DMD DIGITAL HEALTH CONNECTI0 Equity Research & Stock Reports

12 Jul 17

AIM – End of summer term report

We update this table which we first published in early January and highlight the continued progress of the biggest AIM companies so far this year and activity in general. The latest AIM Statistics show that there are 963 companies currently, with 28 new issues year to date raising £441m. What’s more, this momentum has been maintained since June. This demonstrates that despite, the uncertainty surrounding the UK economy, generally investors continue to be active in the AIM market. In Share News & Views we comment on Cohort, ECSC*, Porvair, Quarto*, SQS* and Xafinity.

Companies: BMS CRPR ECSC EUSP FDM PCF PPIX QRT SNX SPRP SQS TCN W7L

18 Aug 17

Small Cap Breakfast

Destiny Pharma—A clinical stage biotechnology company - lead asset (XF-73) targets antibiotic-resistant bacterial infections in hospitals. Offer TBA. Due early September.| Avingtrans (AVG.L) Sch1 on its Reverse Takeover of Hayward Tyler (HAYT). Combined market cap of c.£75m. Expected 01 September 2017 | OnTheMarket—Intention to float on AIM to raise c. £50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. | Kosmos Energy— Secondary listing, currently on NYSE. Oil and gas exploration and production company focused on frontier and emerging areas along the Atlantic Margins. During the first half of 2017, gross sales volumes from Ghana averaged approximately 132,000 barrels of oil per day (net: 26,900 bopd). Due 21 August. No offer. NYSE:KOS. Mkt Cap £2.54bn. | Myanmar Strategic Holdings—Intention to float from the independent developer and operator of consumer-focused businesses in Myanmar, one of the fastest growing economies in the world. Expected Mkt Cap $22.7m at $10 per share. $4.2m gross raise. Due 22 August. | Hipgnosis Songs Fund investment Company offering pure-play exposure to Songs and associated musical intellectual property rights. Offer raising £200m at 100p. The Company has decided to extend the closing date for the Placing, Offer for Subscription and Intermediaries Offer to 1 August 2017. The Company may bring forward this closing date at any time. Admission 15 September 2017

Companies: MMC RLH MCL ARTL SRT PCA VAST SYS1 BOS

21 Aug 17

Small Cap Breakfast

Kosmos Energy (KOS.L)—Secondary listing (Standard), currently on NYSE. Oil and gas exploration and production company focused on frontier and emerging areas along the Atlantic Margins. During the first half of 2017, gross sales volumes from Ghana averaged approximately 132,000 barrels of oil per day (net: 26,900 bopd). No offer. NYSE:KOS. Mkt Cap £2.54bn. | Pembridge Resources (PERE.L) - the natural resource exploration and development company has today moved from AIM to the Standard List of the Main Market.

Companies: PHE EAH SPSY FDEV SSY MERC AVN MUBL ITM DCTA

31 Jul 17

N+1 Singer - Morning Song 31-07-2017

Alliance Pharma (APH LN) Diclectin® non-approval in the UK | Bodycote (BOY LN) Good momentum; PBT forecasts increased | CVS Group (CVSG LN) Positive YE update & 7-8% EPS upgrades for FY18/19 | GlobalData (DATA LN) Revenues ahead | Ground Rents Income Fund (GRIO LN) Prudent and proactive approach to ten year doubling assets | IQE (IQE LN) VCSEL ramp up just the start | Senior (SNR LN) Solid interims; Outlook positive | StatPro Group (SOG LN) Contract extension | Tribal Group (TRB LN) Continued positive progress

Companies: IQE BOY DATA CVSG SNR GRIO TRB SOG APH

27 Apr 17

Building the healthcare offering

The mission has extended the range of its capabilities in the healthcare segment with the acquisition of RJW & Partners, announced this morning. RJW, a consultancy specialising in pricing and market access strategy, has a wide range of high-profile clients including AstraZeneca, Shire and Novartis. The purchase is for £1.75m (plus £0.23m for cash balances), payable 95% in cash, 5% in shares. Consensus forecasts indicate that it should enhance earnings in FY17e and FY18e by 3% and 4%, respectively. Mission’s shares continue to trade at an unwarranted discount to its peers.

Companies: The Mission Marketing Group

07 Aug 17

Going straight to video

Taptica is expanding its range of markets addressed and revenue streams received with the acquisition of a share in its small Japanese partner, followed by a much bigger move into the video advertising business with the purchase of US-listed Tremor Video’s DSP business for $50.0m, although this comes with a net $22.5m of working capital in the target. Taptica is utilising cheap debt with a $30m loan to help fund the second acquisition, along with existing cash resources. These two additions are both expected to be earnings-enhancing – seeing a 6% upgrade in FY 2018 – and will accelerate the group’s expansion in two high-growth areas of digital ad spending (Asia-Pacific and digital video) while substantially broadening the revenue base.

