Morning Wrap

Today ’s Newsflow Equity Research 23 Nov 2015 Upcoming Events Select headline to navigate to article

Playtech Announces termination of Plus500 acquisition and Company Events trading update 24-Nov ; Mitchells & Butlers; FY15 Results UDG Healthcare; Q4 2015 Results Bank of Ireland Redemption of Preference Shares on 4 26-Nov Marston's; FY15 Results 27-Nov Origin Enterprises; Q1 2016 Results January 2016 30-Nov ARYZTA; Q1 trading update

AIB Group Number of upgrades announced by Moody’s

Euro Economic View Euro falls to 7 month low versus the dollar amidst diverging policy

Economic Events Ireland 25-Nov Property Prices YoY 27-Nov Retail Sales Volume YoY

United Kingdom 25-Nov BBA Loans for HOuse Purchase Autumn Spending Review 27-Nov GfK Consumer Confidence GDP YoY

United States 23-Nov US Manufacturing PMI 24-Nov GDP Annualised QoQ Consumer Confidence Index

Europe 23-Nov Eurozone manufaturing PMI Eurozone Composite PMI

Goodbody Capital Markets Equity Research +353 1 6419221 Equity Sales +353 1 6670222 Bloomberg GDSE

Goodbody (trading as Goodbody) is regulated by the Central Bank of Ireland. For the attention of US clients of Goodbody Securities Inc, this third-party research report has been produced by our affiliate Goodbody Stockbrokers. Please see the end of this report for analyst certifications and other important disclosures. Goodbody Morning Wrap

Playtech Announces termination of Plus500 acquisition and trading update

Playtech has this morning announced that its proposed acquisition of Plus500 will not Recommendation: Buy proceed. Playtech had been in active dialogue with the Financial Conduct Authority (FCA), Closing Price: £8.52 from whom it was seeking approval. Following discussions late on Friday afternoon the board of Playtech has come to the conclusion that the steps being proposed to address the Gavin Kelleher +353-1-641 0423 concerns of the FCA will not be sufficient to satisfy the FCA in advance of the longstop date [email protected] of December 31st 2015. Under the terms of the agreement with Plus500, Plus500 had the right to terminate the agreement if completion would not occur by the longstop date. The statement notes that Playtech has no immediate plans with respect to its existing 9.9% holding in Plus500.

Also in the statement is an update on the acquisition of Ava Trade. It is noted that the sellers of Ava Trade, a privately held company, retain the right to terminate the agreement as a result of the Central Bank of Ireland opposition to the deal. While the sellers have not yet exercised this right, the statement notes that the risk of them doing so is now increased following the termination of the Plus500 acquisition.

In a brief trading update, the group confirmed it continues to enjoy double-digit underlying growth in its gaming division with a strong pipeline of opportunities. However, as a result of the termination of the Plus500 acquisition the financials division, Markets Ltd, is unlikely to meet near to medium term expectations. Following termination of talks the group will have significant cash balances (with the deal not happening we conservatively estimate at least €750m net cash at FY15 y/end). The group notes that it is evaluating its options taking into account availability of suitable value-enhancing acquisitions across the business.

Given the scale of the acquisition, the termination of the Plus500 deal will be viewed as negative for the group. The issues that were causing concern for the FCA have not been released and are likely to remain confidential, which will do little to reduce uncertainty. We had removed AvaTrade from our forecasts after Q3 numbers and we will now remove Plus500. This will bring our FY16 EBITDA forecast to €297m from €383m. However, we would note a few things that should provide support should the shares find themselves well below Friday’s close (852p). These include (i) there has been increased uncertainty around this deal for the last number of months so this announcement should not come as a complete surprise; (ii) we do not believe the market had attached a significant proportion of upside on the back of this deal; (iii) our base case valuation suggests upside (894p per share, or 913p including 9.9% of Plus500 stake); and (iv) with the deal now off, the group has a significant cash pile that could be used to undertake value enhancing deals in gaming and/or return cash to shareholders.

Home…

Page 2 23 Nov. 15 Goodbody Morning Wrap

Bank of Ireland Redemption of Preference Shares on 4 January 2016

Bank of Ireland announced this morning that it will redeem the remaining €1.3bn of Recommendation: Buy Preference Shares on the 4th of January 2016. This is in line with our expectation that BOI Closing Price: €0.34 would call the Prefs in December, allowing it to de-recognise the shares from the earliest Eamonn Hughes date possible (1 January 2016). According to the announcement, the redemption does not +353-1-641 9442 affect the CET1 ratio, however, the Capital Ratio will decline from 20.7% to 18.2% (as at 30 [email protected] September 2015).

