august 2015 uk value investor · a few years ago i read a short book called the little book of...

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Contents

FTSE 100 Valuation and Projection Page 2

UKVI Portfolio Review Page 2

Selling: RSA Insurance Group PLC (RSA) Page 12

FTSE All-Share Stock Screens Page 17

Metrics, Maximums & Minimums, Strategy Guide & Colour-Coding Key, Income Portfolio Performance Back pages

Bursting bubbles are nothing newThe Chinese stock market has come to the rescue and given the financial world something else to talk aboutother than Greece. But while the crash may be interesting, exciting or frightening, depending on your pointof view, it should not be surprising.

The Shanghai Composite Index, in the 12 months to June 2015, had increased in value by more than 150%.That’s 150% in one year for a major index. Perhaps such growth would be reasonable if it had beenaccompanied by 150% growth in the revenues, earnings, dividends and assets of the underlying companies,but it hadn’t.

Rather than the index increasing in value along with the productive capacity of its underlying companies, it ismore likely that it had been driven up by short-term speculators and investors with unrealistic futureexpectations of future profits. Unfortunately for both of these groups, a pin usually appears from somewhereto to prick the bubble. A similar story occurred in the 19th century British Railway Mania, which, like China,followed all the classic steps of a market bubble:

1) Low interest rates and a growing economy produced rising profits and dividends for railways

2) A flood of new railway companies formed and floated on the stock exchange

3) Investors used borrowed money to buy more stocks and increase their gains as the market skyrocketed

4) The media fanned the flames with new periodicals for railway speculators and investors

5) After a year or two an unexpected negative event (the potato famine) shook confidence

6) Profits and dividends fell as the flood of new railway companies increase competition

7) A spiral of falling profits and sentiment drove down the price ofrailway shares at double digit rates for several years in a row

For value investors the lesson of the 19th century Railway Mania or thecurrent Chinese stock market crash is always the same: Do not overpayfor an optimistic view of the future.

John Kingham, 4th August 2015

“The central cause of the Maniawas the myopic expectations ofinvestors, who hoped that recentimprovements in the profitability ofthe railway industry wouldcontinue long-term.”

- Dr Gareth Campbell,RailwayMania.co.uk

August 2015

UK Value InvestorFor Defensive and Income-Focused Value Investors

A few years ago I read a short book called The Little Book of Sideways Markets, by Vitaliy Katsenelson. Thebook’s basic premise is that we are in a (very) long sideways market, thanks to massively excessive prices atthe end of the 1990s. Vitaliy expects the sideways market to last until earnings catch up with prices, or untilprices fall back to a reasonable multiple of earnings. I agreed with that premise several years ago and I stilldo. I also agree with Vitaliy’s conclusion, which is that investors would do well to focus on companies thatbest combine quality, value and growth. My agreement shouldn’t come as much of a surprise as Vitaliy’sapproach is very similar to my own, and in fact may have had a strong influence on me as I was developingthe core of the UKVI system.

A “sideways market” is about as good a description of the FTSE 100’s recent history as you’re going to find.Although there have of course been ups and downs on most time-scales, the market has primarily gonesideways ever since it hit 6,700 back in May 2013. Today it stands close to 6,700 once again, so capital gainsover those two years have been essentially zero. The same is true if you look back to October 2007 orDecember 1999, when the market also peaked close to 6,700, although from those points capital gains havebeen zero over 8 and 14 years respectively.

But while prices have been going sideways overall, average earnings and dividends have been going up andup and up. At some point the pressure which is building up, as earnings and dividend yields rise, is likely tobecome irresistible. At that point this near-two decade long sideways market will be consigned to history.

FTSE 100 valuation and forecast

Range of

CAPE valuesEstimated probability of

seeing this valuation2015 FTSE 100

(currently at 6,693)Description 2025 FTSE 100 (after 4%/yr

earnings growth)

Above 32 5% Above 17,000 Extremely Expensive Above 25,200

28 - 32 (e.g. yr 2000) 5% 14,900 - 17,000 Very Expensive 22,000 - 25,200

24 - 28 10% 12,700 - 14,900 Expensive 18,900 - 22,000

20 - 24 10% 10,600 - 12,700 Slightly Expensive 15,700 - 18,900

14 - 20 25% 7,400 - 10,600 Normal 11,000 - 15,700

12 - 14 10% 6,400 - 7,400 Slightly Cheap 9,400 - 11,000

10 - 12 10% 5,300 - 6,400 Cheap 7,900 - 9,400

8 - 10 (e.g. yr 2009) 10% 4,200 - 5,300 Very Cheap 6,300 - 7,900

Below 8 5% Below 4,200 Extremely Cheap Below 6,300

Valuing the market: Although stock market valuations change over time they tend to stay fairly close to their long-term average.Investors can take advantage of this tendency as it implies that markets are more likely to go up when valuations are below averageand more likely to go down when above average.

500

1,000

2,000

4,000

8,000

16,000

32,000

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2012 2013

FTSE

100

Year

FTSE 100 CAPE Long-Term Average "Fan Chart"

CAPE 28-32CAPE 24-28CAPE 20-24CAPE 14-20CAPE 12-14CAPE 10-12CAPE 8-10

FTSE 100

UKVI Portfolio review

Last month’s tradeOn July 6th I added 75 AstraZeneca shares to the portfolio at 4,167 pence each. The total investment,including broker fees and stamp duty, came to £3,150.88, which was approximately 4% of the portfolio. Thisis slightly more than the default 1/30th (3.3%) of the portfolio which I aim for because the portfolio has someexcess cash which I want to reinvest into new positions.

Performance reviewThe portfolio has had a very good run recently, growing by more than 15% so far this year compared to justover 5% for its All-Share tracker benchmark. This surprising but welcome degree of outperformance hasincreased the portfolio’s overall advantage over the market, with total returns now 24% ahead of theAll-Share benchmark. That amounts to an additional gain of £11,966 over the market’s total return in justover four years, from a starting value of £50,000.

Despite this outperformance I still expect the UKVI Portfolio to be lower risk (i.e. less volatile) than the FTSEAll-Share. While I’m happy with these results, the future is of course a very uncertain place and nothing isguaranteed.

HomeServe special dividend and share consolidationHomeServe completed their capital reduction exercise by paying out a special dividend of 30p (around 7% ofthe then-current share price) and carrying out a 13 for 14 consolidation, reducing the number of shares heldin the portfolio from 900 to 835. You will see a similar reduction in your portfolio if you are a HomeServeshareholder.

Possible offer for RSA by Zurich InsuranceZurich Insurance is apparently interested in acquiring RSA. As a result the RSA share price has shot up toalmost 520p, slightly below the 550p which has been suggested as a possible acquisition price. I have noopinion on the likelihood of whether or not this takeover will actually happen.

Holdings reviewThe biggest risers this month were RSA, up 30%, and Telecom Plus, up 16%. Telecom Plus has performedextraordinarily well so far, gaining almost 60% in the three months since it was purchased. On the downside,N Brown fell by 7% and BHP Billiton by 6%.

Reviewing the portfolio: In order to keep a portfolio on track it’s important carry out regular reviews. These reviews should includetasks such as checking overall performance against a suitable benchmark, re-analysing existing holdings when new annual resultsare announced and dealing with corporate actions such as mergers, acquisitions or rights issues.

£- £500

£1,000 £1,500 £2,000 £2,500 £3,000 £3,500 £4,000 £4,500

2011 (2nd half) 2012 2013 2014 2015 YTD

Dividends

Dividends ReinvestedUKVI Portfolio FTSE All-Share Tracker

UKVI Portfolio performance

UK Revenue 49% International Revenue 51%

Note that the “average investor” and “bad investor” under-perform the market by 3% and 6% per year respectively due toovertrading, buying high and selling low. These figures are based on research cited by Barclays and the book, Monkey with a Pin.

Cyclical Sector Stocks 52% Defensive Sector Stocks 48%

Performance Model Portfolio (A) FTSE All-Share TrackerTrust (B)

Difference

(A) - (B)

Total return over 1 year 14.9% 4.1% 10.8%

Total return over 3 years 57.0% 37.3% 19.8%

Total return from inception (March 2011) 62.5% 38.6% 23.9%

Annualised return from inception 11.6% 7.7% 4.0%

Annualised return over 5 years 11.6% 7% (fixed target) 4.6%

Current cash value £81,250 £69,284 £11,966

Historic dividend yield 3.9% 3.2% 0.7%

Maximum decline over 5 years 8% 13.5% -5.5%

This virtual portfolio represents the portfolio of a typical investor who is still in the capital accumulation phase. It started with£50,000 in March 2011 and reinvests all dividends to generate additional growth.

The portfolio should have at least half of its underlying revenues coming from international markets and at be least half invested indefensive sector companies. If these limits are breached I will try to bring them back into line with the next buy or sell trade.

£40,000 £45,000 £50,000 £55,000 £60,000 £65,000 £70,000 £75,000 £80,000 £85,000

UKVI Portfolio FTSE All-Share Tracker Total Return

Average Investor (-3%/yr) Bad Investor (-6%/yr)

Size Allocation

Large Cap, 45%Mid Cap, 42%Small Cap, 12%

Industry Allocation

Industrials, 23%

Financials, 19%

Consumer Services,15%Consumer Goods, 13%

Telecommunications,9%Health Care, 8%

Utilities, 5%

Oil & Gas, 5%

Basic Materials, 4%

UKVI Portfolio - Current HoldingsColour coding rules and column descriptions can be found in the appendices

Rank Weight Name EPIC Index SectorShare

PricePE Ratio

Dividend

YieldPE10

Growth

Rate

Growth

QualityROCE Debt Ratio UK Focus

Purchase

Rank

Purchase

PricePurchase Date

1 1.9% Petrofac Ltd PFC FTSE 250Oil Equipment, Services &

Distribution£8.80 16.26 4.8% 13.0 22.3% 83% 29% 3.5 19% 23 £13.90 07/03/2014

2 2.7% Admiral Group PLC ADM FTSE 100 Nonlife Insurance £14.81 14.41 6.6% 20.2 13.3% 92% 54% 0.0 84% 8 £12.90 07/11/2013

3 1.9% BHP Billiton PLC BLT FTSE 100 Mining £11.82 7.63 6.2% 7.5 12.1% 71% 18% 2.0 1% N/A 1910% 12/09/2011

4 3.6% ITE Group PLC ITE Small Cap Media £1.85 11.66 4.0% 16.1 9.3% 83% 29% 1.3 5% 6 £1.85 06/03/2015

7 4.1% IG Group Holdings PLC IGG FTSE 250 Financial Services £7.49 20.81 3.8% 24.6 13.5% 88% 26% 0.0 50% 8 £6.03 05/09/2014

9 1.8% Centrica PLC CNA FTSE 100 Gas, Water & Multiutilities £2.66 48.10 5.1% 11.2 7.0% 79% 12% 4.7 66% 25 £3.22 10/08/2012

10 3.1% Amlin PLC AML FTSE 250 Nonlife Insurance £5.11 11.06 5.3% 11.2 6.4% 71% 17% 1.5 21% 18 £4.06 08/02/2013

12 3.3% British American Tobacco PLC BATS FTSE 100 Tobacco £38.01 19.42 3.9% 23.0 9.7% 88% 17% 3.2 11% 28 33.22£ 09/09/2013

14 4.0% Mitie Group PLC MTO FTSE 250 Support Services £3.22 14.51 3.6% 17.4 8.9% 92% 12% 3.6 97% N/A £2.38 16/09/2011

15 2.5% Standard Chartered PLC STAN FTSE 100 Banks £9.80 10.25 5.6% 9.2 7.1% 71% 12% N/A 5% 9 £12.15 07/07/2014

19 1.6% Morrison (Wm) Supermarkets PLC MRW FTSE 100 Food & Drug Retailers £1.83 19.41 7.5% 10.6 7.3% 79% 7% 5.4 100% 16 £2.93 07/05/2013

23 4.0% AstraZeneca PLC AZN FTSE 100Pharmaceuticals &

Biotechnology£43.20 35.04 4.1% 14.9 1.4% 75% 23% 1.8 17% 19 £41.67 06/07/2015

26 3.5% Brown (N) Group PLC BWNG FTSE 250 General Retailers £3.18 12.42 4.5% 13.0 6.2% 75% 11% 3.8 100% 17 £3.47 07/11/2014

29 6.0% Telecom plus PLC TEP FTSE 250 Fixed Line Telecommunications £12.14 30.21 3.3% 43.2 17.4% 88% 36% 2.6 100% 9 £7.16 06/05/2015

34 3.4% GlaxoSmithKline PLC GSK FTSE 100Pharmaceuticals &

Biotechnology£13.96 19.75 5.7% 15.2 1.6% 71% 18% 4.6 6% 25 £14.27 09/01/2015

35 2.4% Vodafone Group PLC VOD FTSE 100 Mobile Telecommunications £2.42 10.91 4.6% 13.2 4.0% 92% 7% 2.0 17% N/A £2.02 02/06/2011

40 3.8% Reckitt Benckiser Group PLC RB. FTSE 100Household Goods & Home

Construction£61.49 26.68 2.3% 31.8 11.1% 88% 21% 1.5 7% 27 £48.11 07/02/2014

41 3.4% SSE PLC SSE FTSE 100 Electricity £15.15 14.19 5.8% 15.9 5.3% 83% 8% 5.2 97% N/A £13.33 01/11/2011

53 4.5% Homeserve PLC HSV FTSE 250 Support Services £4.36 24.76 2.8% 21.3 6.7% 79% 18% 1.9 50% 17 £2.63 05/08/2013

57 4.5% JD Sports Fashion PLC JD. FTSE 250 General Retailers £8.05 20.05 0.9% 31.3 16.4% 88% 24% 0.6 82% N/A £2.28 16/03/2011

66 2.9% Braemar Shipping Services PLC BMS Small Cap Industrial Transportation £4.71 19.93 5.5% 11.9 0.3% 58% 15% 1.2 61% N/A £4.79 13/05/2011

68 1.8% Rio Tinto PLC RIO FTSE 100 Mining £24.86 9.46 5.4% 7.2 7.0% 54% 11% 2.2 1% 17 £29.88 07/09/2012

76 1.0% Chemring Group PLC CHG Small Cap Aerospace & Defense £2.36 47.77 1.7% 9.1 3.9% 67% 10% 3.2 15% N/A £6.89 18/04/2011

77 1.5% Tesco PLC TSCO FTSE 100 Food & Drug Retailers £2.16 19.69 0.5% 8.2 1.8% 67% 8% 5.6 69% 28 £3.00 11/06/2012

78 3.4% Tullett Prebon PLC TLPR FTSE 250 Financial Services £4.05 10.55 4.2% 9.6 2.7% 54% 14% 2.4 50% N/A £3.59 05/09/2011

82 4.3% Hill & Smith Holdings PLC HILS Small Cap Industrial Engineering £6.93 16.18 2.6% 20.6 7.4% 88% 10% 3.5 46% 28 £4.31 07/06/2013

83 2.4% BP PLC BP. FTSE 100 Oil & Gas Producers £3.95 7.64 6.3% 8.2 -0.5% 63% 10% 4.7 20% N/A £4.94 04/03/2011

85 4.7% BAE Systems PLC BA. FTSE 100 Aerospace & Defense £4.80 16.27 4.3% 14.3 2.8% 75% 9% 2.9 21% N/A £3.08 21/06/2011

89 4.9% Cranswick PLC CWK FTSE 250 Food Producers £16.50 19.58 2.1% 24.3 8.7% 88% 11% 0.6 98% 16 £7.69 06/11/2012

113 1.8% RSA Insurance Group PLC RSA FTSE 100 Nonlife Insurance £5.14 -25.42 0.4% 10.3 -8.1% 42% 13% 1.1 33% 5 £4.86 09/01/2012

5.2% Cash

UKVI Portfolio - Current Opinion

Rank Name EPIC Index SectorAt today's price would I

buy or hold?Why?

