Morning Report

20th July 2017

READ OUR FULL RISK WARNING. The value of investments and any income from them can fall as well as rise, and
you may get back less than you invested. An investments past performance is not a reliable indicator of future
performance. Tax allowances depend on your personal circumstances and the benefits of tax-efficient accounts could
change in the future.
Market News in Brief
BHP BILLITON: Chilean authorities have approved a $2.5 billion expansion of BHP Billiton's Spence
copper mine, a local newspaper reported on Wednesday, though the company has not yet decided
whether to go ahead with the project.
CARILLION: Oxfordshire County Council, which last week ended much of a 10-year 500 million pound
($652 million) contract with Carillion, is now debating the future of a facilities management deal with
the crisis-hit British construction firm.
EX-DIVS: No FTSE 100 companies will go ex-dividend on Thursday, although several mid-caps will go
ex-div, after which investors will no longer qualify for the latest dividend payout.
BREXIT: Barely more than one in 10 British companies has started to put Brexit contingency plans into
effect as many firms remain unclear about what leaving the European Union will mean, a leading
business organisation said on Thursday.
OIL: Oil prices held steady on Thursday following solid gains the previous day when falling U.S. fuel
inventories lifted the market.
Markets Summary Last Change Proportion
FTSE 100 7430.91 +40.91 +0.55%
FTSE 250 19639.93 +80.55 +0.41%
DJIA 21640.75 +66.02 +0.31%
S&P 500 2473.83 +13.22 +0.54%
Euro Stoxx 50 3500.28 +21.60 +0.62%
Nikkei 225 20146.82 +125.96 +0.63%

US 10yr Yield 2.33% Oil (WTI) $47.32 Gold $1242.15

EUR/GBP 0.8844 GBP/USD $1.3023 EUR/USD $1.1519
Macro Commentary
European bourses are expected to open higher on Thursday, supported by a surge in global stocks, as
investors eye a new rate decision by the European Central Bank (ECB). Looking at individual stocks, Swiss
engineering firm ABB reported a weaker-than-anticipated increase in quarterly net profits on Thursday amid
overcapacity problems and higher raw materials prices. Unilever reported marginally weaker-than-expected
quarterly sales on Thursday, as the firm looked to recover from the fallout of a spurned $143 billion takeover
bid earlier this year. The euro was steady at $1.1515 on Thursday morning, ahead of the ECB meeting later in
the session. The single currency had spiked to 14-month highs this week on the back of apparently hawkish
comments by ECB President Mario Draghi. The ECB is not expected to adjust interest rates on Thursday but it
is projected to signal plans to slow down some of its asset purchases over the next few months. Meanwhile,
the second round of formal Brexit talks are set to continue on Thursday as negotiators from the EU and the
U.K. meet in Brussels. Britain's Brexit Secretary David Davis is expected to speak at a press conference later
in the session. Earlier in the trading day, the Bank of Japan kept its monetary policy unchanged after its two-
day meeting. However, the central bank slashed its inflation forecasts for fiscal years 2017/2018 and
2018/2019. U.S. stocks closed at record highs on Wednesday as investors digested better-than-expected
earnings.
Major Economic Announcements
Time Country Data Consensus Previous
07:30 JPY BoJ Press Conference
12:45 EUR ECB Rate Decision(MAY) 0.00%
12:45 EUR Deposit Facility Rate -0.4 -0.4
13:30 EUR ECB Press Conference
 Morning Report
20th July 2017

Corporate Announcements

FTSE 100 Stocks

Unilever (ULVR) First Half Results

Strong progress against the strategic objectives set out for 2020
Turnover increased 5.5%, including a positive currency impact of 1.7%
Underlying sales growth 3.0%, ahead of our markets, with price up 3.0% and flat volumes
Excluding spreads, underlying sales growth of 3.4% with volume up 0.3%
Underlying operating margin up 180bps, reflecting faster savings delivery and phasing of investment
Underlying earnings per share up 14%, constant underlying EPS up 12%
Net profit increased 22%