The redemption of the preference shares is a positive development. In our view, it represents the final step of capital normalisation prior to the payment of dividends, which we anticipate will coincide with the FY16 results.

Home…

AIB Group Number of upgrades announced by Moody’s

Moody's today announced a number of upgrades for AIB. In particular, Moody’s upgraded Recommendation: N/R AIB’s senior unsecured debt ratings to Ba1 from Ba2, leaving it just one notch below Closing Price: €0.04 investment grade. In addition, the rating agency upgraded AIB's long-term deposit ratings to Eamonn Hughes Baa3 from Ba1 and standalone baseline credit assessment to ba3 from b1. The senior +353-1-641 9442 subordinated and junior subordinated debt ratings were affirmed at B1 and B2 respectively. [email protected] Moody’s noted that the upgrades reflect two main factors. Firstly, the positive impact of the proposed capital reorganisation, which should have a positive impact on the bank’s solvency and liability profile, and secondly, the improvements in the bank's credit fundamentals which it expects to continue into 2016.

Separately, AIB have noted that the planned sale of the planned AT1 won’t trigger an automatic coupon payment on its outstanding Junior bonds.

In addition, AIB announced this morning that the EGM for the proposed capital reorganisation will occur on 16 December 2015.

The announcement by Moody’s is supportive for the Subordinated Tier 2 issued by AIB last Thursday and future potential issuances by the bank. AIB is expected to issue €500m of AT1 in the near future as part of its ongoing capital restructuring.

Home…

Page 3 23 Nov. 15 Goodbody Morning Wrap

Euro Economic View Euro falls to 7 month low versus the dollar amidst diverging policy

The euro continues to depreciate against the dollar as speculation increases that the ECB will Juliet Tennent +353-1-641 9469 ease, and the FOMC will tighten, at their respective meetings in December. Mario Draghi [email protected] further fuelled expectations of policy easing on Friday, pointing out that the ECB would act to stoke inflation “as quickly as possible”. European PMIs for November are expected later this morning with expectations that they will remain steady above the expansionary 50 level. However, these are unlikely to change the dial on monetary policy easing in the region. Meanwhile, former FOMC dove John Williams has lent his support to the case for hiking rates in the US in December.

The market has now been primed for action from the ECB with an extension of the asset purchase programme and a cut in the deposit rate fully expected and anything less will be a disappointment. This has seen the EURUSD rate fall lose to 1.06, its lowest level since April. This is supportive of exports from the region and thus beneficial for Ireland.

Home…

Page 4 23 Nov. 15 Goodbody Morning Wrap

Market Data Top 10 Covered Companies

Company Price Mkt Cap Absolute Relative to European Sector P/E (LC) (LCM) 1 Day 1 Week 1 Mth Ytd 1 Day 1 Week 1 Mth Ytd 2015f 2016f CRH 27.10 22,104 1.3 7.8 15.3 36.2 1.1 4.4 9.5 22.2 31.6 17.3 AIB Group 0.04 20,940 - -45.9 -46.7 -49.4 -0.2 -47.7 -49.3 -54.6 13.0 14.6 Ryanair 14.42 19,963 -0.8 0.2 7.7 47.1 -1.0 -3.0 2.3 31.9 13.1 15.3 IAG 5.77 11,729 -0.9 -2.6 -2.5 18.7 -1.2 -5.7 -7.4 6.5 11.3 7.9 Wolseley 37.50 9,752 0.9 5.4 -0.1 1.7 0.8 2.8 -0.7 1.1 14.2 15.4 Kerry Group 73.40 12,904 -0.7 2.0 5.9 28.6 -0.9 -1.3 0.6 15.4 24.3 22.2 Bank of Ireland 0.34 10,881 3.4 6.7 -6.9 7.3 3.2 3.2 -11.6 -3.7 11.0 11.7 Mondi 15.10 7,332 1.1 6.0 3.4 43.8 0.9 2.6 -1.8 29.0 15.4 14.0 easyJet 16.85 6,693 -1.7 -5.9 -2.7 0.8 -1.8 -8.2 -3.2 0.2 11.8 11.1 DCC 58.30 5,144 -0.5 1.6 11.9 64.1 -0.6 -0.9 11.3 63.0 16.8 23.4