2 Admiral Group PLC ADM FTSE 100 Nonlife Insurance Buy This still looks to me like a good business at an attractive price.

10 Amlin PLC AML FTSE 250 Nonlife Insurance Buy This still looks to me like a good business at an attractive price.

23 AstraZeneca PLC AZN FTSE 100Pharmaceuticals &

BiotechnologyBuy This still looks to me like a good business at an attractive price.

85 BAE Systems PLC BA. FTSE 100 Aerospace & Defense HoldThe Pension Ratio is 21.6, which is well above my preferred maximum of 10. As a result I would not

buy BAE today. It is also one of the bottom five holdings by rank which means it could be sold soon.

3 BHP Billiton PLC BLT FTSE 100 Mining Buy This still looks to me like a good business at an attractive price.

83 BP PLC BP. FTSE 100 Oil & Gas Producers HoldBP has a Growth Rate of less than 2% which is below my preferred minimum. It is also one of the

bottom five stocks by rank which means it could be sold soon.

66 Braemar Shipping Services PLC BMS Small Cap Industrial Transportation Buy This still looks to me like a good business at an attractive price.

12 British American Tobacco PLC BATS FTSE 100 Tobacco Buy This still looks to me like a good business at an attractive price.

26 Brown (N) Group PLC BWNG FTSE 250 General Retailers Buy This still looks to me like a good business at an attractive price.

9 Centrica PLC CNA FTSE 100 Gas, Water & Multiutilities Buy This still looks to me like a good business at an attractive price.

76 Chemring Group PLC CHG Small Cap Aerospace & Defense Hold

Although Chemring ranks well and is in the process of turning its business around, I would not buy it

today as it has no intention to provide a progressive dividend (i.e. dividends will rise and fall with

earnings).

89 Cranswick PLC CWK FTSE 250 Food Producers Hold Cranswick is one of the bottom five holdings by rank, which means it could be sold soon.

34 GlaxoSmithKline PLC GSK FTSE 100Pharmaceuticals &

BiotechnologyBuy

This still looks to me like a good business at an attractive price. Its Growth Rate is below 2% but I am

willing to overlook that for now.

82 Hill & Smith Holdings PLC HILS Small Cap Industrial Engineering Hold Hill & Smith is one of the bottom five holdings by rank, which means it could be sold soon.

53 Homeserve PLC HSV FTSE 250 Support Services Buy This still looks to me like a good business at an attractive price.

7 IG Group Holdings PLC IGG FTSE 250 Financial Services Buy This still looks to me like a good business at an attractive price.

4 ITE Group PLC ITE Small Cap Media Buy This still looks to me like a good business at an attractive price.

57 JD Sports Fashion PLC JD. FTSE 250 General Retailers Buy This still looks to me like a good business at an attractive price.

14 Mitie Group PLC MTO FTSE 250 Support Services Buy This still looks to me like a good business at an attractive price.

19 Morrison (Wm) Supermarkets PLC MRW FTSE 100 Food & Drug Retailers HoldThe Debt Ratio is above 5, which is too high in my opinion. Also, the combined Debt and Pension

Ratio is 11.5, which is above my upper limit of 10.

1 Petrofac Ltd PFC FTSE 250Oil Equipment, Services &

DistributionBuy This still looks to me like a good business at an attractive price.

40 Reckitt Benckiser Group PLC RB. FTSE 100Household Goods & Home

ConstructionBuy This still looks to me like a good business at an attractive price.

68 Rio Tinto PLC RIO FTSE 100 Mining Buy This still looks to me like a good business at an attractive price.

113 RSA Insurance Group PLC RSA FTSE 100 Nonlife Insurance Hold

RSA's Pension Ratio is far too high at 20.3 (well above my preferred maximum of 10) and its Premium

to Surplus Ratio is 2.2, which is also above my preferred maximum of 2. It is also one of the bottom

five holdings by rank, so it could be sold soon.

41 SSE PLC SSE FTSE 100 Electricity Hold SSE's Debt Ratio is fractionally too high at 5.2 so I would not buy it at the moment.

15 Standard Chartered PLC STAN FTSE 100 Banks Buy This still looks to me like a good business at an attractive price.

29 Telecom plus PLC TEP FTSE 250Fixed Line

TelecommunicationsBuy This still looks to me like a good business at an attractive price.

77 Tesco PLC TSCO FTSE 100 Food & Drug Retailers HoldTesco's Growth Rate is currently too low (below 2%) and its Debt Ratio too high (5.6), so I would not

buy it at the moment.

78 Tullett Prebon PLC TLPR FTSE 250 Financial Services Buy This still looks to me like a good business at an attractive price.

35 Vodafone Group PLC VOD FTSE 100 Mobile Telecommunications Buy This still looks to me like a good business at an attractive price.

Latest interim results

27th July - Reckitt Benckiser, Household Goods (cyclical), Large-Cap (£42bn)

“Reckitt Benckiser is the global leader in consumer health and hygiene, with operations inapproximately 60 countries and sales in almost 200.” (www.rb.com)

Half-year revenue up 1% Interim dividend down 16%

Quotes from the interim results

I am pleased with our first half results, they once again confirm that our strategic focus on consumer health andhygiene is delivering sustainable growth and outperformance. We continue to invest behind our innovations suchas Scholl Express Pedi and Durex Real Feel in both developed and developing markets leading to broad-basedgrowth across both areas.

We have made a strong start to the year and are ahead of our ongoing expectations at this half year juncture.Additionally we are now delivering an accelerated implementation of cost efficiency initiatives under ProjectSupercharge. This is having the effect of bringing forward the benefits from this three year programme. Giventhis strong HY performance, and accelerated phasing of Project Supercharge savings, we now expect to exceedour initial targets.

We are committed to investing in the long-term growth of our brands and in HY 2015 we invested 14.4% of ournet revenue in brand equity investment (BEI) which is +30bps versus the prior year (actual rates) and an absoluteincrease of £43m (constant). The organisation has fully embraced the Project Supercharge mindset, and wehave delivered savings earlier than in-going assumptions. In addition, we now expect to achieve the upper endof the estimated £100m-£150m annualised savings by the end of the programme.

The absolute [dividend] reduction versus the prior year is due to the demerger of Indivior (formerly called RBPharmaceuticals).

28th July - Tullett Prebon, Financial Services (cyclical), Mid-Cap (£1bn)

“Tullett Prebon is one of the world's leading interdealer brokers and has a presence in 23 countriesacross the globe. The Company’s goal is to become the world’s most trusted source of liquidity in hybridOver The Counter markets and the best operator in global voice broking.” (www.tullettprebon.com)

Half-year revenue up 15% Interim dividend unchanged


The actions that were taken during 2014 to develop the business and to better align the cost base with the lowerlevel of activity have resulted in a 15% increase in revenue to £415.7m and a 20% increase in underlyingoperating profit to £60.6m.

The performance of [oil broker] PVM since the completion of the acquisition in November last year has beenstrong. The Company’s Information Sales and Risk Management Services businesses have also performedstrongly. The level of activity in the wholesale OTC [Over The Counter] financial markets has been more stableduring the first half than in recent periods although activity has continued to be relatively subdued. There hasbeen higher volatility in some financial markets in 2015 compared with a year ago, but despite the economic andpolitical dramas that have been playing during the first half of the year, volatility and trading volumes in manyproduct areas have continued to be sporadic.

The Company’s goal is to become the world’s most trusted source of liquidity in hybrid OTC markets and the bestoperator in global voice broking. The Company’s plan is to build revenue and raise the quality and quantity ofearnings through further diversification of the client base, continued expansion into Energy and commodities,and building scale in the Americas and Asia Pacific, whilst preserving the business’s core franchises

https://www.rb.com

http://www.tullettprebon.com/


29th July - British American Tobacco, Tobacco (defensive), Large-Cap (£64bn)

“We are a global company with over 200 brands sold in more than 200 markets. We employ more than57,000 people and we make the cigarettes chosen by around one in eight of the world’s one billion adultsmokers.” (www.bat.com)

Half-year revenue down 6% Interim dividend up 4%


As we anticipated, the first half of the year has been impacted by adverse exchange rate movements and astrong first half volume comparator. The underlying performance of the business remains strong and we areconfident that we are on course to deliver an improved second half, leading to another year of good earningsgrowth at constant rates of exchange.

On 12 June 2015, the Group completed its investment of US$4.7 billion in cash to maintain its 42% equityposition in the enlarged Reynolds American Inc. as part of its acquisition of Lorillard Inc. The Group has alsosigned an agreement to acquire TDR, the leading independent cigarette manufacturer in Central Europe, for€550 million. This will provide us with the opportunity to significantly grow our business in the region.

We remain committed to leading in Next Generation Products globally and continued to make good progress onthe development and roll out of our portfolio. Our e-cigarette brand, Vype, continues to perform well in the UKmarket and has been strengthened by the recent launch of an enhanced range of flavours and nicotine strengthsfor our ePen and eStick devices. In July, we launched an open system, the Vype eTank and its accompanyingrange of liquids. We continue to make progress on Voke, our nicotine inhalation product licensed as medicine,and expect to launch in the UK around the year end.

Underscoring our commitment to growing shareholder returns we intend to reflect this good underlyingperformance with an increase in the full year dividend.

29th July - GlaxoSmithKline, Pharmaceuticals&Biotechnology (defensive), Large-Cap (£65bn)

“We are a science-led global healthcare company. We research and develop a broad range of innovativeproducts in three primary areas of Pharmaceuticals, Vaccines and Consumer Healthcare.”(www.gsk.com)



[After the Novartis transaction] GSK has created a Group of three world-leading businesses in Pharmaceuticals,Vaccines and Consumer Healthcare, which aims to deliver sustainable and improving returns to shareholdersthrough development of innovative healthcare options for patients and consumers.

This is our first full quarter of performance since completion of the transaction with Novartis and it is encouraging.Our integration and restructuring plans are on track and we remain confident that we can achieve our targets forthis year and return the Group to earnings growth in 2016.

New product performance was positive in all three of GSK’s businesses, with the standout performance for thequarter coming from our new HIV drugs. Importantly, the growth of our new pharmaceutical products is now morethan offsetting sales declines of Seretide/Advair.

At its Investor Day on 6 May 2015, GSK outlined a series of expectations for its performance over the five yearperiod 2016-2020. This included an expectation that Group core EPS would grow at a CAGR [Compound AnnualGrowth Rate] of mid-to-high single digits on a CER [Constant Exchange Rate] basis. The introduction of ageneric alternative to Advair in the US was factored into the Group’s assessment of its future performance. TheGroup also stated its intention to pay an annual ordinary dividend of 80p for each of the next three years(2015-2017).

http://www.bat.com/

http://www.gsk.com/


30th July - AstraZeneca, Pharmaceuticals & Biotechnology (defensive), Large-Cap (£54bn)

“[Spans] the entire value chain of a medicine from discovery, early- and late-stage development tomanufacturing and distribution, and the global commercialisation of primary care, specialty care-led andspecialty care medicines that transform lives.” (www.astrazeneca.com)



We made good progress in the period, delivering a robust underlying business performance. This represents sixsuccessive quarters of top-line growth. The initiatives introduced to increase efficiency are starting to reduceSG&A [Selling, General & Administrative] costs, supporting our continued strategic investment in science andthe acceleration of our pipeline which has positive momentum across all key areas.

I’m particularly pleased by the pace of progress in Oncology, with new approvals for both Iressa and Faslodexaccompanied by regulatory submissions for AZD9291 and cediranib. The strong performance of the growthplatforms and the subsequent upgrade to top-line guidance, together with increased R&D productivity reaffirmthe confidence we have in our ability to navigate the final impacts from the loss of exclusivity and meet ourrevenue targets.

The Company continued both with the construction of its new Global R&D Centre and Corporate Headquarterson the Cambridge Biomedical Campus and the move of employees to Cambridge from other UK locations.AstraZeneca announced that it will invest approximately $285m in a new high-tech facility for the manufactureof biological medicines in Södertälje, Sweden.

The Company continues to focus on delivering innovative medicines by accelerating investment in its EmergingMarkets’ capabilities, with a focus on China and other leading markets, such as Russia and Brazil.

30th July - BAE Systems, Aerospace & Defence (defensive), Large-Cap (£15bn)

“BAE Systems is a global defence, aerospace and security company employing around 88,200 peopleworldwide. Our wide-ranging products and services cover air, land and naval forces, as well as advancedelectronics, security, information technology, and support services.” (www.baesystems.com)

Half-year revenue up 11% Interim dividend up 2%


Overall, the business performed well during the first half of 2015 during which the Group has leveraged itscapabilities in adjacent growth markets and maintained disciplined cost control. The Group has also continuedto invest in developing skills and new technologies for the future. These actions have provided resilience throughan extended period of reduced defence spending in some key markets and ensured that BAE Systems is wellpositioned to benefit from a generally improving market environment.

The defence market outlook in the US is improving, with recent indications of a return to growth in defencebudgets. There are signs of potential improvement as fiscal year 2016 defence budget proposals continue toseek funding above previously imposed spending caps. The Group's UK business is stable, with much of thebusiness subject to long-term contracts. The recent budget announcements are supportive of defence and theannouncement in June of a £500m reduction in the current year defence budget is not expected to materiallyimpact programmes on which the Group is engaged. In Saudi Arabia, the Group continues to support the RoyalSaudi Air Force during a period of military operations. The equipment supplied by the Group is achieving highlevels of availability. The Group is facing a challenging outlook in its naval shipbuilding business in Australia.