Companies: Taptica International

16 Aug 17

Termination of bid discussions

The discussions announced on 8 August, with an unnamed bidder have been terminated by mutual agreement. The approach was unsolicited. Discussions had not progressed to the satisfaction of the Board due to regulatory approvals extending the process longer than indicated. Mindful of the need to deliver a strong finish to the year, the Board was not prepared to prolong discussions during a key trading period. QRT confirmed its confidence of delivering a strong finish to the year. Our recommendation, estimates and TP are under review.

Companies: Quarto Group

09 Aug 17

Small Cap Breakfast

OnTheMarket—Intention to float on AIM to raise c. £50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. Wilmcote Holdings plc—Sch1 from the Company established with the objective of creating value for its investors through the acquisition and subsequent development of target businesses in the downstream and specialty chemicals sector. Offer raising £15m at 120p with market cap of £25m. Expected 17 August 2017 Andes Energia PLC—Sch1 on admission the Company will change its name to Phoenix Global Resources plc will be an Argentinian independent oil & gas exploration and production company, offer TBC but market cap to be £844m and admission date 10 August 2017 Verditek PLC—Sch1 update from holding company in the clean technology sector with subsidiaries operating within what it considers are emergent and fast growing sectors (industrial treatment of solids, air purification, water de-odourisation, zero emission, low cost energy), offer raising £2.75m at 9p with market cap of £16.9m. Admission 10 August 2017 Xpediator Plc—Sch 1 from the holding Company for an integrated freight management business operating in the supply chain logistics and fulfilment sector across the UK and Europe with a strong presence in Central and Eastern Europe. Offer details TBC, expected Admission early August 2017. Altus Strategies—African focused natural resource Company. Offer raising £1.1m at 10p with market cap of £10.7m. Expected 10 August 2017 Hipgnosis Songs Fund investment Company offering pure-play exposure to Songs and associated musical intellectual property rights. Offer raising £200m at 100p. The Company has decided to extend the closing date for the Placing, Offer for Subscription and Intermediaries Offer to 1 August 2017. The Company may bring forward this closing date at any time. Admission 15 September 2017

Companies: HNL JLP EME AMER XLM PMG TRE TAST PHE SHRE

14 Aug 17

Small Cap Breakfast

OnTheMarket—Intention to float on AIM to raise c. £50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. Wilmcote Holdings plc—Sch1 from the Company established with the objective of creating value for its investors through the acquisition and subsequent development of target businesses in the downstream and specialty chemicals sector. Offer raising £15m at 120p with market cap of £25m. Expected 17 August 2017 Hipgnosis Songs Fund investment Company offering pure-play exposure to Songs and associated musical intellectual property rights. Offer raising £200m at 100p. The Company has decided to extend the closing date for the Placing, Offer for Subscription and Intermediaries Offer to 1 August 2017. The Company may bring forward this closing date at any time. Admission 15 September 2017

Companies: DCD EAH GGP GTC FISH AAZ WJG SAV FTC LWRF

18 Aug 17

Some encouraging signs around

Publicis produced rather satisfactory H1 17 results, slightly above expectations as Q2 organic revenue growth improved to +0.8% (a negative figure was widely anticipated; Q1 17 was -1.2%). This occurred thanks to the lesser impact from recent issues (i.e. FY15 and H1 16 US account losses and the end of one-time projects not offset by new businesses at Razorfish) as well as a good North American performance (+0.2% organic after -5% in Q1). Despite some weaknesses in the FMCG sector, Publicis also benefited from the growing contributions of the accounts gained since Q2 16 (Walmart, HPE, USAA, Asda, Motorola and Lowe’s). The H1 organic revenue growth therefore stood at -0.2%, with consolidated revenues reaching €4,843m, up 1.9% (+€90m) after a +1.6% impact from forex and +0.5% from perimeter moves. The operating profit rose by 3.1% to €638m, reflecting a 20bp operating margin improvement to 13.2% (Europe: 13.7%, North America: 14.1%, Asia Pacific: 11.9%, Latin America: 5.7%, the Middle East & Africa: 4.4%), supported by ongoing savings (i.e. the Power of One implementation; +70bp coming from personnel costs overall, of which freelance costs: +50bp) and despite the costs linked to new client contracts, IT projects (-20bp) and higher other opex. Group net income reached €387m (+1.6%) and diluted headline EPS amounted to €1.89, 4.4% higher than for the same period last year. Regarding the FY17e guidance, a sequential improvement in organic revenue trends is expected to continue in Q3 and management anticipates to return to growth rates comparable with peers in H2. Coming as a slight disappointment, few indications were given regarding the FY18e guidance as a new action plan is being implemented under a new management team, but details will be released at an Investors Day to be held between the end of 2017 and the beginning of 2018.

