THE ECONOMIC MONITOR

10 September 2010

U.K.
Free Edition

INSIDE THE REPORT MARKETS AT A GLANCE

 Stock recommendations and price targets from top  The FTSE 100 closed just a few points higher at 5501.64 or
brokerage firms up 0.14 percent.

 Important Events Scheduled on 13 September
Corporate Events
 City of London Investment Group final results
 Zamano, Telit Communications, Phorm interim results
 CVS group full year preliminary earnings for 2009-2010
 AdEPT Telecom annual general meeting
 At 1530 GMT, against the dollar, sterling was 0.2 percent
lower at $1.5398, off an earlier high of $1.5468.
 At 1247 GMT the December gilt future was 19 ticks lower
at 122.97.
 At 1350 GMT, London Brent crude gained 2 cents to
$77.49.
 Spot gold was at $1,249.80 an ounce by 1514 GMT, less
than $20 away from an all-time high above $1,264 an
ounce struck in June.

Breaking News
STOCK INDICES
 Wetherspoon’s new strategy enhances sales
INDEX LAST CHNG % CHNG
 Petropavlovsk plans to list its iron ore ops in HK FTSE 100* 5501.64 7.48 0.14

FTSE 250* 10396.38 70.68 0.68

 Imagination Tech ensures its shipping targets on track
FTSE 350* 2905.45 7.41 0.26
 Laura Ashley profit soars FTSE Tech Mark 100* 1908.34 14.94 0.79

 Arden estimates its profit low, cuts jobs FTSE AIM 100* 3368.99 35.64 1.07
FTSE All Share* 2841.07 7.29 0.26
 Oil spill complication leads BP to delay results
FTSE Eurofirst 300* 1081.28 -0.98 -0.09

 Morgan Sindall acquires Connaught assets DAX* 6214.77 -6.75 -0.11

CAC 40* 3725.82 3.67 0.10

 BAA August traffic slows down
Stoxx Europe 50 2573.03 -8.50 -0.33
 Chote replace Alan as OBR new head * CLOSING VALUES

 Renewable Energy Target not be raised - Adviser CURRENCIES

 Unions all set to oppose govt cuts INDEX LAST PRIOR

 BMS schizophrenia effectiveness needs review - NICE Euro (EUR/USD) 1.2732 1.2705

U.K. Pound (GBP/USD) 1.5388 1.5438

 Overcuts for long term benefit- PM Clegg
Japanese Yen (USD/JPY) 84.17 83.82

 Government urges biofuels 2020 targets to be cut All prices are at 11:37 AM EDT

FUTURES
LAST CHANGE

Crude Oil 76.13 1.88

Natural Gas 3.89 0.122

Gold, Dec. 1250.5 -0.40

Copper (¢), Dec 343.15 -1.20

Wheat (¢), Dec. 728 -10.00

All prices are at 11:27 AM EDT

THE ECONOMIC MONITOR - U.K.

STOCK RECOMMENDATIONS BY BROKERAGE HOUSES

BROKERAGE/COMPANY ACTIONS RATING

Credit Suisse
Home Retail Group Cuts price target to 180p from 250p Buy
G4S Cuts to neutral from outperform Neutral
Jefferies
SABMiller -- Hold
Berenberg
Legal and General Group -- Buy
Standard Life -- Hold
Evolution Securities
ICAP Recommends price target of 505p Buy
Citigroup
Barclays Cuts price target to 350p from 442p Hold
Panmure
ITM Power Raises price target to 55p from 50p Buy
Diploma Raises price target to 280p from 250p Buy
Charles Stanley
Synergy Health Recommends price target of 848p Buy
Seymour Pierce
London and Stamford Property Raises price target to 109p from 118p Hold
Disclaimer: The views and investment tips expressed by investment experts are their own, and not that of IBTimes or its management. We advise users to check with certified experts before
taking any investment decisions.

MARKET BRIEFING

 European shares edged lower, with Deutsche Bank down on talks it plans to raise capital, while other banks pared losses as concerns
over capital requirements eased ahead of the release of the Basel III rules. While Britain’s lead share index failed to take cues from the
U.S. market gains, boosted by favorable economic data showing wholesale inventories jumped by 1.3% in July, ahead of estimates, and
sales at distributors rose by 0.6%. The FTSE 100 closed just a few points higher at 5501.64 or up 0.14 percent. The pan-European
FTSEurofirst 300 closed 0.1 percent lower at 1,081.28 points, retreating from at its highest closing level since late April on Thursday.