Following last year's triennial funding valuations and funding agreements on all of the Group's UK pensionschemes, the cash contributions in 2015 to fund the pension deficit recovery plans will be consistent with theprior year at approximately £0.4bn.

http://www.astrazeneca.com/

http://www.baesystems.com/


30th July - Centrica, Gas, Water & Multiutilities (defensive), Large-Cap (£14bn)

“Our operations cover all elements of the energy value chain, from sourcing to supplying and saving it.We participate in international energy markets with customers across the UK, North America and theRepublic of Ireland.” (www.centrica.com)

Half-year revenue down 2% Interim dividend down 30%


In light of significantly changed circumstances a fundamental strategic review was launched in February,focused on: i) outlook and sources of growth; ii) portfolio mix and capital intensity; iii) operating capability andefficiency; and iv) Group financial framework. The headline conclusions are:

i) Our long-term growth focus will be on energy supply, services, distributed energy and power, the connectedhome and energy marketing and trading. Relative to 2015, we will commit about £1.5 billion of additionaloperating and capital resources to drive growth in these areas over the next five years. ii) We will reduce andlimit scale in E&P [Exploration & Production] and central power generation, lowering the Group’s capital intensity.Relative to 2015, resource allocation to these areas will fall by about £1.5 billion over the next five years. iii) Inaddition to the shift in future resource allocation, we will target cost efficiencies of £750 million per annum by2020 relative to a 2015 baseline. iv) We will manage the Group within a clear financial framework.

The conclusion of our strategic review provides a clear direction for the business. Centrica is an energy andservices company. Our purpose is to provide energy and services to satisfy the changing needs of ourcustomers, and as such we will focus our growth ambitions on our customer-facing activities. Serving ourcustomers is what we are known for, what we are good at and where we already have distinctive positions andcapabilities. Alongside a major Group-wide efficiency programme, this will underpin long-term shareholder value,as we target operating cash flow growth of 3-5% per year and deliver a progressive dividend policy.

“Ben Graham taught me that the key to successful investing was the purchase of shares in goodbusinesses when market prices were at a large discount from underlying business values. Thetrue investor welcomes volatility. Ben Graham explained this in Chapter 8 of The IntelligentInvestor. There he introduced "Mr. Market," an obliging fellow who shows up every day toeither buy from you or sell to you, whichever you wish. The more manic-depressive this chap is,the greater the opportunities available to the investor. That's true because a wildly fluctuatingmarket means that irrationally low prices will periodically be attached to solid businesses.”

Warren Buffett

https://www.centrica.com/

Latest annual results

21st July - IG Group, Financial Services (cyclical), Mid-Cap (£2.9bn)

“IG is a global leader in online trading and currently the No.1 provider of CFDs and financial spreadbetting worldwide. We have opened offices in […] 14 countries around the world and now serve clientsin over 140 countries.” (www.iggroup.com)

Revenue

Up 2%

10 Year average earnings

Up 12%

Dividend per share

UnchangedDebt Ratio

0 (No borrowings)

Pension Ratio

0 (no DB pension scheme)

Does it still pass the buy tests?

Yes

Quotes from the annual results

2015 was another year of good progress on our strategic initiatives, coupled with a solid underlying set offinancial results. As part of our product and geographic diversification strategy, we launched our execution-onlystockbroking product in the UK, Ireland and the Netherlands and extended it into Germany and Austria after yearend. We also successfully acquired licences and opened offices in Switzerland and Dubai.

Over the past few years IG has set out a clear vision of what it wants to achieve. Our aim is to become the defaultchoice for active traders globally. To achieve this, we are building on our award-winning technology suite,broadening the range of products we offer to appeal to sophisticated investors, expanding into further geographicregions and fundamentally improving our mobile and online marketing capability. This year we achieved a majormilestone in IG’s development with the launch of an execution-only stockbroking service in the UK.Stockbroking, and its link to IG’s existing products, has the potential to underpin the future growth of ourbusiness. We will use technology to bring a revolution to a very traditional market. This will allow IG to appeal toa much bigger global audience, providing an attractive business opportunity in its own right as well as broadeningthe understanding and take-up of our core leveraged trading products.

In summary, 2015 was a solid year, both financially and strategically, but we are not resting on our laurels. Weare clear about our agenda and the team is energised to deliver growth and profitability for the future.

The Swiss franc event: In January the Swiss National Bank announced, without notice, that it was ceasingintervention in the franc exchange rate. This caused an unprecedented appreciation in the value of the franc,creating turmoil in the foreign exchange markets and drastically reducing global liquidity in this G10 currency.The Swiss franc event provided a sudden real-world stress test for our technology, our risk managementprocedures and our balance sheet capacity. Although the resultant negative impact of £27 million, net ofrecoveries, was significant and disappointing, IG clearly demonstrated its ability to manage through such aso-called ‘Black Swan’ event while maintaining a robust business that delivers strong cash flows. Following this,we have reviewed our robust risk management system and learned lessons that we are applying to provide evengreater protection for our business and our clients.

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http://www.iggroup.com/

“We make a difference by protecting people and businesses against the risks they face in their dailylives. We provide unrivalled expertise through our global network of providers to cover everything fromhouses and pets, to skyscrapers and tankers, across the world.” (www.rsagroup.com)

OverviewRSA was the first insurance company to join the UKVI Portfolio and, while not catastrophically bad, it has beena mostly disappointing investment. The original investment premise was that it appeared to have turnedaround well after a problematic period in the early 2000s, which included a dividend cut and rights issue tostrengthen the balance sheet. The dividend yield at the time of purchase was 8.8%, so clearly the market waspricing the company as if a dividend cut was inevitable.

In this case the market was right because the dividend was cut, the CEO “resigned” and a rights issue wascarried out. RSA turned out to be a classic value trap and I fell straight into it. With hindsight there were holesin my analysis process back in 2012, although those holes have since hopefully been filled.

The holes, specifically, related to profitability and leverage and I have since filled those holes with theCombined Ratio (for profitability) and the Premium to Surplus Ratio (for leverage). With these metrics inplace RSA would never have been bought. However, thanks to recent acquisition interest from ZurichInsurance RSA’s share price has reached a point where this value trap can be escaped profitably.

Selling: RSA Insurance Group PLC (RSA)Improving the portfolio: As companies grow (or shrink) and as their share prices go up (or down) the features and relativeattractiveness of the investment change. If a company’s share price increases faster than its earnings or dividends, or if a companyfalls into long-term decline, it may be time to sell and replace it with something that appears to offer better value for money.

Adjusted purchase price

544p on 09/01/12

Current price

514p on 31/07/15

Holding period

3 Year 6 monthCapital gain (inc. Nil Paid Rights)

3.6%

Dividend income

14.3%

Annualised rate of return

5.4% per year

http://www.rsagroup.com/

RSA’s problems at the start of the decade are clear to see, with normalised earnings falling essentially to zero.I summarised the underlying problems in my original analysis back in January 2012:

“In very simple terms insurance companies can make money in two ways: one is to make money on each policyso that the premium income more than offsets any losses; the other is to invest that premium while it’s held inreserve waiting to cover any losses. If this ‘float’ is invested well it makes money which goes on the bottom line.Unfortunately it seems that RSA had been depending too much on the stock market and when that fell for threeyears between 2000 and 2003 it hurt the company a lot. The dividend was cut from around 25p eventually downto less than 5p [20p after recent share consolidations]. Just as bad was the more than £900m rights issue thatwas used to strengthen the balance sheet.”

So the company had a history of recent failures of judgement, but it seemed to me that things had gottenbetter and none of the metrics I used at the time told me otherwise. After analysing the company I wascomfortable investing 3% of the UKVI Portfolio into RSA and a similar amount with my personal investments.

Reasons for holding: I prefer to sell when sentiment is positive rather than negativeAs the notes on the share price chart show, the market turned out to be right and I was wrong. RSA did stillhave underlying problems which needed to be sorted out, and these were pretty much the same issues thecompany had exhibited during the 2000 - 2003 period. Along the way the dividend was cut to virtuallynothing, the CEO “resigned” and a major rights issue was carried out. RSA was indeed the classic value trap.

Let’s start with the dividend cut, which was announced in the 2012 annual results in February 2013. The mainreason given for the dividend cut was the exceptionally low yield on bonds. At the time RSA had more than£11bn of its customers’ premiums invested in bonds and was clearly relying on the income from those bondsto fund a significant portion of the dividend. This is normal for an insurance company, but it does perhapshint at RSA’s inability to generate significant cash from its underwriting (i.e. insurance) activities rather thanits investment activities.

Reasons for buying: A very high dividend yield from a “blue chip” companyThe primary reasons for RSA’s attractiveness as an investment was its dividend yield. At 8.8% it was morethan double the FTSE 100’s yield of 3.6%. I was well aware of the risks of investing in a company with such ahigh yield, but even if the dividend was cut in half the yield would still be above the market average, so Ithought the risks were already accounted for in the price. However, if the dividend wasn’t cut then the shareswere likely to re-rate upwards, producing large and rapid capital gains.

The chart below shows RSA’s latest financial results at the time of purchase in January 2012.

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As usual I did not sell when the dividend cut was announced. In general I think there are better opportunitiesto sell than immediately after a dividend cut. Dividend cuts usually result in new management taking over,changes being made and companies being improved. At some point down the line some good news is likelyto appear and the market will often raise a company’s share price accordingly.

In RSA’s case, Stephen Hester (of RBS turnaround fame) joined the company in 2014 to turn it around. Byholding on I was effectively waiting for that turnaround to come good, or at least for the market to think theturnaround would come good and therefore raise the share price to where the investment could be exitedprofitably.

However, I would have preferred to avoid this value trap altogether and, having spent some time looking atinsurance company-specific financial ratios, I think RSA’s problems were visible beforehand if you new whereto look.

The first problem is weak underwriting profitability, which leads to its reliance on bond coupons to fund asignificant portion of the dividend.

One of the ratios I now apply to insurance companies is the Combined Ratio, which works a bit like profitmargin. It is a combination of the Loss Ratio (the ratio between claim expenses and premium income) andthe Expenses Ratio (the ratio between operating expenses and premium income). If the sum of claims andexpenses are less than premium income then the Combined Ratio is less than 100% and the company madean underwriting profit. If claims and expenses exceeded premiums then the Combined Ratio is above 100%and the company made an underwriting loss.

Today I use the following rule of thumb for insurance company profitability:

● Only invest in an insurance company if its 5-year average Combined Ratio is below 95%

In the 5 years to RSA’s 2010 annual results (the latest results when I reviewed the company in January 2012)it had a 5-year average Combined Ratio of 94.7%, which means it would have just about passed that test. Sowhile the company’s profitability was weak, it was not so weak that I would have avoided it, even in hindsight.

However, when the 2011 results were published shortly after the company was added to the UKVI Portfolio,that average Combined Ratio had crept up to 95.1%, which too high, although only fractionally. After the2012 results were announced, which included that dividend cut, the average Combined Ratio rose to 95.2%,which is clearly going in the wrong direction. So the company’s profitability was weak at the time of purchase,but not outrageously so. What about leverage?

Most of the time when I talk about leverage I mean borrowed money, i.e. interest-bearing debts. As at the2010 results, RSA had £298m of borrowings and 5-year average post tax earnings of £494m, giving thecompany a Debt Ratio of just 0.6, well below my maximum of 5 for defensive companies like RSA. So debtwasn’t an obvious problem.

However, there are other forms of leverage and for insurance companies an important measure of operatingleverage is the Premium to Surplus Ratio. This is the ratio between how much premium a company earns ina given period and how much “surplus” assets the company has over its liabilities. The idea is that aninsurance company has a fiduciary duty to pay out claims and so if push came to shove all of its assets shouldbe sold in order to fund its claim liabilities. The size of the surplus then dictates, approximately, how muchnew business the company should write, as there is only so much new insurance business a company shouldtake on given its ability to pay existing claims.

I now apply the following rule of thumb:

● Only invest in an insurance company if its Premium to Surplus Ratio is below 2

This is an old insurance industry rule of thumb which has stood the test of time as an indication of prudentunderwriting activities.

At the 2010 results RSA earned premiums of £7,179m and had tangible shareholder equity (tangible assetsminus liabilities) of £2,557m, giving the company a Premium to Surplus Ratio of 2.8. This is clearly above my“rule of thumb” maximum of 2, so if I had been using this particular rule at the time RSA would have appearedto have been taking on too much new business given its asset surplus. Or another way of looking at it is tosay that its asset surplus was too thin for the amount of business it was writing. Either way, it was not runningwhat some old insurance books call a “prudent operation”.

After the 2011 results the Premium to Surplus Ratio increased to 3.2 and in 2012 it increased to 3.6. ClearlyRSA’s margin of safety was becoming ever more thin in relation to the amount of insurance it was writing.

If I had been using the Premium to Surplus Ratio when I originally reviewed RSA I would not have invested.

Reasons for selling: A potential takeover has produced a profitable exit priceAs I mentioned before, I do not like to sell on bad news, such as a dividend cut or CEO “resignation”. I preferto sell when everybody is optimistic about the future of a company. In the case of an underperformingcompany like RSA, that usually means waiting for some hint that the turnaround is going well, and that isessentially why RSA was still in the portfolio even though it had occasionally been the lowest ranked holding.

However, Zurich Insurance is apparently now interested in buying RSA for something in the region of 550pper share. Consequently the share price has risen recently from around 400p in July to 523p as I type. For methis means that optimism has returned and any operational improvements from a turnaround are alreadyincluded in the price.

As a result of this recent price increase RSA is now clearly the lowest ranking holding and it also has a verypoor dividend yield. It is not a company I particularly want to keep in the portfolio so I will be selling it a fewdays after this newsletter is published (both from the UKVI Portfolio and my personal portfolio).

It has not been the most profitable investment, but I think it has been very profitable in terms of lessonslearned. Thanks to RSA I expect the UKVI Portfolio to only invest in much better insurance companies in future.

Holdings with a lower stock screen rank Reason for not selling

None N/A

“The markets are a classroom where lessons are taught everyday. The keys to investment success liein observing and learning.”

Howard Marks, Chairman of Oaktree Capital (quote from his book “The Most Important Thing”)

IMPORTANT NOTICE: This analysis is for information only. It is an example of how one investor applies a checklist approachto analysing a company and it should not be construed as investment advice and should not be relied upon in isolation beforeinvesting. You should always perform your own analysis and factual verification before making investment decisions. If youneed advice you should seek a financial advisor. See the important notes on the last page.

Questions and AnswersReaders ask questions on a range of topics every month. Here are the most interesting and/or frequent:

Q: Should I take profits on Telecom Plus or hold on for further gains?A: Telecom Plus has certainly exploded out of the gates, gaining almost 60% from its addition to the UKVIPortfolio in May. This rather happy result means that Telecom Plus is now likely to be a relatively largeposition for anyone who bought in May (it is now the largest holding in the UKVI Portfolio, at almost 6%).

It is natural to assume that a share which has increased in value quickly will continue to do so, and in factthere is some evidence that this “momentum” effect does exist, at least occasionally. If Telecom Plus doescontinue to grow then leaving it alone and allowing an already large position to grow further would of courseproduce substantial profits. However, there are no guarantees that the share price will continue to growquickly and there are no guarantees that it will not fall back again. For me, basing investment decisions onthe hope that a share price will rise quickly, just because it has done so in the past, is overly speculative. Someinvestors may be comfortable with that approach, but I am not.