Companies: Publicis Groupe

17 Aug 17

On track for the full year

As expected, Wolters Kluwer reported a modest H1 17 organic top-line growth rate (+2%; was +3% in H1 16). The group had indeed warned at the beginning of the year that H1 17e was likely to record lower organic growth rates due to “phasing and a challenging basis of comparison in Health and in Governance, Risk & Compliance”. The deceleration was finally linked to Governance, Risk & Compliance (+2% versus +3%, impacted by a slowdown in non-recurring revenues) as well as to Legal & Regulatory (-2% versus -1% as H1 16 benefited from one-off timing; a positive: digital revenues – 61% of the division – grew by 3% organically). On the whole, consolidated revenues reached €2,174m, up 6% (+€132m) and improved by 4% at CER. The good news came from the adjusted OP which amounted to €450m (+10% and +7% at CER), enabling the operating margin to be 70bp higher than in H1 16 at 20.7%. The diluted adjusted EPS increased by 10% at CER to €0.99 (+13% on a reported basis) while the interim dividend was set at €0.20/share, in line with our expectations. Organic revenue growth is still anticipated to be more H2-weighted and, unsurprisingly, management reiterated its FY 17e guidance for diluted adjusted EPS rising by a mid single-digit rate at CER (as in previous years). The adjusted operating margin is expected to be 22.5-23%, once again partly supported by lower restructuring costs of c.€15-25m (FY16: €29m; about €40m over H1 17) but still driven by further efficiencies. Following the disposal of the Transport Services activities, the FY17e share buy-back has been raised to €300m (€150m completed as of the end of July) instead of c.€200m initially anticipated, in order to offset the dilutive impact on earnings. The 2016-18 share buy-back programme therefore now totals up to €700m versus €600m.

Companies: Wolters Kluwer

23 Aug 17

Weak trends seen across the advertising industry

WPP has just reported H1 17 revenue figures (including the full impact of digital billings, i.e. linked to acquiring digital media space on its own account) which were up 13.3% to £7,404m, a 0.3% organic decline (was 4.3% in H1 16) offset by an 11.4% positive impact from forex and +2.2% from acquisitions. Net sales were down 0.5% organically (were +0.8% over Q1), implying a tough Q2: July was bad with net sales down 2.6% organically, below internal budget (cumulative organic net sales growth for the first seven months is -0.8%) and Q2, indeed, suffered from pressures on client spending namely in the FMCG sector The reported net sales margin reached 13.9%, up 20bp from the 13.7% level a year earlier and flat at CER. The headline diluted EPS rose by 16.1% to 45.4p (+2.4% at CER) while the interim dividend is raised 16.1% to 22.7p (i.e. a pay-out ratio of 50%). Following these disappointing Q2 results, the FY17e forecast has been revised down further. WPP now anticipates organic revenue and net sales growth between 0% and +1% instead of the previous “around +2%”. Positively, the headline net sales operating margin target improvement remains unchanged at +30bp at CER.

Companies: WPP

24 Jul 17

A solid, in-line first half

Crossrider’s update for the first half of FY 2017E says that trading has been in line with management expectations and strikes an upbeat tone on future performance. The first half reflects continued delivery on Crossrider’s expansion strategy and the period includes three months’ contribution from CyberGhost. Crossrider expects to report revenues of around U$29.7 million for the period – equivalent to 43% of our current full year estimate of U$68.6 million. It also anticipates adjusted EBITDA for the six months of around U$3 million which compares to our full year estimate of U$8.3 million. Building on the performance in the last financial year, the App Distribution business has performed strongly and the group as a whole has demonstrated good cash conversion again. We note that there will be a full six months contribution from CyberGhost in H2 and make no changes to numbers at present. We shall address estimates when more detail of the first half performance is available with the interim results announcement in September.

Companies: Crossrider

22 Aug 17

Extra quality services

EQS continues to add functionality to its cloud-based offering, growing its potential share of client spend across investor relations, compliance and corporate communications. H117 top-line growth was boosted by the consolidation of ARIVA (67.5% owned), with good momentum into H217 as clients prepare to meet further regulatory requirements. Operating profits, which dipped 3% y-o-y, were held back by spending on developing new services and on geographic expansion. With the IT and geographic platforms now in place, the EBITDA margin is set to expand over the medium term. The share price has performed strongly over the last year, yet the valuation remains at a discount to larger, more mature peers.

Companies: EQS Group

16 Aug 17

A solid H1, slightly ahead of expectations

RELX produced slightly higher than expected H1 17 revenues at £3,718m (+£461m) and reflecting a solid +4% organic growth. Adjusted OP grew a bit faster, up +5% to £1,154m (+£151m), implying a 20bp margin improvement to 31% compared with 30.8% a year earlier. The adjusted EPS at CER rose by 8% and +19% in sterling and the interim dividend per share is raised by 14% to 11.70p. The group specified that the £500m share buy-back programme was completed and further £200m will be made in H2 (£40m completed over July), i.e. £700m for the full-year as previously announced. An update will be made on the FY18 buy-back plan (thus implying there will be another one) in February 2018. The FY17e guidance was reiterated, i.e. delivering “another year of underlying revenue, profit, and earnings growth in 2017”. This is as vague as usual but the solid H1 results and the current trends (in line with FY16) indicate that risk for disappointment remains very low at this stage for this very well-managed company.

Companies: Relx

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