 Sterling fell against the dollar and the euro, weighed down by uncertainty over the outlook for the U.K. economy, with market players
recommending selling into rallies in the currency. Britain's austerity measures were back in focus with finance minister George Osborne
planning an extra 4 billion pounds of welfare cuts on top of already announced plans to cut the annual bill by 11 billion pounds, the
BBC reported on Thursday. Sterling was knocked by data on Thursday showing Britain posted a record high trade deficit in July. At 1530
GMT, the euro was up 0.6 percent at 82.73 pence, well above a low of 82.02 pence hit earlier in the week. Against the dollar, sterling was
0.2 percent lower at $1.5398, off an earlier high of $1.5468 to take it close to its 200-day moving average, currently at $1.5395.

 U.K. gilt futures briefly fell to their lowest since August 17 in a selloff of European fixed income ahead of an expected rise in U.S.
shares. U.S. stock index futures pointed to slightly higher open, placing gilts again at the mercy of the pattern of rising share prices and
falling bonds that has knocked almost 200 ticks off the December gilt future since Wednesday. At 1247 GMT the December gilt future
was 19 ticks lower at 122.97, in line with a similar move on Bunds and having touched a fresh three-week low of 122.80 20 minutes ear-
lier. Ten-year gilt yields were 3 basis points higher at 3.08 percent.

 U.S. crude oil futures extended early gains to more than $2, sparked by the shutdown on Thursday of a major Enbridge pipeline to the
Midwest and rising gasoline cash prices in the Chicago region and the U.S. Gulf Coast. On the New York Mercantile Exchange, crude for
October delivery traded up $2.05, or 2.76 percent, to $76.30 a barrel at 1433 GMT. It hit a session high of $76.3, the loftiest since Aug.
17's $76.63. Much earlier, it traded as low as $74.37. U.S. government data showing U.S. wholesale inventories surged by the largest
amount in two years in July aided crude's rise as the report signaled that firms were anticipating enough demand to boost stock this
summer. At 1350 GMT, London Brent crude gained 2 cents to $77.49.