Instead, my rule for taking a portion of profits from an existing holding is simply based on the size of thatholding. If a position reaches more than double the default size of 1/30th (i.e. 3.3%, so double that is 6.6%)then I will sell half the position to reduce it back to the default position size. In reality I tend to be a bit morecautious than that, reducing holdings when they move above 6% rather than 6.6%. In either case, nospeculation is required; I just follow the rule and don’t have to think about what the share price may or maynot do in the future.

Defensive Sectors● Aerospace & Defense● Beverages● Electricity● Fixed Line Telecommunications● Food & Drug Retailers● Food Producers● Gas, Water & Multiutilities● Health Care Equipment & Services● Mobile Telecommunications● Non-life Insurance● Personal Goods● Pharmaceuticals & Biotechnology● Tobacco

Cyclical Sectors● Automobiles & Parts● Banks● Chemicals● Construction & Materials● Electronic & Electrical Equipment● Financial Services● Forestry & Paper● General Industrials● General Retailers● Household Goods & Home Construction● Industrial Engineering● Industrial Metals & Mining● Industrial Transportation● Leisure Goods● Life Insurance● Media● Mining● Oil & Gas Producers● Oil Equipment, Services & Distribution● Real Estate Investment & Services● Software & Computer Services● Support Services● Technology Hardware & Equipment● Travel & Leisure

Defensive and Cyclical sectorsThe model portfolio aims to be at least 50% invested in defensive FTSE Sectors as defined in the CapitaDividend Monitor. The definitions are repeated here in case you want to follow a similar policy:

Stock Screen - Sorted by RankColour coding rules and column descriptions can be found in the appendices

Rank Name EPIC Index SectorShare

PricePE Ratio

Dividend

YieldPE10

Growth

Rate

Growth

QualityROCE

Debt

Ratio

Earnings

Power

C

o

1 Petrofac Ltd PFC FTSE 250 Oil Equipment, Services & Distribution £8.80 16.3 4.8% 13.0 22.3% 83% 29% 3.5 £316

2 Admiral Group PLC ADM FTSE 100 Nonlife Insurance £14.81 14.4 6.6% 20.2 13.3% 92% 54% 0.0 £249

3 BHP Billiton PLC BLT FTSE 100 Mining £11.82 7.6 6.2% 7.5 12.1% 71% 18% 2.0 £10,326

4 ITE Group PLC ITE Small Cap Media £1.85 11.7 4.0% 16.1 9.3% 83% 29% 1.3 £32

5 Chesnara PLC CSN Small Cap Life Insurance £3.38 15.3 5.4% 14.3 7.0% 83% 15% N/K £29

6 Amec Foster Wheeler PLC AMFW FTSE 250 Oil Equipment, Services & Distribution £8.20 13.0 5.3% 15.7 15.0% 83% 12% 6.1 £216

7 IG Group Holdings PLC IGG FTSE 250 Financial Services £7.49 20.8 3.8% 24.6 13.5% 88% 26% 0.0 £139

8 Fenner PLC FENR Small Cap Industrial Engineering £1.67 6.1 7.2% 8.3 10.9% 79% 8% 4.6 £47

9 Centrica PLC CNA FTSE 100 Gas, Water & Multiutilities £2.66 48.1 5.1% 11.2 7.0% 79% 12% 4.7 £1,475

10 Amlin PLC AML FTSE 250 Nonlife Insurance £5.11 11.1 5.3% 11.2 6.4% 71% 17% 1.5 £178

11 Rotork PLC ROR FTSE 250 Industrial Engineering £2.14 18.0 2.3% 26.6 14.3% 100% 30% 0.2 £88

12 British American Tobacco PLC BATS FTSE 100 Tobacco £38.01 19.4 3.9% 23.0 9.7% 88% 17% 3.2 £3,838

13 Aggreko PLC AGK FTSE 250 Support Services £12.00 14.8 2.3% 17.8 17.7% 88% 16% 2.2 £238

14 Mitie Group PLC MTO FTSE 250 Support Services £3.22 14.5 3.6% 17.4 8.9% 92% 12% 3.6 £78

15 Standard Chartered PLC STAN FTSE 100 Banks £9.80 10.2 5.6% 9.2 7.1% 71% 12% N/A £2,845

16 Sky PLC SKY FTSE 100 Media £11.40 36.4 2.9% 28.9 10.8% 96% 21% 2.4 £1,106

17 PayPoint PLC PAY FTSE 250 Support Services £10.02 17.5 3.8% 25.3 8.1% 88% 34% 0.0 £31

18 Weir Group PLC WEIR FTSE 100 Industrial Engineering £15.37 12.0 2.9% 16.6 18.2% 83% 11% 3.7 £280

19 Morrison (Wm) Supermarkets PLC MRW FTSE 100 Food & Drug Retailers £1.83 19.4 7.5% 10.6 7.3% 79% 7% 5.4 £468

20 Vedanta Resources PLC VED FTSE 250 Mining £3.99 0.3 10.1% 1.8 15.8% 67% 3% 13.0 £863

21 Beazley PLC BEZ FTSE 250 Nonlife Insurance £3.38 12.6 2.8% 15.3 6.7% 79% 18% N/K £125

22 Ashley (Laura) Holdings PLC ALY Small Cap General Retailers £0.28 11.5 7.1% 17.1 7.7% 58% 20% 0.0 £16

23 AstraZeneca PLC AZN FTSE 100 Pharmaceuticals & Biotechnology £43.20 35.0 4.1% 14.9 1.4% 75% 23% 1.8 £3,928

24 Stagecoach Group PLC SGC FTSE 250 Travel & Leisure £3.91 15.5 2.7% 18.5 8.1% 92% 14% 5.4 £145

25 Cobham PLC COB FTSE 250 Aerospace & Defense £2.61 28.5 4.1% 17.6 9.7% 79% 13% 5.8 £188

26 Brown (N) Group PLC BWNG FTSE 250 General Retailers £3.18 12.4 4.5% 13.0 6.2% 75% 11% 3.8 £76

27 Antofagasta PLC ANTO FTSE 100 Mining £5.67 12.5 2.4% 8.5 14.6% 58% 13% 2.2 £694

28 Jardine Lloyd Thompson Group PLC JLT FTSE 250 Nonlife Insurance £10.41 17.8 2.8% 25.2 10.1% 88% 16% N/K £114

29 Telecom plus PLC TEP FTSE 250 Fixed Line Telecommunications £12.14 30.2 3.3% 43.2 17.4% 88% 36% 2.6 £26

30 Computacenter PLC CCC FTSE 250 Software & Computer Services £7.59 16.2 2.5% 22.0 10.4% 92% 13% 0.2 £60

31 IMI PLC IMI FTSE 250 Industrial Engineering £10.61 14.8 3.5% 18.6 6.0% 83% 17% 1.2 £210

32 Mears Group PLC MER Small Cap Support Services £3.90 15.9 2.6% 19.7 12.2% 92% 11% 2.9 £21

33 Victrex PLC VCT FTSE 250 Chemicals £19.36 20.2 2.3% 30.8 13.0% 92% 23% 0.0 £70

34 GlaxoSmithKline PLC GSK FTSE 100 Pharmaceuticals & Biotechnology £13.96 19.7 5.7% 15.2 1.6% 71% 18% 4.6 £4,051

35 Vodafone Group PLC VOD FTSE 100 Mobile Telecommunications £2.42 10.9 4.6% 13.2 4.0% 92% 7% 2.0 £9,979

36 De La Rue PLC DLAR Small Cap Support Services £5.05 11.1 3.3% 9.9 1.2% 50% 46% 2.9 £48

37 Menzies (John) PLC MNZS Small Cap Support Services £5.14 15.0 3.2% 11.5 4.5% 71% 13% 4.6 £32

38 Diageo PLC DGE FTSE 100 Beverages £17.90 18.1 3.2% 22.2 7.5% 88% 13% 4.0 £2,409

39 Hiscox Ltd HSX FTSE 250 Nonlife Insurance £9.26 13.4 2.6% 17.8 9.3% 79% 15% N/K £167

40 Reckitt Benckiser Group PLC RB. FTSE 100 Household Goods & Home Construction £61.49 26.7 2.3% 31.8 11.1% 88% 21% 1.5 £1,689