Indices ISEQ performance

% Price 1 Day 1 Week 1 Mth Ytd ISEQ 6,714.37 0.40 3.68 6.60 28.52 6,600 6,400 FTSE 100 6,334.63 0.07 3.54 -0.17 -3.53 6,200 DAX 30 11,119.83 0.31 3.84 9.58 13.40 6,000 CAC 40 4,910.97 -0.08 2.14 5.07 14.94 5,800 FTSE Eurofirst 300 1,505.16 0.19 3.24 5.11 9.98 5,600 5,400 Nasdaq 5,104.92 0.62 3.59 4.59 7.79 5,200 S&P 500 2,089.17 0.38 3.27 2.88 1.47 5,000 Dow Jones 17,823.81 0.51 3.35 3.52 0.00 4,800 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Nikkei 225 19,879.81 0.10 1.44 9.19 13.92

Exchange Rates

Current Px 1 day Px 1 Week Px Dec14 Avg Ytd

Stg/€ 0.701 0.702 0.706 0.776 0.727 STOXX 600 performance US$/€ 1.067 1.074 1.073 1.210 1.113 CHF/€ 1.085 1.089 1.082 1.202 1.066 420 410 JPY/€ 131.012 131.850 131.799 145.079 134.624 400 Bonds 390 380 Yield 1 Day Yld 1 Wk Yld 1 Mth Yld 3 Mth 370 360 US 2 Yr 0.91 0.02 0.91 0.28 0.26 350 US 10 Yr 2.26 0.02 -0.00 0.20 0.19 340 330 UK 2 Yr 0.61 -0.01 -0.07 0.04 -0.05 320 Nov-14 Feb-15 May-15 Aug-15 Nov-15 UK 10 Yr 1.87 -0.01 -0.11 0.13 0.09

BD 2 Yr -0.39 -0.01 -0.02 -0.39 -0.13

BD 10 Yr 0.48 0.00 -0.08 0.48 -0.10

Irish 10 Yr 1.01 -0.01 -0.09 -0.21 -0.25

Commodities FTSE 250 performance

% Current 1 day 5 day 1 Mth 1 Yr Brent (ICE $/bbl) 44.66 1.09 2.41 -8.31 -43.70 18,000 Gasoline (NYM $/Gal) 1.29 0.19 4.15 0.94 -36.36 17,500 Heat Oil (NYM $/Gal) 1.40 0.09 1.13 -5.50 -40.88 17,000 Nat.Gas 2.15 -5.76 -9.15 -13.37 -52.22 Gold $/oz 1,081.75 -0.08 0.02 -8.15 -9.10 16,500 Silver $/ozt 14.29 0.56 -0.69 -9.90 -11.79 16,000

Copper U$/MT 4,690.00 1.74 -2.80 -9.62 -29.87 15,500

Wheat $/BU 4.90 -0.46 -1.16 -0.25 -11.31 15,000 Nov-14 Feb-15 May-15 Aug-15 Nov-15

Source : FactSet

Page 5 23 Nov. 15 Goodbody Morning Wrap

Issuer & Analyst Disclosures

Analyst Certification The named Research Analyst certifies that: (1) All of the views expressed in this research report accurately reflect my personal views about any and all of the subject securities and issuers. (2) No part of my remuneration was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by me in this report.

Regulatory Information Goodbody Stockbrokers, trading as Goodbody, is regulated by the Central Bank of Ireland. In the UK, Goodbody is authorised and subject to limited regulation by the Financial Conduct Authority. Goodbody is a member of the Irish and the . Goodbody is a member of the FEXCO group of companies. This publication has been approved by Goodbody Stockbrokers. The information has been taken from sources we believe to be reliable, we do not guarantee their accuracy or completeness and any such information may be incomplete or condensed. All opinions and estimates constitute best judgement at the time of publication and are subject to change without notice. The information, tools and material presented in this document are provided to you for information purposes only and are not to be used or considered as an offer or the solicitation of an offer to sell or to buy or subscribe for securities.

Conflicts of Interest Goodbody Stockbrokers has procedures and policies in place to identify and manage any potential conflicts of interest that arise in connection with its research business. Goodbody Stockbrokers’ analysts and other staff who are involved in the preparation and dissemination of research operate and have a management reporting line that is independent to its Corporate Finance business. Information barriers are in place between the Corporate Finance arm and the Research arm to ensure that any confidential and or price sensitive information is handled in an appropriate manner.

Our Investment Research Conflicts of Interest Policy is available at Conflicts of Interest

Investors should be aware, that, where appropriate, research may be disclosed to the issuer(s) in advance of publication in order to correct factual inaccuracies only and not to materially amend the research in any way. Goodbody Stockbrokers is satisfied that it has operational procedures in place, which ensure that such disclosures will not compromise the report’s objectivity.

