 120 2 December 2010 .0 0. The opportunity for the P3 products looks significant.5 EBITDA (£m) 6. If successful. Demand from the Company description Xaar designs and manufactures inkjet printheads. Xaar’s growth story should have a long way to run.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. Success with Bentley could make it one of the North Sea’s largest independent players.6 PBT (£m) (0.0 5.6 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. where manufacturers are looking to make significant investments in expanding their digital production capacity. which is focused on the exploration and development of heavy oil resources in the North Sea on the United Kingdom Continental Shelf.9) 30.8 7. with full field development to follow by 2014. Xcite plans a unique alliance financing structure to both incentivise partners while retaining a 100% WI. Y/E Dec Price performance % Actual Relative* 1m 70.5 N/A FULL Xaar (XAR) INVESTMENT SUMMARY As a pivotal figure in the global transition to digital printing.8 EPS (p) (0.8 3m 302. but virtually all capacity for this year has already been allocated.2 14. we would expect this to increase significantly in the event of a successful flow test and an indication of increased reserves.8 P/E (x) N/A N/A N/A 13.7 122.4 EBITDA (£m) (0.0 2008A 2009A 2010E 2011E Revenue (£m) 42.8) (0.1 52.8) (0.0 42.9 12m 603. The 2011 rating is a premium.6) 20.0 57.4) (0. INDUSTRY OUTLOOK Company description Xcite Energy is an oil exploration and development company. through developing its Bentley field.6 PBT (£m) 2.

3 67.3% in FY10 and 7.6 12m 46. although business development may bring in further funds.0 11.6) (17.0p Market cap: £193m Forecast net debt (£m) 18. Technology customers have rebounded strongly after a dismal 2009.0 Forecast gearing ratio (%) 44.7 12m 157.9) (16.4 EBITDA (C$m) (12. while the industrial sector is starting to show signs of improved activity. with more detailed results to be presented at ASH on 6 December.6 P/E (x) 28.3) (20. The three end-markets supplied by XP are showing differing rates of recovery. Europe and Asia.6 20.82 Market cap: C$147m Forecast net cash (C$m) 18.6 95.0 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 14.2 18.5 EPS (fd) (p) 34.5 0.8 Price performance % Actual Relative* 1m (2. service and sales teams across the US. Nimotuzumab has shown a reduced incidence of side effects common to Erbitux and Vectibix: a potential competitive advantage. Initial data from the Phase I/II MPN study has been positive. Y/E Jun Revenue (C$m) 4.3) (20. Clinical data for potential best-in-class EGFr inhibitor nimotuzumab is also expected this year and may trigger deal activity/further development.5 Forecast gearing ratio (%) N/A Market TSX Share price graph (C$) YM BioSciences INVESTMENT SUMMARY (YM) CYT387 is the most advanced unpartnered JAK1/2 inhibitor in development. Cash of C$45.8 15.8 66. Erbitux. Healthcare equipment manufacturers are reporting bookings growth and improving book-to-bill ratios after many quarters of weak bookings. an indication dominated by Company description YM BioSciences is an oncology-focused business developing compounds licensed from academia and acquired through company takeovers.6m provides a runway into 2012.6) (17. which should enable construction to begin by year-end as planned.1) P/E (x) N/A N/A N/A N/A P/CF (x) N/A N/A N/A N/A Price performance % Actual Relative* 1m (14.Edison Insight Sector: Electrical Equipment Price: 1003.2% in FY11.8 30.8) (24.6 17. XP continues to gain market share as customer programmes based on recently launched products ramp into production.9) PBT (C$m) (11.6 3. the company guided to higher revenue growth for FY10 (at least 30% y-o-y) and raised the Q3 dividend.4) 3m 30. Y/E Dec Revenue (£m) 69.9) (28.2 2009A 2010A 2011E 2012E * % Relative to local index Analyst Lala Gregorek 2 December 2010 121 . earnings and dividend forecasts to reflect the strong order backlog: EPS was boosted by 7.6 9.3 87. XP received planning permission for the Vietnam facility last month.3 49.1) (26.8 40.1) (1.6 15.9 11. Consequently. 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.2 132. Phase I/II data from Incyte/Novartis’s twice-daily JAK1/2 inhibitor INCB18424 is promising. this and the recent ESH poster on CYT387's comparative profile may stimulate partnering interest.0 8.7) EPS (c) (20.1 13.4 2008A 2009A 2010E 2011E * % Relative to local index Analyst Katherine Thompson Sector: Pharma & Healthcare Price: C$1.8 PBT (£m) 8.5 74. We upgraded our revenue. INDUSTRY OUTLOOK Anti-EGFR MAb Vectibix failed in first-line head and neck cancer.2) (23.0) (23. Its stock is listed on Amex and the Toronto stock exchange. although preclinical data review suggests CYT387 has comparative potency but with potentially an improved therapeutic window and dosing.7 15.4 P/CF (x) 20.5 2.3) 3m 35.0 EBITDA (£m) 10.8 24.

reflecting past disappointments.3 3.6 Price performance % Actual Relative* 1m 11.6 12. Buyers’ and providers’ confidence. with both GfK and Synovate reporting revenues over 10% ahead.1 11.1 8.8p £44m 17. though improving. in-depth data for market research and stakeholder consultation. Company description YouGov is a professional research and consulting organisation.3 44.8 N/A AIM YouGov (YOU) INVESTMENT SUMMARY YouGov is now back on a growth trend after a difficult couple of years.8 4.0 6. IMS) and much noise around the development of opportunities in social networking.9 P/E (x) 19.4 6.7 PBT (£m) 3. The rating is at the bottom of the range of peers.1 EBITDA (£m) 3. Investment in a technology platform and new products is providing a credible portfolio of real value to the corporate market. in fact.Edison Insight Sector: Media & Entertainment Price: Market cap: Forecast net cash (£m) Forecast gearing ratio (%) Market Share price graph (p) 45. is still brittle.9 19.5 57.4 6. Y/E Jul Revenue (£m) 44. There has been a little M&A.3) 2009A 2010A 2011E 2012E * % Relative to local index Analyst Fiona Orford-Williams 122 2 December 2010 . INDUSTRY OUTLOOK After discovering that it was not.9 12.2 52. The Harrison acquisition has given a step up to building the scale needed to tackle the key US market. the industry is showing gentle recovery.5 3.8 3. immune from economic factors.3 9.0 12m (10. which can be rolled out across territories.1 EPS (p) 2.5 4. to the benefit of our clients and people". with the new CEO focusing on building on the group’s core strengths.7 P/CF (x) 8.3 2.7) (19. pioneering the use of the internet and information technology to collect high quality. mostly earlier in the year (Ipsos/OTX.1 6. providing greater consistency.8 5.5 3m 15. WPP's Q3 statement also talks of the need to focus on "the application of technology and analysis of data.

London Finals Interims Event Finals Interims Edison event. London Edison event. Leeds/Manchester/Liverpool Edison breakfast. Glasgow/Manchester Edison event. If you would like to attend an Edison investor event. 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.Edison Insight Events diary Listed below are the expected dates of forthcoming events commencing Monday 6 December 2010. London Finals Interims Edison breakfast. Edinburgh Finals Interims Edison event. London Edison event. South West Interims Monday 13 December Interims 2 December 2010 123 . 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 .

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