41 SSE PLC SSE FTSE 100 Electricity £15.15 14.2 5.8% 15.9 5.3% 83% 8% 5.2 £1,179

42 Prudential PLC PRU FTSE 100 Life Insurance £15.07 16.8 2.5% 26.1 11.5% 83% 18% N/K £1,807

43 Compass Group PLC CPG FTSE 100 Travel & Leisure £10.25 21.3 2.6% 32.1 13.7% 96% 13% 3.6 £775

44 Intertek Group PLC ITRK FTSE 100 Support Services £24.47 19.5 2.0% 28.0 16.8% 92% 14% 4.1 £182

45 Burberry Group PLC BRBY FTSE 100 Personal Goods £16.09 21.0 2.2% 30.7 16.5% 83% 26% 0.2 £304

46 Imperial Tobacco Group PLC IMT FTSE 100 Tobacco £33.65 6.8 3.8% 18.5 13.7% 75% 10% 5.3 £1,858

47 Domino's Pizza UK & IRL PLC DOM FTSE 250 Travel & Leisure £8.98 34.8 1.9% 54.4 19.4% 100% 39% 0.6 £35

48 Restaurant Group (The) PLC RTN FTSE 250 Travel & Leisure £6.74 22.5 2.3% 31.8 10.0% 100% 19% 0.9 £50

49 Dialight PLC DIA Small Cap Electronic & Electrical Equipment £5.45 14.9 2.8% 24.4 17.0% 83% 12% 0.7 £10

50 Ladbrokes PLC LAD FTSE 250 Travel & Leisure £1.14 9.4 7.8% 4.8 -4.9% 50% 21% 2.5 £190

51 Tullow Oil PLC TLW FTSE 250 Oil & Gas Producers £2.46 2.7 1.6% 6.9 13.6% 54% 9% 4.3 £506

52 Aberdeen Asset Management PLC ADN FTSE 100 Financial Services £3.64 14.3 4.9% 25.5 19.0% 83% 9% 0.0 £241

53 Homeserve PLC HSV FTSE 250 Support Services £4.36 24.8 2.8% 21.3 6.7% 79% 18% 1.9 £73

54 Ultra Electronics Holdings PLC ULE FTSE 250 Aerospace & Defense £17.45 36.9 2.5% 22.7 11.7% 71% 18% 2.7 £64

55 Spirax-Sarco Engineering PLC SPX FTSE 250 Industrial Engineering £33.16 23.8 2.0% 30.8 10.0% 96% 17% 0.9 £96

56 Legal & General Group PLC LGEN FTSE 100 Life Insurance £2.61 14.4 4.3% 21.8 11.1% 67% 17% N/K £894

57 JD Sports Fashion PLC JD. FTSE 250 General Retailers £8.05 20.1 0.9% 31.3 16.4% 88% 24% 0.6 £63

58 Sainsbury (J) PLC SBRY FTSE 100 Food & Drug Retailers £2.65 10.5 3.1% 11.0 5.7% 75% 5% 5.2 £533

59 KCOM Group PLC KCOM Small Cap Fixed Line Telecommunications £0.94 10.1 5.7% 14.5 6.1% 50% 19% 2.8 £39

60 Barr (A G) PLC BAG FTSE 250 Beverages £5.65 19.8 2.1% 31.0 9.2% 96% 16% 0.6 £27

61 Atkins (W S) PLC ATK FTSE 250 Support Services £15.72 16.2 2.3% 19.4 5.2% 79% 19% 1.3 £87

62 UK Mail Group PLC UKM Small Cap Industrial Transportation £5.10 16.6 4.3% 22.2 5.4% 67% 18% 0.7 £14

63 RPS Group PLC RPS Small Cap Support Services £2.14 13.1 4.0% 14.9 7.2% 83% 8% 3.1 £30

64 Rolls-Royce Group PLC RR. FTSE 100 Aerospace & Defense £7.94 12.2 2.9% 16.4 9.0% 83% 9% 3.2 £1,008

65 Premier Farnell PLC PFL FTSE 250 Support Services £1.36 9.6 7.6% 9.6 2.6% 42% 13% 5.3 £57

66 Braemar Shipping Services PLC BMS Small Cap Industrial Transportation £4.71 19.9 5.5% 11.9 0.3% 58% 15% 1.2 £8

67 Britvic PLC BVIC FTSE 250 Beverages £6.86 16.2 3.0% 23.0 9.2% 79% 12% 6.7 £85

68 Rio Tinto PLC RIO FTSE 100 Mining £24.86 9.5 5.4% 7.2 7.0% 54% 11% 2.2 £7,462

69 William Hill PLC WMH FTSE 250 Travel & Leisure £4.05 15.8 3.0% 16.8 1.4% 88% 10% 3.9 £183

70 Wood Group (John) PLC WG. FTSE 250 Oil Equipment, Services & Distribution £6.26 12.5 2.7% 9.2 11.6% 71% 9% 2.3 £142

71 Royal Dutch Shell PLC RDSB FTSE 100 Oil & Gas Producers £18.60 10.0 6.4% 8.5 3.0% 63% 9% 2.1 £14,029

72 BG Group PLC BG. FTSE 100 Oil & Gas Producers £10.93 7.9 1.6% 12.4 8.0% 79% 12% 3.3 £3,457

73 NCC Group PLC NCC Small Cap Software & Computer Services £2.36 26.3 1.7% 40.9 19.9% 96% 14% 2.3 £15

74 Babcock International Group PLC BAB FTSE 100 Support Services £9.91 19.4 2.4% 27.1 13.6% 88% 10% 8.4 £187

75 Drax Group PLC DRX FTSE 250 Electricity £2.98 9.3 4.0% 4.6 -5.7% 50% 14% 1.7 £187

76 Chemring Group PLC CHG Small Cap Aerospace & Defense £2.36 47.8 1.7% 9.1 3.9% 67% 10% 3.2 £49

77 Tesco PLC TSCO FTSE 100 Food & Drug Retailers £2.16 19.7 0.5% 8.2 1.8% 67% 8% 5.6 £2,270

78 Tullett Prebon PLC TLPR FTSE 250 Financial Services £4.05 10.6 4.2% 9.6 2.7% 54% 14% 2.4 £92

79 Diploma PLC DPLM FTSE 250 Support Services £7.43 23.1 2.3% 37.7 15.6% 92% 14% 0.0 £29

80 Renishaw PLC RSW FTSE 250 Electronic & Electrical Equipment £20.95 12.5 2.2% 29.8 18.2% 79% 14% 0.0 £64

81 Goodwin PLC GDWN Small Cap Industrial Engineering £25.27 11.9 1.7% 18.2 11.4% 71% 18% 0.8 £12



PricePE Ratio

Dividend

YieldPE10

Growth

Rate

Growth

QualityROCE

Debt

Ratio

Earnings

Power

C

o

82 Hill & Smith Holdings PLC HILS Small Cap Industrial Engineering £6.93 16.2 2.6% 20.6 7.4% 88% 10% 3.5 £29

83 BP PLC BP. FTSE 100 Oil & Gas Producers £3.95 7.6 6.3% 8.2 -0.5% 63% 10% 4.7 £7,290

84 Fisher (James) & Sons PLC FSJ FTSE 250 Industrial Transportation £11.14 12.8 2.0% 23.6 13.0% 100% 8% 2.7 £30

85 BAE Systems PLC BA. FTSE 100 Aerospace & Defense £4.80 16.3 4.3% 14.3 2.8% 75% 9% 2.9 £1,152

86 Carillion PLC CLLN FTSE 250 Support Services £3.46 13.6 5.1% 11.9 5.0% 71% 7% 7.6 £145

87 Croda International PLC CRDA FTSE 250 Chemicals £30.40 24.2 2.2% 36.7 17.8% 83% 17% 1.4 £162

88 Next PLC NXT FTSE 100 General Retailers £79.90 19.4 1.9% 32.7 10.9% 83% 42% 1.7 £501

89 Cranswick PLC CWK FTSE 250 Food Producers £16.50 19.6 2.1% 24.3 8.7% 88% 11% 0.6 £38

90 RM PLC RM. Small Cap Software & Computer Services £1.70 10.5 2.4% 10.2 -3.6% 58% 19% 0.0 £13

91 Spectris PLC SXS FTSE 250 Electronic & Electrical Equipment £19.53 16.9 2.4% 23.8 11.0% 79% 13% 1.3 £122

92 Senior PLC SNR FTSE 250 Aerospace & Defense £2.91 16.0 1.9% 20.4 13.2% 79% 12% 1.4 £83

93 Smiths Group PLC SMIN FTSE 100 General Industrials £11.29 14.0 3.6% 15.5 5.5% 67% 11% 2.9 £343

94 Capita PLC CPI FTSE 100 Support Services £13.04 32.3 2.2% 36.9 11.5% 92% 13% 7.8 £263

95 Electrocomponents PLC ECM FTSE 250 Support Services £1.99 11.9 5.9% 12.9 1.0% 54% 12% 2.3 £75

96 Ted Baker PLC TED FTSE 250 Personal Goods £32.27 38.7 1.2% 67.4 13.5% 92% 25% 1.0 £25

97 HSBC Holdings PLC HSBA FTSE 100 Banks £5.80 12.9 5.5% 11.7 -1.4% 71% 9% N/A £9,371

98 Micro Focus International PLC MCRO FTSE 250 Software & Computer Services £13.98 19.5 2.2% 37.6 20.9% 75% 44% 2.4 £71

99 Aveva Group PLC AVV FTSE 250 Software & Computer Services £22.05 32.8 1.4% 36.4 13.9% 83% 21% 0.0 £44

100 Brammer PLC BRAM Small Cap Support Services £3.25 17.4 3.3% 19.9 9.5% 79% 8% 4.4 £22

101 Vitec Group (The) PLC VTC Small Cap Industrial Engineering £6.51 9.5 3.7% 13.2 5.1% 63% 11% 3.3 £25

102 RPC Group PLC RPC FTSE 250 General Industrials £6.81 14.6 2.3% 24.0 13.6% 83% 9% 7.0 £73

103 Intermediate Capital Group PLC ICP FTSE 250 Financial Services £5.84 9.8 4.4% 11.4 -1.6% 63% 12% 12.7 £164

104 Tate & Lyle PLC TATE FTSE 250 Food Producers £5.45 14.8 5.1% 12.0 2.0% 63% 10% 3.4 £227

105 Connect Group PLC CNCT Small Cap Support Services £1.48 8.1 5.9% 9.8 4.7% 71% -115% 3.4 £33

106 Standard Life PLC SL. FTSE 100 Life Insurance £4.54 20.2 3.9% 23.8 5.2% 75% 11% N/K £475

107 Smith & Nephew PLC SN. FTSE 100 Health Care Equipment & Services £11.89 25.1 1.6% 30.8 10.5% 83% 16% 2.7 £401

108 Fidessa Group PLC FDSA FTSE 250 Software & Computer Services £24.00 32.3 1.6% 39.2 12.3% 83% 17% 0.0 £29

109 Euromoney Institutional Investor PLC ERM FTSE 250 Media £10.43 17.7 2.2% 24.2 5.5% 75% 17% 0.7 £65

110 WPP Group PLC WPP FTSE 100 Media £14.70 19.1 2.6% 24.1 13.0% 88% 7% 4.7 £1,017

111 Devro PLC DVO Small Cap Food Producers £3.03 25.6 2.9% 22.0 11.0% 67% 11% 2.7 £30

112 National Grid PLC NG. FTSE 100 Gas, Water & Multiutilities £8.53 15.0 5.0% 15.3 3.7% 75% 5% 12.4 £2,086

113 RSA Insurance Group PLC RSA FTSE 100 Nonlife Insurance £5.14 -25.4 0.4% 10.3 -8.1% 42% 13% 1.1 £218

114 Headlam Group PLC HEAD Small Cap Household Goods & Home Construction £4.76 16.7 3.7% 17.2 -2.5% 75% 11% 1.1 £21

115 Kier Group PLC KIE FTSE 250 Construction & Materials £14.43 20.7 4.0% 18.1 2.0% 63% 14% 7.3 £44

116 Hunting PLC HTG FTSE 250 Oil Equipment, Services & Distribution £5.14 9.3 3.8% 14.9 7.2% 71% 6% 2.4 £59

117 Playtech PLC PTEC FTSE 250 Travel & Leisure £9.06 24.3 2.3% 39.2 19.1% 71% 16% 2.4 £81

118 Close Brothers Group PLC CBG FTSE 250 Financial Services £14.53 14.5 3.4% 20.9 3.0% 67% 14% 67.2 £100

119 Morgan Sindall PLC MGNS Small Cap Construction & Materials £8.12 20.8 3.3% 11.5 -5.5% 46% 14% 1.5 £24

120 Unilever PLC ULVR FTSE 100 Personal Goods £29.07 25.9 3.1% 24.9 5.0% 71% 15% 2.7 £3,584

121 Johnson Matthey PLC JMAT FTSE 100 Chemicals £29.15 16.7 2.3% 23.8 8.8% 75% 11% 3.5 £307

122 Inmarsat PLC ISAT FTSE 100 Mobile Telecommunications £8.88 20.1 3.4% 25.6 10.3% 71% 10% 6.9 £196

123 Bunzl PLC BNZL FTSE 100 Support Services £18.34 25.6 1.9% 34.5 8.8% 100% 11% 4.8 £204

124 UBM PLC UBM FTSE 250 Media £5.32 10.7 4.3% 14.2 0.3% 58% 12% 5.5 £113

125 S & U PLC SUS Small Cap Financial Services £24.97 16.1 2.6% 31.8 10.1% 83% 10% 4.6 £12

126 WH Smith PLC SMWH FTSE 250 General Retailers £15.81 20.4 2.2% 32.7 10.8% 71% 34% 0.1 £81

127 Man Group PLC EMG FTSE 250 Financial Services £1.63 11.4 3.9% 8.3 -14.0% 50% 10% 0.5 £197

128 St James's Place PLC STJ FTSE 100 Life Insurance £9.79 27.3 2.4% 49.8 16.0% 83% 15% N/K £123

129 Halma PLC HLMA FTSE 250 Electronic & Electrical Equipment £7.57 28.0 1.0% 39.2 8.7% 92% 14% 1.6 £90

130 Sage Group (The) PLC SGE FTSE 100 Software & Computer Services £5.21 24.4 2.3% 30.4 7.2% 83% 11% 2.5 £237

131 Morgan Advanced Materials PLC MGAM FTSE 250 Electronic & Electrical Equipment £3.55 15.1 3.1% 16.6 4.8% 71% 10% 4.2 £64

132 Hikma Pharmaceuticals PLC HIK FTSE 100 Pharmaceuticals & Biotechnology £23.95 25.3 0.6% 62.0 21.7% 88% 12% 3.4 £106

133 PZ Cussons PLC PZC FTSE 250 Personal Goods £3.47 19.3 2.3% 22.7 7.6% 75% 10% 1.5 £79

134 Bloomsbury Publishing PLC BMY Small Cap Media £1.63 12.3 3.7% 15.8 2.8% 75% 7% 0.3 £8

135 Carr's Group PLC CARR Small Cap Food Producers £1.64 13.4 2.1% 20.3 7.8% 79% 9% 4.9 £8

136 Pennon Group PLC PNN FTSE 250 Gas, Water & Multiutilities £8.15 21.8 3.9% 22.9 5.6% 83% 4% 20.5 £145

137 Whitbread PLC WTB FTSE 100 Travel & Leisure £51.90 25.0 1.6% 42.1 13.8% 100% 10% 2.0 £290

138 Darty PLC DRTY Small Cap General Retailers £0.72 16.9 3.6% 7.7 -15.1% 38% 10% 5.6 £40

139 Rathbone Brothers PLC RAT FTSE 250 Financial Services £22.77 21.1 2.3% 32.2 3.7% 79% 16% 41.5 £34

140 Paragon Group of Companies (The) PLCPAG FTSE 250 Financial Services £4.09 11.7 2.2% 6.6 -11.5% 63% 13% 102.8 £95

141 Huntsworth PLC HNT Small Cap Media £0.43 8.3 2.3% 6.4 0.8% 46% 6% 2.7 £16

142 Interserve PLC IRV FTSE 250 Support Services £6.45 17.4 3.6% 20.2 3.9% 75% 8% 8.4 £42

143 Elementis PLC ELM FTSE 250 Chemicals £2.57 11.1 2.1% 23.8 10.8% 71% 11% 0.1 £68

144 Clarkson PLC CKN FTSE 250 Industrial Transportation £27.64 21.2 2.2% 23.8 1.3% 79% 13% 0.0 £22

145 ICAP PLC IAP FTSE 250 Financial Services £5.16 22.9 4.3% 18.1 2.5% 54% 11% 2.8 £196

146 SThree PLC STHR Small Cap Support Services £3.88 24.9 3.6% 25.6 0.9% 58% 24% 1.4 £17

147 Serco Group PLC SRP FTSE 250 Support Services £1.29 -1.1 1.9% 19.9 -4.9% 75% 8% -77.9 -£11

148 Hogg Robinson Group PLC HRG Small Cap Support Services £0.67 10.7 3.5% 11.0 1.1% 63% 7% 4.1 £23

149 Go-Ahead Group (The) PLC GOG FTSE 250 Travel & Leisure £25.50 18.1 3.3% 17.7 2.3% 58% 12% 5.9 £55

150 Provident Financial PLC PFG FTSE 250 Financial Services £29.73 23.2 3.3% 34.3 10.7% 75% 9% 9.6 £155

151 Keller Group PLC KLR FTSE 250 Construction & Materials £10.58 14.9 2.4% 15.2 1.6% 75% 8% 5.2 £36

152 Greggs PLC GRG FTSE 250 Food & Drug Retailers £13.55 28.7 1.6% 38.4 5.5% 83% 18% 0.0 £39

153 FTSE 100 6,693 17.6 3.6% 14.2 0.6% 54% 10%

154 Kingfisher PLC KGF FTSE 100 General Retailers £3.61 14.1 2.8% 17.7 6.8% 67% 8% 0.5 £616

155 Marks & Spencer Group PLC MKS FTSE 100 General Retailers £5.44 15.8 2.1% 15.4 -1.5% 63% 11% 3.7 £548

156 Meggitt PLC MGGT FTSE 100 Aerospace & Defense £4.64 19.0 3.0% 20.4 9.3% 71% 6% 3.3 £208

157 Marston's PLC MARS FTSE 250 Travel & Leisure £1.56 10.5 4.3% 10.4 -1.4% 67% 3% 17.6 £78

158 ARM Holdings PLC ARM FTSE 100 Technology Hardware & Equipment £10.07 55.7 0.7% 132.4 22.3% 88% 9% 0.0 £155

159 Hays PLC HAS FTSE 250 Support Services £1.67 27.1 1.6% 23.2 -3.8% 58% 22% 1.5 £72

160 Aviva PLC AV. FTSE 100 Life Insurance £5.20 10.4 3.5% 12.0 -6.4% 46% 10% N/K £1,042

161 BBA Aviation PLC BBA FTSE 250 Industrial Transportation £2.97 12.7 3.5% 17.3 4.6% 67% 7% 5.7 £90

162 Bodycote PLC BOY FTSE 250 Industrial Engineering £6.84 16.1 2.1% 24.1 6.4% 75% 10% 0.0 £65



PricePE Ratio

Dividend

YieldPE10

Growth

Rate

Growth

QualityROCE

Debt

Ratio

Earnings

Power

C

o

163 Speedy Hire PLC SDY Small Cap Support Services £0.52 4.7 1.3% 7.7 -15.8% 67% 4% 6.5 £16

164 Melrose Industries PLC MRO FTSE 250 Industrial Engineering £2.77 26.3 2.9% 36.4 14.0% 79% 4% 5.2 £109

165 Investec PLC INVP FTSE 250 Financial Services £5.86 17.3 3.4% 14.7 -0.6% 58% 9% 120.7 £324

166 Greene King PLC GNK FTSE 250 Travel & Leisure £8.64 14.4 3.4% 15.7 3.7% 71% 4% 13.9 £119

167 Home Retail Group PLC HOME FTSE 250 General Retailers £1.63 11.4 2.3% 7.9 -11.5% 42% 6% 0.0 £120

168 Essentra PLC ESNT FTSE 250 Support Services £9.13 25.3 2.0% 40.1 11.4% 79% 11% 1.8 £64

169 SABMiller PLC SAB FTSE 100 Beverages £33.65 23.7 2.1% 31.4 9.5% 83% 7% 4.1 £2,067

170 Brewin Dolphin Holdings PLC BRW FTSE 250 Financial Services £3.15 19.7 3.1% 28.5 3.3% 63% 14% 0.0 £29

171 Randgold Resources Ltd RRS FTSE 100 Mining £38.62 23.9 1.0% 31.1 30.5% 79% 7% 0.0 £177

172 InterContinental Hotels Group PLC IHG FTSE 100 Travel & Leisure £26.98 30.5 1.8% 33.0 6.0% 71% 19% 4.8 £227

173 Pearson PLC PSON FTSE 100 Media £12.03 24.9 4.2% 23.1 3.7% 71% 5% 4.9 £453

174 Communisis PLC CMS Small Cap Support Services £0.49 10.9 4.1% 8.5 -4.5% 58% 4% 8.3 £7

175 Xaar PLC XAR Small Cap Electronic & Electrical Equipment £5.18 20.2 1.7% 35.6 20.9% 63% 14% 2% £16

176 Charles Taylor PLC CTR Small Cap Support Services £2.42 14.3 3.9% 13.6 -2.1% 58% 6% 6.8 £6

177 Anglo-Eastern Plantations PLC AEP Small Cap Food Producers £5.97 11.9 0.5% 8.5 4.9% 58% 11% 0.6 £35

178 St Ives PLC SIV Small Cap Support Services £1.77 16.4 4.0% 13.2 -8.0% 54% 7% 3.7 £15

179 Berendsen PLC BRSN FTSE 250 Support Services £10.23 20.4 2.9% 27.7 5.6% 79% 6% 6.7 £70

180 Balfour Beatty PLC BBY FTSE 250 Construction & Materials £2.36 -5.2 2.4% 13.7 -8.7% 50% 8% 15.9 £60

181 Carclo PLC CAR Small Cap Chemicals £1.43 9.3 1.9% 16.3 2.8% 75% 7% 6.2 £6

182 Anglo Pacific Group PLC APF Small Cap Mining £0.84 -5.1 10.1% 9.8 -9.9% 42% 4% 0.0 £5

183 4imprint Group PLC FOUR Small Cap Media £12.24 28.5 1.7% 53.3 5.8% 83% 13% 0.0 £7