Goodbody is acting as joint financial advisor and joint to UTV Media on the proposed sale of UTV television assets. Goodbody was the co-lead manager in an offering of securities in Permanent TSB Group Holdings Plc in the last 12 months. Goodbody was the co-lead manager for Hibernia REIT Plc for a public fund raising in the past 12 months. CRH Plc has been an investment banking client of Goodbody’s in the past 12 months. International Consolidated Airlines Group has been an investment banking client of Goodbody’s in the past 12 months. Goodbody Stockbrokers acts as corporate broker to AIB Group, Applegreen, Cairn Homes, Datalex, FBD Holdings, First Derivatives, , Greencore, Hibernia REIT, ICG, Kingspan, Origin Enterprises, Paddy Power, UDG Healthcare, and UTV Media A complete list of the companies that Goodbody Stockbrokers makes a market in is available at Regulatory Disclosures

Page 6 23 Nov. 15 Goodbody Morning Wrap

Other disclosures

We would like to inform you that Eamonn Hughes holds shares in AIB Group

A description of this company is available at Company Descriptions

All prices used in this report are as at close of business of the previous working day unless otherwise indicated.

A summary of our standard valuation methods are available at Valuation Methodologies

A summary of share price recommendations and whether material investment banking services have been provided to these companies is available at Regulatory Disclosures

Other important disclosures are available at Regulatory Disclosures

Goodbody Stockbrokers updates its recommendations on a regular basis. A breakdown of all recommendations provided by Goodbody Stockbrokers is available at Regulatory Disclosures Where Goodbody Stockbrokers has provided investment banking services to an issuer, details of the proportion of buys, holds and sells attributed to that issuer will also be included. This is updated on a quarterly basis.

The date on which stock recommendations were first released for all stocks mentioned in this report are available at http://www.goodbody.ie/research_disclosures/regulatorydisclosures/index.html. If a different recommendation has been made in the previous twelve months, this will also be disclosed here.

Recommendation Definitions Goodbody Stockbrokers uses the terms “Buy”, “Sell” and “Hold. The term “Buy” means that the analyst expects the security to appreciate in excess of 10% over a twelve month period. The term “Sell” means that the security is expected to decline in excess of 10% over the next twelve months. The term “Hold” means that the analyst expects the security to neither appreciate more than 10%, or depreciate more than 10% over the next twelve months.

On 26th November, 2012, the terms “Add” and “Reduce” were removed from the Recommendation Definitions and both were replaced with the “Hold” recommendation. Any Previous Recommendation that refers to either an “Add” means that the analyst expected the security to appreciate by up to 15% over a twelve month period. Any Previous Recommendation to “Reduce” means that the analyst expected the security to decline by up to 15% over the next twelve months.

In the event that a stock is delisted the firm will automatically cease coverage. If however the firm ceases to cover a stock for any other reason the firm will disclose this fact.

Distribution of research to clients of Goodbody Securities Inc (GSI) in the US

GSI distributes third-party research produced by its affiliate, Goodbody Stockbrokers GSI is a member of FINRA and SIPC GSI does not act as a market-maker.

This information was current as of the last business day of the month preceding the date of the report. An affiliate of GSI may have acted, in the past 12 months, as lead manager/co-lead manager of a publicly disclosed offer of the securities in this company. Investors should be aware that an affiliate of GSI may have provided investment banking or non-investment-banking services to, and received compensation from this company in the past 12 months or may provide such services in the next three months. The term investment banking services includes acting as broker as well as the provision of corporate finance services, such as underwriting and managing or advising on a public offer. All transactions by US persons involving securities of companies discussed in this report are to be effected through GSI.

Disclaimer While all reasonable care has been taken in the production and dissemination of this report it is not to be relied upon in substitution for the exercise of independent judgement. Nothing in this report constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you.

Private customers having access, should not act upon it in anyway but should consult with their independent professional advisors. The price, value and income of certain investments may rise or may be subject to sudden and large falls in value. You may not recover the total amount originally invested. Past performance should not be taken as an indication or guarantee of future performance; neither should simulated performance. The value of securities may be subject to exchange rate fluctuation that may have a positive or adverse effect on the price or income of such securities.

All material presented in this report, unless specifically indicated otherwise is copyright to Goodbody Stockbrokers. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior express written permission of Goodbody Stockbrokers.

Goodbody, Ballsbridge Park, Ballsbridge, Dublin 4, Ireland T (+353 1) 6670400 W www.goodbody.ie E [email protected] Page 7 23 Nov. 15