EasyJet (EZJ) Interim Management Statement

Passengers carried increased by 10.8% to 22.3 million, driven by an increase in capacity of 9.5% to
24.0 million seats and load factor increasing by 1.1 percentage points to 93.1%.
Total revenue per seat increased by 2.2% at constant currency, ahead of guidance and increased by
5.9% on a reported basis to 57.78 per seat. Total revenue in the quarter increased by 16.0% to
1,387 million, with a significant benefit from the move of Easter to April, higher load factors, as well as
an improving underlying trend in the trading environment. Ongoing enhancements to our customer
proposition and other revenue initiatives helped to stimulate bookings and build revenue momentum
throughout the period.
easyJet delivered strong cost control as headline cost per seat including fuel improved by 5.5% at
constant currency, due to low fuel prices and a strong underlying cost focus. As anticipated easyJet's
headline cost per seat excluding fuel at constant currency was up 1.6% in the quarter reflecting
planned investment in the resilience of the operation and the additional load.
Operational performance for the quarter has improved as the investment in resilience has delivered
improved on time performance figures across the network. A new ground handling agreement has
been signed with DHL at Gatwick, commencing November 2017.
Continued strong balance sheet with net cash of 426 million as at 30 June and reaffirmed "BBB+"
investment grade rating by Standard & Poor's.
easyJet has received approval for its Air Operator Certificate and airline operating licence from the
authorities in Austria, securing its future operations in Europe.
Headline profit before tax guidance for FY2017 expected in the range of 380 million to 420 million.

SSE (SSE) Trading Statement

Operational performance in SSE's Wholesale, Networks and Retail businesses;

Progress made in SSE's plans to invest around 1.7bn in 2017/18 in energy infrastructure in the UK
and Ireland;
Confirmation that SSE is continuing to target an increase in the full-year dividend for 2017/18 of at
least RPI inflation, with annual increases thereafter of at least RPI inflation also being targeted; and
Confirmation that SSE is continuing to work to keep dividend cover for 2017/18 within the expected
range of around 1.2-1.4 times, although as previously indicated, it remains likely to be towards the
bottom of that range.

Anglo American (AAL) Production Report

At De Beers, the ramp-up of Gahcho Ku and stable trading conditions supported a 36% increase in
rough diamond production.
Copper production, while broadly unchanged, was impacted by the temporary mine stoppage at El
Soldado, partially offset by higher production at Los Bronces.
Platinum's Mogalakwena mine production increased by 15% due to higher grades and
increased throughput.
 Morning Report
20th July 2017

Iron ore volumes from Sishen increased by 38% due to operational improvements.
Metallurgical coal production from Australia was impacted by Cyclone Debbie, two longwall moves in
Q2 and the ongoing geological issues at Grosvenor; improvements are expected in H2.
______________________________________________________________________________________
FTSE 250 Stocks

Sports Direct (SPD) Preliminary Results

Group revenue increased by 11.7%

UK Sports Retail revenue increased by 6.3% Excluding acquisitions and 53rd week, revenue increased
by 2.6%
UK Sports Retail like-for-like stores gross contribution was up +0.3%[2]
International Sports Retail revenue increased by 38.0%
Currency neutral, excluding acquisitions and 53rd week, revenue increased by 5.9%
International Sports Retail like-for-like stores gross contribution was -0.8%
Group underlying EBITDA[3] decreased by 28.5% to 272.7m
Underlying profit before tax decreased by 58.7% to 113.7m largely due to currency movements and
increased depreciation charges.
Underlying earnings per share decreased by 67.9% to 11.4p (3)
Underlying free cash generation of 173.7m (4)
Net debt increased to 182.1m (99.7m at 24 April 2016) (5)
Invested 317.0m in property assets as we execute our strategic priority to elevate our sports retail
proposition
79.9m exceptional profit on the disposal of the Dunlop brand

Howden Joinery (HWDN) Half Year Report

Howden Joinery UK depot revenue 539.5m (2016: 518.9m), an increase of 4.0% and 2.4% on a
same depot basis. Group revenue was 553.0m (2016: 528.9m);
Gross profit margin 64.1% (2016: 64.5%), stable on FY 2016 and including 12m of currency costs;
Operating profit 66.6m (2016: 74.7m), reflecting expected costs due to new distribution centre and
new product introduction programme;
Basic earnings per share 8.4p (2016: 9.1p);
11.3m returned to shareholders by 9 June 2017 as part of a 80m share buyback programme
announced in February 2017;
Net cash of 215.1m at 10 June 2017 (24 December 2016: 226.6m net cash; 11 June 2016: 182.7m
net cash), including repurchasing of shares and capital expenditure;
Interim dividend 3.6p per share (2016: 3.3p).

Upgrades/Downgrades
Upgrades Stock Broker From To
ASHM Ashmore Group Plc Barclays Capital Underweight Equal weight
SPT Spirent Communications Jefferies l Hold Buy
Downgrades Stock Broker From To
PMO Premier Oil Plc Peel Hunt Buy Buy
SDR Schroders Plc Barclays Capital Equal weight Underweight