184 Informa PLC INF FTSE 250 Media £5.96 20.4 3.2% 24.9 6.2% 71% 6% 5.6 £165

185 Michael Page International PLC MPI FTSE 250 Support Services £5.48 29.4 2.0% 31.0 0.5% 67% 26% 0.0 £47

186 Experian PLC EXPN FTSE 100 Support Services £12.01 23.2 2.1% 33.2 8.9% 71% 12% 5.7 £390

187 Associated British Foods PLC ABF FTSE 100 Food Producers £32.24 32.8 1.1% 47.5 10.0% 96% 7% 1.5 £646

188 Ricardo PLC RCDO Small Cap Support Services £9.00 23.9 1.7% 31.3 4.8% 71% 14% 0.0 £16

189 Fuller Smith & Turner PLC FSTA Small Cap Travel & Leisure £11.91 23.7 0.9% 32.4 7.8% 92% 6% 6.7 £25

190 Ashtead Group PLC AHT FTSE 100 Support Services £9.81 18.0 1.6% 48.8 19.6% 88% 5% 12.1 £140

191 Old Mutual PLC OML FTSE 100 Life Insurance £2.12 14.8 4.1% 17.8 0.8% 58% 8% N/K £617

192 DCC PLC DCC FTSE 250 Support Services £50.60 27.5 1.7% 37.4 11.1% 79% 8% 10.8 £136

193 BT Group PLC BT.A FTSE 100 Fixed Line Telecommunications £4.64 16.1 2.7% 23.5 0.9% 67% 10% 5.3 £1,846

194 Dignity PLC DTY FTSE 250 General Retailers £24.47 18.5 0.8% 41.7 10.3% 88% 8% 14.9 £41

195 Severn Trent PLC SVT FTSE 100 Gas, Water & Multiutilities £22.04 37.8 3.9% 24.3 3.0% 71% 3% 23.6 £209

196 RELX PLC REL FTSE 100 Media £11.18 24.8 2.3% 30.0 5.2% 67% 10% 4.9 £409

197 Dairy Crest Group PLC DCG FTSE 250 Food Producers £5.78 16.4 3.8% 15.5 -2.6% 54% 7% 5.5 £48

198 Lavendon Group PLC LVD Small Cap Support Services £1.82 12.9 2.5% 9.8 -6.2% 67% 5% 5.8 £19

199 Low & Bonar PLC LWB Small Cap Construction & Materials £0.71 16.4 3.8% 14.3 -0.4% 54% 4% 7.1 £16

200 Rexam PLC REX FTSE 250 General Industrials £5.57 14.3 3.2% 18.1 1.0% 63% 6% 5.2 £274

201 Millennium & Copthorne Hotels PLC MLC FTSE 250 Travel & Leisure £5.58 16.0 2.4% 14.0 6.1% 54% 4% 6.0 £152

202 Genus PLC GNS FTSE 250 Pharmaceuticals & Biotechnology £14.41 28.1 1.2% 41.0 10.1% 92% 5% 3.5 £25

203 Oxford Instruments PLC OXIG Small Cap Electronic & Electrical Equipment £9.16 89.6 1.4% 36.4 22.6% 67% 7% 6.4 £25

204 United Utilities Group PLC UU. FTSE 100 Gas, Water & Multiutilities £8.92 20.8 4.2% 18.2 -2.2% 63% 3% 20.3 £327

205 Barclays PLC BARC FTSE 100 Banks £2.89 176.2 2.2% 13.6 -23.0% 54% 4% N/A £1,925

206 DS Smith PLC SMDS FTSE 250 General Industrials £4.01 19.8 2.8% 33.6 10.9% 71% 6% 6.3 £126

207 Robert Walters PLC RWA Small Cap Support Services £4.52 31.5 1.3% 37.0 1.8% 75% 14% 2.8 £8

208 Schroders PLC SDR FTSE 100 Financial Services £31.63 20.2 2.5% 33.0 10.9% 75% 5% 49.0 £343

209 Vp PLC VP. Small Cap Support Services £7.79 19.8 2.1% 32.7 5.2% 79% 7% 6.5 £11

210 Centaur Media PLC CAU Small Cap Media £0.78 458.8 3.8% 18.9 -7.4% 67% 4% 4.4 £4

211 British Polythene Industries PLC BPI Small Cap General Industrials £7.10 12.6 2.3% 17.1 0.8% 58% 7% 2.0 £12

212 Regus PLC RGU FTSE 250 Support Services £2.81 39.5 1.4% 38.8 8.2% 79% 9% 3.9 £54

213 Porvair PLC PRV Small Cap Industrial Engineering £3.25 22.3 1.0% 41.2 9.3% 88% 5% 0.6 £4

214 Shanks Group PLC SKS Small Cap Support Services £1.00 29.9 3.5% 15.0 -1.4% 50% 3% 19.2 £23

215 Henderson Group PLC HGG FTSE 250 Financial Services £2.86 -119.7 3.1% 39.6 4.1% 67% 10% 2.2 £69

216 Dechra Pharmaceuticals PLC DPH FTSE 250 Pharmaceuticals & Biotechnology £9.85 40.6 1.6% 58.0 2.9% 88% 9% 2.2 £15

217 Laird PLC LRD FTSE 250 Technology Hardware & Equipment £3.94 19.4 3.2% 29.6 0.5% 75% 5% 6.7 £34

218 Galliford Try PLC GFRD FTSE 250 Household Goods & Home Construction £17.75 20.2 3.0% 28.3 4.1% 71% 8% 3.4 £43

219 UDG Healthcare PLC UDG FTSE 250 Health Care Equipment & Services £5.01 23.7 1.6% 29.3 5.9% 71% 7% 6.9 £44

220 Chime Communications PLC CHW Small Cap Media £3.61 34.2 2.3% 26.2 -1.4% 71% 9% 9.5 £8

221 Zotefoams PLC ZTF Small Cap Chemicals £2.95 26.9 1.8% 33.1 5.1% 67% 9% 0.5 £4

222 G4S PLC GFS FTSE 100 Support Services £2.75 41.4 3.4% 27.2 0.3% 67% 5% 17.9 £119

223 QinetiQ Group PLC QQ. FTSE 250 Aerospace & Defense £2.37 12.7 2.3% 19.6 0.7% 63% 6% 0.0 £80

224 Acal PLC ACL Small Cap Support Services £2.97 22.6 2.6% 31.3 3.1% 50% 5% 7.0 £7

225 CRH PLC CRH FTSE 100 Construction & Materials £19.07 25.4 2.6% 20.6 -4.1% 58% 4% 9.6 £479

226 Consort Medical PLC CSRT Small Cap Health Care Equipment & Services £9.33 23.5 1.9% 24.6 -0.7% 42% 9% 11.4 £13

227 Tribal Group PLC TRB Small Cap Support Services £1.61 15.6 1.1% 15.6 -6.4% 54% 6% 2.1 £10

228 Greencore Group PLC GNC FTSE 250 Food Producers £3.16 17.0 1.7% 29.0 1.3% 63% 6% 4.5 £51

229 London Stock Exchange Group PLC LSE FTSE 100 Financial Services £26.11 31.4 0.9% 41.7 6.5% 67% 8% 7.7 £207

230 Boot (Henry) PLC BHY Small Cap Construction & Materials £2.38 15.2 2.4% 35.1 1.0% 63% 4% 3.6 £11

231 Bellway PLC BWY FTSE 250 Household Goods & Home Construction £24.11 15.4 2.2% 32.9 -0.1% 71% 7% 0.3 £93

232 Marshalls PLC MSLH Small Cap Construction & Materials £3.20 28.3 1.9% 33.8 -7.4% 46% 5% 3.9 £13

233 Anite PLC AIE Small Cap Software & Computer Services £1.26 1260.0 0.5% 40.2 -0.6% 42% 8% 0.9 £13

Stock Screen - Sorted by NameColour coding rules and column descriptions can be found in the appendices


PricePE Ratio

Dividend

YieldPE10

Growth

Rate

Growth

QualityROCE

Debt

Ratio

Earnings

Power

C

o

183 4imprint Group PLC FOUR Small Cap Media £12.24 28.5 1.7% 53.3 5.8% 83% 13% 0.0 £7

52 Aberdeen Asset Management PLC ADN FTSE 100 Financial Services £3.64 14.3 4.9% 25.5 19.0% 83% 9% 0.0 £241

224 Acal PLC ACL Small Cap Support Services £2.97 22.6 2.6% 31.3 3.1% 50% 5% 7.0 £7

2 Admiral Group PLC ADM FTSE 100 Nonlife Insurance £14.81 14.4 6.6% 20.2 13.3% 92% 54% 0.0 £249

13 Aggreko PLC AGK FTSE 250 Support Services £12.00 14.8 2.3% 17.8 17.7% 88% 16% 2.2 £238

6 Amec Foster Wheeler PLC AMFW FTSE 250 Oil Equipment, Services & Distribution £8.20 13.0 5.3% 15.7 15.0% 83% 12% 6.1 £216