 Gold held steady below $1,250 as a lack of fresh investment demand balanced against investors' lingering worries about the global
economy. Spot gold was at $1,249.80 an ounce by 1514 GMT, less than $20 away from an all-time high above $1,264 an ounce struck
in June, versus Thursday's $1,248.27 an ounce. It fell to a session low of $1,236.55 an ounce. Bullion earlier this week touched its highest
in two months above $1,262 an ounce on renewed worries about the European banking sector but it gave up some gains after upbeat
economic data on Thursday soothed some investor fears. U.S. gold futures for December delivery were down $1.4 at $1,249.5 an ounce.
THE ECONOMIC MONITOR - U.K.
COMPANY NEWS
Wetherspoon’s new strategy enhances sales
JD Wetherspoon, a British pubs
company, which has recently came out
with a new strategy of opening two
hours earlier to sell breakfasts, and the
company informed that because of this
new strategy it reported a 7.3 percent
increase in full year pretax profits to 71 million pounds ($109 million), in
line with forecast. The company had earlier this month announced
plans to create 1,000 new jobs for 16 and 17 year old school leavers,
said it is now selling over 400,000 breakfasts and 600,000 coffees each
week, an increase of 40 percent, having started opening its pubs at
7.00am in April. Its share closed at 443.5 pence on Thursday.
Petropavlovsk plans to list iron ore ops in HK
Petropavlovsk, a Russian miner announced its plans to launch its IPO
for Hong Kong stock exchange in October for its non-precious metals
division, including its iron ore operations. The proceedings have already
reached its advanced stage, but IPO value is still not disclosed, London-
listed Petropavlovsk said. The company also signaled its keenness to
keep a controlling stake in the division. A group of Hong Kong-based
investors in June agreed to take a $60 million equity stake, valuing the
division at $860 million. The company’s shares were up 2.2 percent at
0723 GMT.
Imagination Tech ensures shipping targets on track
Imagination Technologies, British graphics chip designer which
supplies chips to shareholders Apple, Intel and others announced that
its full-year shipping targets was in track, attributed to strong demand
for chips for mobile phones, netbooks and set-top TV boxes. The
company stated that strong demand would put it on track to achieve its
target of shipping around 200 million units in the 2010/11 financial
year.
Laura Ashley profit soars
Laura Ashley, a fashion and home wares retailer
reported a 10-fold hike in its first-half profit as
consumers return, and doubled its interim dividend. The
company showed its concern for the rest of the year as
consumer environment continued to be uncertain. For
the 26 weeks to end-July, pretax profit increased to 10.5
million pounds ($16.2 million), while total revenue grew
5.7 percent to 135.1 million pounds, while like-for-like
sales were up 6.2 percent. It recorded a 4.8 million -pound gain for the
period primarily from selling and leasing back a freehold property.
Arden disappoints investors, cuts jobs
Arden Partners, a British stockbroker stated its disappointment
towards investors as it said that its full-year results would not be able to
meet expectation due to tough equity trading conditions and the cost
of laying people off. The company described its corporate finance
pipeline as satisfactory, saying it had increased the number of corporate
clients it services to 41 over the last few months. Jeremy Grime has
been appointed as the chief executive while Jonathan Keeling had been
formally appointed deputy chairman with a particular focus on growing
its Indian business.
COMPANY NEWS (contd...)
Oil spill complication to delay BP results
BP announced that the release of third
quarter results will get delayed because of
added complexities in its accounts due to
costs associated with the Gulf of Mexico oil
spill. The company’s Q3 results are now
expected on Nov. 2, rather than Oct. 26. BP
has recently appointed an internal
investigation into the explosion on the
Deepwater Horizon drilling rig, which exploded on April 20, and sunk,
creating the United States' worst ever oil spill.
Morgan Sindall acquires Connaught assets
Morgan Sindall, a construction company has safeguarded 2,500 jobs by
acquiring the majority of assets and contracts of troubled social housing group
Connaught for 28 million pounds ($43.1 million). Connaught called in
administrators to its main social housing unit after government cuts caused
contract deferrals that created financial difficulties. The assets were bought at a
discount to their net book value and approximately 2,500 employees will transfer
to Lovell as Connaught operations gets merged into its affordable housing
division Lovell Partnerships.
ECONOMY NEWS
BAA August traffic slows down
BAA airports passenger traffic slipped 0.6
percent in August year-on-year, due to
continuous loophole in U.K. leisure market,
which hit the small British tour operators.
The company, which owns London's
Heathrow and Stansted airports, said 6.5
million passengers flew from Heathrow in
August, 2.5 percent rise from the previous
month, while passenger numbers dropped 6.1 percent at Stansted, due
to reductions in seat capacity at airlines using the airport. BAA said air
freight jumped 13.7 percent at BAA airports, with the figure for 2010
well up on last year.
Chote replaces Alan as OBR new head
The new head of the Office for Budget Responsibility (OBR), an
independent agency responsible for running the rule over the
government’s economic forecasts will be Robert Chote who was earlier
the director of the Institute for Fiscal Studies. He will replace Sir Alan
Budd, who left his role last month after barely four months in the chair.
The appointment is subject to parliamentary approval.
Unions all set to oppose govt cuts
A campaign by Britain's trades unions is expected next week to
convince voters to oppose huge public spending cuts, although
commentators say their power to sway the government is limited. Huge
cuts by collation government is expected next week almost 25 percent
in many departments to tame a budget deficit totaling 11 percent of
national output. The unions fears thousands of job losses in the public
sector, so they have started to build momentum towards a mass rally
outside parliament in London on October 19, the eve of the
announcement of the spending programme for the next four years.
THE ECONOMIC MONITOR - U.K.

REGULATORY NEWS NEXT TRADING DAY

BMS schizophrenia effectiveness needs review: NICE ECONOMIC EVENTS

Any recommendation on the use of Bristol-Myers Squibb's
schizophrenia drug Abilify in children aged 15 to 17 cannot be provided
yet by Britain's healthcare cost watchdog and had asked for more
information on its effectiveness. The National Institute for Health and
Clinical Excellence (NICE) stated that it has lack of data on the clinical
and cost effectiveness of the drug, which is known generically as
aripiprazole and sold by BMS and Otsuka Pharmaceuticals.
BMS has also instructed the British government on which drugs and
treatments should be paid for and which has to be offered by the state-
funded National Health System (NHS).
Overcuts meant for long term interests: PM Clegg
Nick Clegg, Deputy Prime Minister tried
to convince public saying that over cuts
are meant for nation's long-term interest
and the public should not panic over
imminent spending cuts planned for the
economy. Large spending cuts are to be
unveil next month by the coalition
government so as to address a record
budget deficit following the global financial crisis of 2008-09
No major economic events scheduled.
CORPORATE EVENTS
City of London Investment Group is expected to declare its final
results with a profit of £27.5 per share, up from £15.45 per share a year
ago. Company’s full year revenue is expected at £29.90 million, up from
£18.05 million in the previous year. Net Debt and capital expenditure is
expected at £5.9 million and £0.6 million respectively.
Zamano, a wireless telecommunication services is expected to declare
its interim results. Analysts expect the company’s full year revenue will
be at £19.8 million, down from £25.17 million a year ago. Net debt and
capital expenditure for full year is expected at £1.85 million and £0.2
million respectively.
Telit Communications, a wireless telecommunication services is
expected to declare its interim results. Analysts expect the company to
report a full year profit at £3.920 per share, as compared to the previous
year loss of £0.881 per share. Company’s full year revenue is expected
to rise to £85.59 million from previous £57.98 million. Net debt and
capital expenditure for full year is expected at £10.61 million and £0.26
million respectively.