10 Amlin PLC AML FTSE 250 Nonlife Insurance £5.11 11.1 5.3% 11.2 6.4% 71% 17% 1.5 £178

182 Anglo Pacific Group PLC APF Small Cap Mining £0.84 -5.1 10.1% 9.8 -9.9% 42% 4% 0.0 £5

177 Anglo-Eastern Plantations PLC AEP Small Cap Food Producers £5.97 11.9 0.5% 8.5 4.9% 58% 11% 0.6 £35

233 Anite PLC AIE Small Cap Software & Computer Services £1.26 1260.0 0.5% 40.2 -0.6% 42% 8% 0.9 £13

27 Antofagasta PLC ANTO FTSE 100 Mining £5.67 12.5 2.4% 8.5 14.6% 58% 13% 2.2 £694

158 ARM Holdings PLC ARM FTSE 100 Technology Hardware & Equipment £10.07 55.7 0.7% 132.4 22.3% 88% 9% 0.0 £155

22 Ashley (Laura) Holdings PLC ALY Small Cap General Retailers £0.28 11.5 7.1% 17.1 7.7% 58% 20% 0.0 £16

190 Ashtead Group PLC AHT FTSE 100 Support Services £9.81 18.0 1.6% 48.8 19.6% 88% 5% 12.1 £140

187 Associated British Foods PLC ABF FTSE 100 Food Producers £32.24 32.8 1.1% 47.5 10.0% 96% 7% 1.5 £646

23 AstraZeneca PLC AZN FTSE 100 Pharmaceuticals & Biotechnology £43.20 35.0 4.1% 14.9 1.4% 75% 23% 1.8 £3,928

61 Atkins (W S) PLC ATK FTSE 250 Support Services £15.72 16.2 2.3% 19.4 5.2% 79% 19% 1.3 £87

99 Aveva Group PLC AVV FTSE 250 Software & Computer Services £22.05 32.8 1.4% 36.4 13.9% 83% 21% 0.0 £44

160 Aviva PLC AV. FTSE 100 Life Insurance £5.20 10.4 3.5% 12.0 -6.4% 46% 10% N/K £1,042

74 Babcock International Group PLC BAB FTSE 100 Support Services £9.91 19.4 2.4% 27.1 13.6% 88% 10% 8.4 £187

85 BAE Systems PLC BA. FTSE 100 Aerospace & Defense £4.80 16.3 4.3% 14.3 2.8% 75% 9% 2.9 £1,152

180 Balfour Beatty PLC BBY FTSE 250 Construction & Materials £2.36 -5.2 2.4% 13.7 -8.7% 50% 8% 15.9 £60

205 Barclays PLC BARC FTSE 100 Banks £2.89 176.2 2.2% 13.6 -23.0% 54% 4% N/A £1,925

60 Barr (A G) PLC BAG FTSE 250 Beverages £5.65 19.8 2.1% 31.0 9.2% 96% 16% 0.6 £27

161 BBA Aviation PLC BBA FTSE 250 Industrial Transportation £2.97 12.7 3.5% 17.3 4.6% 67% 7% 5.7 £90

21 Beazley PLC BEZ FTSE 250 Nonlife Insurance £3.38 12.6 2.8% 15.3 6.7% 79% 18% N/K £125

231 Bellway PLC BWY FTSE 250 Household Goods & Home Construction £24.11 15.4 2.2% 32.9 -0.1% 71% 7% 0.3 £93

179 Berendsen PLC BRSN FTSE 250 Support Services £10.23 20.4 2.9% 27.7 5.6% 79% 6% 6.7 £70

72 BG Group PLC BG. FTSE 100 Oil & Gas Producers £10.93 7.9 1.6% 12.4 8.0% 79% 12% 3.3 £3,457

3 BHP Billiton PLC BLT FTSE 100 Mining £11.82 7.6 6.2% 7.5 12.1% 71% 18% 2.0 £10,326

134 Bloomsbury Publishing PLC BMY Small Cap Media £1.63 12.3 3.7% 15.8 2.8% 75% 7% 0.3 £8

162 Bodycote PLC BOY FTSE 250 Industrial Engineering £6.84 16.1 2.1% 24.1 6.4% 75% 10% 0.0 £65

230 Boot (Henry) PLC BHY Small Cap Construction & Materials £2.38 15.2 2.4% 35.1 1.0% 63% 4% 3.6 £11

83 BP PLC BP. FTSE 100 Oil & Gas Producers £3.95 7.6 6.3% 8.2 -0.5% 63% 10% 4.7 £7,290

66 Braemar Shipping Services PLC BMS Small Cap Industrial Transportation £4.71 19.9 5.5% 11.9 0.3% 58% 15% 1.2 £8

100 Brammer PLC BRAM Small Cap Support Services £3.25 17.4 3.3% 19.9 9.5% 79% 8% 4.4 £22

170 Brewin Dolphin Holdings PLC BRW FTSE 250 Financial Services £3.15 19.7 3.1% 28.5 3.3% 63% 14% 0.0 £29

12 British American Tobacco PLC BATS FTSE 100 Tobacco £38.01 19.4 3.9% 23.0 9.7% 88% 17% 3.2 £3,838

211 British Polythene Industries PLC BPI Small Cap General Industrials £7.10 12.6 2.3% 17.1 0.8% 58% 7% 2.0 £12

67 Britvic PLC BVIC FTSE 250 Beverages £6.86 16.2 3.0% 23.0 9.2% 79% 12% 6.7 £85

26 Brown (N) Group PLC BWNG FTSE 250 General Retailers £3.18 12.4 4.5% 13.0 6.2% 75% 11% 3.8 £76

193 BT Group PLC BT.A FTSE 100 Fixed Line Telecommunications £4.64 16.1 2.7% 23.5 0.9% 67% 10% 5.3 £1,846

123 Bunzl PLC BNZL FTSE 100 Support Services £18.34 25.6 1.9% 34.5 8.8% 100% 11% 4.8 £204

45 Burberry Group PLC BRBY FTSE 100 Personal Goods £16.09 21.0 2.2% 30.7 16.5% 83% 26% 0.2 £304

94 Capita PLC CPI FTSE 100 Support Services £13.04 32.3 2.2% 36.9 11.5% 92% 13% 7.8 £263

181 Carclo PLC CAR Small Cap Chemicals £1.43 9.3 1.9% 16.3 2.8% 75% 7% 6.2 £6

86 Carillion PLC CLLN FTSE 250 Support Services £3.46 13.6 5.1% 11.9 5.0% 71% 7% 7.6 £145

135 Carr's Group PLC CARR Small Cap Food Producers £1.64 13.4 2.1% 20.3 7.8% 79% 9% 4.9 £8

210 Centaur Media PLC CAU Small Cap Media £0.78 458.8 3.8% 18.9 -7.4% 67% 4% 4.4 £4

9 Centrica PLC CNA FTSE 100 Gas, Water & Multiutilities £2.66 48.1 5.1% 11.2 7.0% 79% 12% 4.7 £1,475

176 Charles Taylor PLC CTR Small Cap Support Services £2.42 14.3 3.9% 13.6 -2.1% 58% 6% 6.8 £6

76 Chemring Group PLC CHG Small Cap Aerospace & Defense £2.36 47.8 1.7% 9.1 3.9% 67% 10% 3.2 £49

5 Chesnara PLC CSN Small Cap Life Insurance £3.38 15.3 5.4% 14.3 7.0% 83% 15% N/K £29

220 Chime Communications PLC CHW Small Cap Media £3.61 34.2 2.3% 26.2 -1.4% 71% 9% 9.5 £8

144 Clarkson PLC CKN FTSE 250 Industrial Transportation £27.64 21.2 2.2% 23.8 1.3% 79% 13% 0.0 £22

118 Close Brothers Group PLC CBG FTSE 250 Financial Services £14.53 14.5 3.4% 20.9 3.0% 67% 14% 67.2 £100

25 Cobham PLC COB FTSE 250 Aerospace & Defense £2.61 28.5 4.1% 17.6 9.7% 79% 13% 5.8 £188

174 Communisis PLC CMS Small Cap Support Services £0.49 10.9 4.1% 8.5 -4.5% 58% 4% 8.3 £7

43 Compass Group PLC CPG FTSE 100 Travel & Leisure £10.25 21.3 2.6% 32.1 13.7% 96% 13% 3.6 £775

30 Computacenter PLC CCC FTSE 250 Software & Computer Services £7.59 16.2 2.5% 22.0 10.4% 92% 13% 0.2 £60

105 Connect Group PLC CNCT Small Cap Support Services £1.48 8.1 5.9% 9.8 4.7% 71% -115% 3.4 £33

226 Consort Medical PLC CSRT Small Cap Health Care Equipment & Services £9.33 23.5 1.9% 24.6 -0.7% 42% 9% 11.4 £13

89 Cranswick PLC CWK FTSE 250 Food Producers £16.50 19.6 2.1% 24.3 8.7% 88% 11% 0.6 £38

225 CRH PLC CRH FTSE 100 Construction & Materials £19.07 25.4 2.6% 20.6 -4.1% 58% 4% 9.6 £479

87 Croda International PLC CRDA FTSE 250 Chemicals £30.40 24.2 2.2% 36.7 17.8% 83% 17% 1.4 £162

197 Dairy Crest Group PLC DCG FTSE 250 Food Producers £5.78 16.4 3.8% 15.5 -2.6% 54% 7% 5.5 £48

138 Darty PLC DRTY Small Cap General Retailers £0.72 16.9 3.6% 7.7 -15.1% 38% 10% 5.6 £40

192 DCC PLC DCC FTSE 250 Support Services £50.60 27.5 1.7% 37.4 11.1% 79% 8% 10.8 £136

36 De La Rue PLC DLAR Small Cap Support Services £5.05 11.1 3.3% 9.9 1.2% 50% 46% 2.9 £48

216 Dechra Pharmaceuticals PLC DPH FTSE 250 Pharmaceuticals & Biotechnology £9.85 40.6 1.6% 58.0 2.9% 88% 9% 2.2 £15

111 Devro PLC DVO Small Cap Food Producers £3.03 25.6 2.9% 22.0 11.0% 67% 11% 2.7 £30

38 Diageo PLC DGE FTSE 100 Beverages £17.90 18.1 3.2% 22.2 7.5% 88% 13% 4.0 £2,409

49 Dialight PLC DIA Small Cap Electronic & Electrical Equipment £5.45 14.9 2.8% 24.4 17.0% 83% 12% 0.7 £10

194 Dignity PLC DTY FTSE 250 General Retailers £24.47 18.5 0.8% 41.7 10.3% 88% 8% 14.9 £41

79 Diploma PLC DPLM FTSE 250 Support Services £7.43 23.1 2.3% 37.7 15.6% 92% 14% 0.0 £29

47 Domino's Pizza UK & IRL PLC DOM FTSE 250 Travel & Leisure £8.98 34.8 1.9% 54.4 19.4% 100% 39% 0.6 £35

75 Drax Group PLC DRX FTSE 250 Electricity £2.98 9.3 4.0% 4.6 -5.7% 50% 14% 1.7 £187

206 DS Smith PLC SMDS FTSE 250 General Industrials £4.01 19.8 2.8% 33.6 10.9% 71% 6% 6.3 £126

95 Electrocomponents PLC ECM FTSE 250 Support Services £1.99 11.9 5.9% 12.9 1.0% 54% 12% 2.3 £75

143 Elementis PLC ELM FTSE 250 Chemicals £2.57 11.1 2.1% 23.8 10.8% 71% 11% 0.1 £68

168 Essentra PLC ESNT FTSE 250 Support Services £9.13 25.3 2.0% 40.1 11.4% 79% 11% 1.8 £64



PricePE Ratio

Dividend

YieldPE10

Growth

Rate

Growth

QualityROCE

Debt

Ratio

Earnings

Power

C

o

109 Euromoney Institutional Investor PLC ERM FTSE 250 Media £10.43 17.7 2.2% 24.2 5.5% 75% 17% 0.7 £65

186 Experian PLC EXPN FTSE 100 Support Services £12.01 23.2 2.1% 33.2 8.9% 71% 12% 5.7 £390

8 Fenner PLC FENR Small Cap Industrial Engineering £1.67 6.1 7.2% 8.3 10.9% 79% 8% 4.6 £47

108 Fidessa Group PLC FDSA FTSE 250 Software & Computer Services £24.00 32.3 1.6% 39.2 12.3% 83% 17% 0.0 £29

84 Fisher (James) & Sons PLC FSJ FTSE 250 Industrial Transportation £11.14 12.8 2.0% 23.6 13.0% 100% 8% 2.7 £30

153 FTSE 100 6,693 17.6 3.6% 14.2 0.6% 54% 10%

189 Fuller Smith & Turner PLC FSTA Small Cap Travel & Leisure £11.91 23.7 0.9% 32.4 7.8% 92% 6% 6.7 £25

222 G4S PLC GFS FTSE 100 Support Services £2.75 41.4 3.4% 27.2 0.3% 67% 5% 17.9 £119

218 Galliford Try PLC GFRD FTSE 250 Household Goods & Home Construction £17.75 20.2 3.0% 28.3 4.1% 71% 8% 3.4 £43

202 Genus PLC GNS FTSE 250 Pharmaceuticals & Biotechnology £14.41 28.1 1.2% 41.0 10.1% 92% 5% 3.5 £25

34 GlaxoSmithKline PLC GSK FTSE 100 Pharmaceuticals & Biotechnology £13.96 19.7 5.7% 15.2 1.6% 71% 18% 4.6 £4,051

149 Go-Ahead Group (The) PLC GOG FTSE 250 Travel & Leisure £25.50 18.1 3.3% 17.7 2.3% 58% 12% 5.9 £55

81 Goodwin PLC GDWN Small Cap Industrial Engineering £25.27 11.9 1.7% 18.2 11.4% 71% 18% 0.8 £12

228 Greencore Group PLC GNC FTSE 250 Food Producers £3.16 17.0 1.7% 29.0 1.3% 63% 6% 4.5 £51

166 Greene King PLC GNK FTSE 250 Travel & Leisure £8.64 14.4 3.4% 15.7 3.7% 71% 4% 13.9 £119

152 Greggs PLC GRG FTSE 250 Food & Drug Retailers £13.55 28.7 1.6% 38.4 5.5% 83% 18% 0.0 £39

129 Halma PLC HLMA FTSE 250 Electronic & Electrical Equipment £7.57 28.0 1.0% 39.2 8.7% 92% 14% 1.6 £90

159 Hays PLC HAS FTSE 250 Support Services £1.67 27.1 1.6% 23.2 -3.8% 58% 22% 1.5 £72

114 Headlam Group PLC HEAD Small Cap Household Goods & Home Construction £4.76 16.7 3.7% 17.2 -2.5% 75% 11% 1.1 £21

215 Henderson Group PLC HGG FTSE 250 Financial Services £2.86 -119.7 3.1% 39.6 4.1% 67% 10% 2.2 £69

132 Hikma Pharmaceuticals PLC HIK FTSE 100 Pharmaceuticals & Biotechnology £23.95 25.3 0.6% 62.0 21.7% 88% 12% 3.4 £106

82 Hill & Smith Holdings PLC HILS Small Cap Industrial Engineering £6.93 16.2 2.6% 20.6 7.4% 88% 10% 3.5 £29

39 Hiscox Ltd HSX FTSE 250 Nonlife Insurance £9.26 13.4 2.6% 17.8 9.3% 79% 15% N/K £167

148 Hogg Robinson Group PLC HRG Small Cap Support Services £0.67 10.7 3.5% 11.0 1.1% 63% 7% 4.1 £23

167 Home Retail Group PLC HOME FTSE 250 General Retailers £1.63 11.4 2.3% 7.9 -11.5% 42% 6% 0.0 £120

53 Homeserve PLC HSV FTSE 250 Support Services £4.36 24.8 2.8% 21.3 6.7% 79% 18% 1.9 £73

97 HSBC Holdings PLC HSBA FTSE 100 Banks £5.80 12.9 5.5% 11.7 -1.4% 71% 9% N/A £9,371

116 Hunting PLC HTG FTSE 250 Oil Equipment, Services & Distribution £5.14 9.3 3.8% 14.9 7.2% 71% 6% 2.4 £59

141 Huntsworth PLC HNT Small Cap Media £0.43 8.3 2.3% 6.4 0.8% 46% 6% 2.7 £16

145 ICAP PLC IAP FTSE 250 Financial Services £5.16 22.9 4.3% 18.1 2.5% 54% 11% 2.8 £196

7 IG Group Holdings PLC IGG FTSE 250 Financial Services £7.49 20.8 3.8% 24.6 13.5% 88% 26% 0.0 £139

31 IMI PLC IMI FTSE 250 Industrial Engineering £10.61 14.8 3.5% 18.6 6.0% 83% 17% 1.2 £210

46 Imperial Tobacco Group PLC IMT FTSE 100 Tobacco £33.65 6.8 3.8% 18.5 13.7% 75% 10% 5.3 £1,858

184 Informa PLC INF FTSE 250 Media £5.96 20.4 3.2% 24.9 6.2% 71% 6% 5.6 £165

122 Inmarsat PLC ISAT FTSE 100 Mobile Telecommunications £8.88 20.1 3.4% 25.6 10.3% 71% 10% 6.9 £196