Clegg said headlines suggesting the proposed cuts of 25 percent or CVS group, a healthcare company is
more across government, spending round, 700 billion pounds of public expected to announce its full year
money. preliminary earnings for 2009-2010.
Analysts expect the company’s full year
Renewable Energy target not to be raised: Advisors profit at £11.3 million as compared to
£12.725 million a year ago. Company’s
U.K. climate advisors have urged the government not to raise its full year revenue is expected at £86.26
target for generating 15 percent of its energy for heating, power and million, up from £76.49 million in the previous year. Company’s net
transportation from renewable sources by 2020 as this could be too debt and capital expenditure is expected at £42.85 million and £1.8
expensive. Adair Turner, chairman of the Committee on Climate million respectively.
Change has also advised the government to focus on achieving the
goal by reducing obstacles to wind farms and solar parks, upgrading AdEPT Telecom, an integrated telecommunication services company is
the electricity grid, and ensuring that subsidies provide enough support expected to conducts its annual general meeting. Analysts expect the
for clean energy companies. company’s full year profit (pre amortization) to be at £8.3 per share,
slightly down from previous £8.8 per share. Company’s full year revenue
is expected to fall slightly to £24.3 million as compared to £25.7 million
a year ago. Full year net debt is expected at £7.5 million.
ECONOMIC INDICATOR WATCH
Phorm, an advertising company is expected to declare its interim
results. The company is expected to post a full year loss at £1.599 per
U.K. regional PMI (August) share from a previous loss of £1.829 per share. The full year revenue will
be at £2.07 million.
The U.K. regional PMI numbers will be released at 0930LST/ 0830GMT/
0430 EST.
ECONOMIC CALENDAR
In July, London posted weakest output growth of all English regions. Its
new business rose at slowest pace since August 2009, while input price DATE LST INDICATOR F’CAST PRIOR
inflation hit eight-month low.
MON 09/13 N/A No major indicators N/A N/A
East of England PMI TUE 09/14 1400 CPI mm N/A -0.2 %
Output continued to rise at marked pace, but new order growth hit five 1400 CPI yy N/A 3.10 %
-month low, while it remained weakest rise in employment in current
sequence of growth. Its Input costs rose sharply. 1400 RPI mm N/A -0.2 %

1400 RPI yy N/A 4.8%

North East PMI 1400 RPI - X (retail prices) mm N/A -0.3 %
Output growth fastest since April, despite slower rise in new business,
while employment growth slowed to modest pace. 1400 RPIX yy N/A 4.80 %

0431 RICS housing survey N/A -8

East Midlands PMI WED 09/15 1400 Avg wk earnings 3mth yy 1.7% 1.3%
Its fastest new order growth in three years supported further sharp rise
in output with steepest expansion of new orders in three years. 14:00 Claimant count unem chng -3.0k -3.8k

1400 ILO unemployment rate 7.8% 7.8%

THE ECONOMIC MONITOR - U.K.

MARKET PERFORMANCE

FTSE 100
A. Imperial Tobacco was the best performer at the index. Banks
were going well, led higher by RBS, while miners Vedanta and
Kazakhmys were also going well. Tullow and Cairn Energy both
lower. FTSE 100 flat at 5,495.

B. With banking stocks moving higher and miners falling back,

Footsie was still flat. RBS led the banking sector higher on hopes
that the rules will be easier than feared when new capital rules are
unveiled by BIS on Monday. ENRC led miners lower. Oil stocks
were also weak, with Tullow at the bottom of the pile. FTSE 100
down 4 at 5,489.

C. A bright start on Wall Street had failed to spur index into action,
but the leading share index has at least cleared the 5,500 point
mark. RBS led the sector higher. But these gains were largely offset
by miners which retreat in line with metals prices. ENRC led the
sector lower. FTSE 100 up 9 at 5,503.

CORPORATE RESULTS
DATE - 13/September/2010

COMPANY NAME EVENT

Associated British Foods Trading Statement

PZ Cussons Interim Management Statement

K3 Business Technology Group 18 MONTHS 2009/2010

Zamano Interim 2010

Phorm Interim 2010

CVS Group Preliminary 2009/2010

City of London Investment Group Interim 2010

This report is produced by

International Business Times
For questions or comments
reach us at
researchanalysis@ibtimes.com

For more information about

our products visit
www.ibtimes.com

© IBTimes 2010. All rights reserved.