172 InterContinental Hotels Group PLC IHG FTSE 100 Travel & Leisure £26.98 30.5 1.8% 33.0 6.0% 71% 19% 4.8 £227

103 Intermediate Capital Group PLC ICP FTSE 250 Financial Services £5.84 9.8 4.4% 11.4 -1.6% 63% 12% 12.7 £164

142 Interserve PLC IRV FTSE 250 Support Services £6.45 17.4 3.6% 20.2 3.9% 75% 8% 8.4 £42

44 Intertek Group PLC ITRK FTSE 100 Support Services £24.47 19.5 2.0% 28.0 16.8% 92% 14% 4.1 £182

165 Investec PLC INVP FTSE 250 Financial Services £5.86 17.3 3.4% 14.7 -0.6% 58% 9% 120.7 £324

4 ITE Group PLC ITE Small Cap Media £1.85 11.7 4.0% 16.1 9.3% 83% 29% 1.3 £32

28 Jardine Lloyd Thompson Group PLC JLT FTSE 250 Nonlife Insurance £10.41 17.8 2.8% 25.2 10.1% 88% 16% N/K £114

57 JD Sports Fashion PLC JD. FTSE 250 General Retailers £8.05 20.1 0.9% 31.3 16.4% 88% 24% 0.6 £63

121 Johnson Matthey PLC JMAT FTSE 100 Chemicals £29.15 16.7 2.3% 23.8 8.8% 75% 11% 3.5 £307

59 KCOM Group PLC KCOM Small Cap Fixed Line Telecommunications £0.94 10.1 5.7% 14.5 6.1% 50% 19% 2.8 £39

151 Keller Group PLC KLR FTSE 250 Construction & Materials £10.58 14.9 2.4% 15.2 1.6% 75% 8% 5.2 £36

115 Kier Group PLC KIE FTSE 250 Construction & Materials £14.43 20.7 4.0% 18.1 2.0% 63% 14% 7.3 £44

154 Kingfisher PLC KGF FTSE 100 General Retailers £3.61 14.1 2.8% 17.7 6.8% 67% 8% 0.5 £616

50 Ladbrokes PLC LAD FTSE 250 Travel & Leisure £1.14 9.4 7.8% 4.8 -4.9% 50% 21% 2.5 £190

217 Laird PLC LRD FTSE 250 Technology Hardware & Equipment £3.94 19.4 3.2% 29.6 0.5% 75% 5% 6.7 £34

198 Lavendon Group PLC LVD Small Cap Support Services £1.82 12.9 2.5% 9.8 -6.2% 67% 5% 5.8 £19

56 Legal & General Group PLC LGEN FTSE 100 Life Insurance £2.61 14.4 4.3% 21.8 11.1% 67% 17% N/K £894

229 London Stock Exchange Group PLC LSE FTSE 100 Financial Services £26.11 31.4 0.9% 41.7 6.5% 67% 8% 7.7 £207

199 Low & Bonar PLC LWB Small Cap Construction & Materials £0.71 16.4 3.8% 14.3 -0.4% 54% 4% 7.1 £16

127 Man Group PLC EMG FTSE 250 Financial Services £1.63 11.4 3.9% 8.3 -14.0% 50% 10% 0.5 £197

155 Marks & Spencer Group PLC MKS FTSE 100 General Retailers £5.44 15.8 2.1% 15.4 -1.5% 63% 11% 3.7 £548

232 Marshalls PLC MSLH Small Cap Construction & Materials £3.20 28.3 1.9% 33.8 -7.4% 46% 5% 3.9 £13

157 Marston's PLC MARS FTSE 250 Travel & Leisure £1.56 10.5 4.3% 10.4 -1.4% 67% 3% 17.6 £78

32 Mears Group PLC MER Small Cap Support Services £3.90 15.9 2.6% 19.7 12.2% 92% 11% 2.9 £21

156 Meggitt PLC MGGT FTSE 100 Aerospace & Defense £4.64 19.0 3.0% 20.4 9.3% 71% 6% 3.3 £208

164 Melrose Industries PLC MRO FTSE 250 Industrial Engineering £2.77 26.3 2.9% 36.4 14.0% 79% 4% 5.2 £109

37 Menzies (John) PLC MNZS Small Cap Support Services £5.14 15.0 3.2% 11.5 4.5% 71% 13% 4.6 £32

185 Michael Page International PLC MPI FTSE 250 Support Services £5.48 29.4 2.0% 31.0 0.5% 67% 26% 0.0 £47

98 Micro Focus International PLC MCRO FTSE 250 Software & Computer Services £13.98 19.5 2.2% 37.6 20.9% 75% 44% 2.4 £71

201 Millennium & Copthorne Hotels PLC MLC FTSE 250 Travel & Leisure £5.58 16.0 2.4% 14.0 6.1% 54% 4% 6.0 £152

14 Mitie Group PLC MTO FTSE 250 Support Services £3.22 14.5 3.6% 17.4 8.9% 92% 12% 3.6 £78

131 Morgan Advanced Materials PLC MGAM FTSE 250 Electronic & Electrical Equipment £3.55 15.1 3.1% 16.6 4.8% 71% 10% 4.2 £64

119 Morgan Sindall PLC MGNS Small Cap Construction & Materials £8.12 20.8 3.3% 11.5 -5.5% 46% 14% 1.5 £24

19 Morrison (Wm) Supermarkets PLC MRW FTSE 100 Food & Drug Retailers £1.83 19.4 7.5% 10.6 7.3% 79% 7% 5.4 £468

112 National Grid PLC NG. FTSE 100 Gas, Water & Multiutilities £8.53 15.0 5.0% 15.3 3.7% 75% 5% 12.4 £2,086

73 NCC Group PLC NCC Small Cap Software & Computer Services £2.36 26.3 1.7% 40.9 19.9% 96% 14% 2.3 £15

88 Next PLC NXT FTSE 100 General Retailers £79.90 19.4 1.9% 32.7 10.9% 83% 42% 1.7 £501

191 Old Mutual PLC OML FTSE 100 Life Insurance £2.12 14.8 4.1% 17.8 0.8% 58% 8% N/K £617

203 Oxford Instruments PLC OXIG Small Cap Electronic & Electrical Equipment £9.16 89.6 1.4% 36.4 22.6% 67% 7% 6.4 £25

140 Paragon Group of Companies (The) PLCPAG FTSE 250 Financial Services £4.09 11.7 2.2% 6.6 -11.5% 63% 13% 102.8 £95

17 PayPoint PLC PAY FTSE 250 Support Services £10.02 17.5 3.8% 25.3 8.1% 88% 34% 0.0 £31

173 Pearson PLC PSON FTSE 100 Media £12.03 24.9 4.2% 23.1 3.7% 71% 5% 4.9 £453

136 Pennon Group PLC PNN FTSE 250 Gas, Water & Multiutilities £8.15 21.8 3.9% 22.9 5.6% 83% 4% 20.5 £145

1 Petrofac Ltd PFC FTSE 250 Oil Equipment, Services & Distribution £8.80 16.3 4.8% 13.0 22.3% 83% 29% 3.5 £316

117 Playtech PLC PTEC FTSE 250 Travel & Leisure £9.06 24.3 2.3% 39.2 19.1% 71% 16% 2.4 £81

213 Porvair PLC PRV Small Cap Industrial Engineering £3.25 22.3 1.0% 41.2 9.3% 88% 5% 0.6 £4



PricePE Ratio

Dividend

YieldPE10

Growth

Rate

Growth

QualityROCE

Debt

Ratio

Earnings

Power

C

o

65 Premier Farnell PLC PFL FTSE 250 Support Services £1.36 9.6 7.6% 9.6 2.6% 42% 13% 5.3 £57

150 Provident Financial PLC PFG FTSE 250 Financial Services £29.73 23.2 3.3% 34.3 10.7% 75% 9% 9.6 £155

42 Prudential PLC PRU FTSE 100 Life Insurance £15.07 16.8 2.5% 26.1 11.5% 83% 18% N/K £1,807

133 PZ Cussons PLC PZC FTSE 250 Personal Goods £3.47 19.3 2.3% 22.7 7.6% 75% 10% 1.5 £79

223 QinetiQ Group PLC QQ. FTSE 250 Aerospace & Defense £2.37 12.7 2.3% 19.6 0.7% 63% 6% 0.0 £80

171 Randgold Resources Ltd RRS FTSE 100 Mining £38.62 23.9 1.0% 31.1 30.5% 79% 7% 0.0 £177

139 Rathbone Brothers PLC RAT FTSE 250 Financial Services £22.77 21.1 2.3% 32.2 3.7% 79% 16% 41.5 £34

40 Reckitt Benckiser Group PLC RB. FTSE 100 Household Goods & Home Construction £61.49 26.7 2.3% 31.8 11.1% 88% 21% 1.5 £1,689

212 Regus PLC RGU FTSE 250 Support Services £2.81 39.5 1.4% 38.8 8.2% 79% 9% 3.9 £54

196 RELX PLC REL FTSE 100 Media £11.18 24.8 2.3% 30.0 5.2% 67% 10% 4.9 £409

80 Renishaw PLC RSW FTSE 250 Electronic & Electrical Equipment £20.95 12.5 2.2% 29.8 18.2% 79% 14% 0.0 £64

48 Restaurant Group (The) PLC RTN FTSE 250 Travel & Leisure £6.74 22.5 2.3% 31.8 10.0% 100% 19% 0.9 £50

200 Rexam PLC REX FTSE 250 General Industrials £5.57 14.3 3.2% 18.1 1.0% 63% 6% 5.2 £274

188 Ricardo PLC RCDO Small Cap Support Services £9.00 23.9 1.7% 31.3 4.8% 71% 14% 0.0 £16

68 Rio Tinto PLC RIO FTSE 100 Mining £24.86 9.5 5.4% 7.2 7.0% 54% 11% 2.2 £7,462

90 RM PLC RM. Small Cap Software & Computer Services £1.70 10.5 2.4% 10.2 -3.6% 58% 19% 0.0 £13

207 Robert Walters PLC RWA Small Cap Support Services £4.52 31.5 1.3% 37.0 1.8% 75% 14% 2.8 £8

64 Rolls-Royce Group PLC RR. FTSE 100 Aerospace & Defense £7.94 12.2 2.9% 16.4 9.0% 83% 9% 3.2 £1,008

11 Rotork PLC ROR FTSE 250 Industrial Engineering £2.14 18.0 2.3% 26.6 14.3% 100% 30% 0.2 £88

71 Royal Dutch Shell PLC RDSB FTSE 100 Oil & Gas Producers £18.60 10.0 6.4% 8.5 3.0% 63% 9% 2.1 £14,029

102 RPC Group PLC RPC FTSE 250 General Industrials £6.81 14.6 2.3% 24.0 13.6% 83% 9% 7.0 £73

63 RPS Group PLC RPS Small Cap Support Services £2.14 13.1 4.0% 14.9 7.2% 83% 8% 3.1 £30

113 RSA Insurance Group PLC RSA FTSE 100 Nonlife Insurance £5.14 -25.4 0.4% 10.3 -8.1% 42% 13% 1.1 £218

125 S & U PLC SUS Small Cap Financial Services £24.97 16.1 2.6% 31.8 10.1% 83% 10% 4.6 £12

169 SABMiller PLC SAB FTSE 100 Beverages £33.65 23.7 2.1% 31.4 9.5% 83% 7% 4.1 £2,067

130 Sage Group (The) PLC SGE FTSE 100 Software & Computer Services £5.21 24.4 2.3% 30.4 7.2% 83% 11% 2.5 £237

58 Sainsbury (J) PLC SBRY FTSE 100 Food & Drug Retailers £2.65 10.5 3.1% 11.0 5.7% 75% 5% 5.2 £533

208 Schroders PLC SDR FTSE 100 Financial Services £31.63 20.2 2.5% 33.0 10.9% 75% 5% 49.0 £343

92 Senior PLC SNR FTSE 250 Aerospace & Defense £2.91 16.0 1.9% 20.4 13.2% 79% 12% 1.4 £83

147 Serco Group PLC SRP FTSE 250 Support Services £1.29 -1.1 1.9% 19.9 -4.9% 75% 8% -77.9 -£11

195 Severn Trent PLC SVT FTSE 100 Gas, Water & Multiutilities £22.04 37.8 3.9% 24.3 3.0% 71% 3% 23.6 £209

214 Shanks Group PLC SKS Small Cap Support Services £1.00 29.9 3.5% 15.0 -1.4% 50% 3% 19.2 £23

16 Sky PLC SKY FTSE 100 Media £11.40 36.4 2.9% 28.9 10.8% 96% 21% 2.4 £1,106

107 Smith & Nephew PLC SN. FTSE 100 Health Care Equipment & Services £11.89 25.1 1.6% 30.8 10.5% 83% 16% 2.7 £401

93 Smiths Group PLC SMIN FTSE 100 General Industrials £11.29 14.0 3.6% 15.5 5.5% 67% 11% 2.9 £343

91 Spectris PLC SXS FTSE 250 Electronic & Electrical Equipment £19.53 16.9 2.4% 23.8 11.0% 79% 13% 1.3 £122

163 Speedy Hire PLC SDY Small Cap Support Services £0.52 4.7 1.3% 7.7 -15.8% 67% 4% 6.5 £16

55 Spirax-Sarco Engineering PLC SPX FTSE 250 Industrial Engineering £33.16 23.8 2.0% 30.8 10.0% 96% 17% 0.9 £96

41 SSE PLC SSE FTSE 100 Electricity £15.15 14.2 5.8% 15.9 5.3% 83% 8% 5.2 £1,179

178 St Ives PLC SIV Small Cap Support Services £1.77 16.4 4.0% 13.2 -8.0% 54% 7% 3.7 £15

128 St James's Place PLC STJ FTSE 100 Life Insurance £9.79 27.3 2.4% 49.8 16.0% 83% 15% N/K £123

24 Stagecoach Group PLC SGC FTSE 250 Travel & Leisure £3.91 15.5 2.7% 18.5 8.1% 92% 14% 5.4 £145

15 Standard Chartered PLC STAN FTSE 100 Banks £9.80 10.2 5.6% 9.2 7.1% 71% 12% N/A £2,845

106 Standard Life PLC SL. FTSE 100 Life Insurance £4.54 20.2 3.9% 23.8 5.2% 75% 11% N/K £475

146 SThree PLC STHR Small Cap Support Services £3.88 24.9 3.6% 25.6 0.9% 58% 24% 1.4 £17

104 Tate & Lyle PLC TATE FTSE 250 Food Producers £5.45 14.8 5.1% 12.0 2.0% 63% 10% 3.4 £227

96 Ted Baker PLC TED FTSE 250 Personal Goods £32.27 38.7 1.2% 67.4 13.5% 92% 25% 1.0 £25

29 Telecom plus PLC TEP FTSE 250 Fixed Line Telecommunications £12.14 30.2 3.3% 43.2 17.4% 88% 36% 2.6 £26

77 Tesco PLC TSCO FTSE 100 Food & Drug Retailers £2.16 19.7 0.5% 8.2 1.8% 67% 8% 5.6 £2,270

227 Tribal Group PLC TRB Small Cap Support Services £1.61 15.6 1.1% 15.6 -6.4% 54% 6% 2.1 £10

78 Tullett Prebon PLC TLPR FTSE 250 Financial Services £4.05 10.6 4.2% 9.6 2.7% 54% 14% 2.4 £92

51 Tullow Oil PLC TLW FTSE 250 Oil & Gas Producers £2.46 2.7 1.6% 6.9 13.6% 54% 9% 4.3 £506

124 UBM PLC UBM FTSE 250 Media £5.32 10.7 4.3% 14.2 0.3% 58% 12% 5.5 £113

219 UDG Healthcare PLC UDG FTSE 250 Health Care Equipment & Services £5.01 23.7 1.6% 29.3 5.9% 71% 7% 6.9 £44

62 UK Mail Group PLC UKM Small Cap Industrial Transportation £5.10 16.6 4.3% 22.2 5.4% 67% 18% 0.7 £14

54 Ultra Electronics Holdings PLC ULE FTSE 250 Aerospace & Defense £17.45 36.9 2.5% 22.7 11.7% 71% 18% 2.7 £64

120 Unilever PLC ULVR FTSE 100 Personal Goods £29.07 25.9 3.1% 24.9 5.0% 71% 15% 2.7 £3,584

204 United Utilities Group PLC UU. FTSE 100 Gas, Water & Multiutilities £8.92 20.8 4.2% 18.2 -2.2% 63% 3% 20.3 £327

20 Vedanta Resources PLC VED FTSE 250 Mining £3.99 0.3 10.1% 1.8 15.8% 67% 3% 13.0 £863

33 Victrex PLC VCT FTSE 250 Chemicals £19.36 20.2 2.3% 30.8 13.0% 92% 23% 0.0 £70

101 Vitec Group (The) PLC VTC Small Cap Industrial Engineering £6.51 9.5 3.7% 13.2 5.1% 63% 11% 3.3 £25

35 Vodafone Group PLC VOD FTSE 100 Mobile Telecommunications £2.42 10.9 4.6% 13.2 4.0% 92% 7% 2.0 £9,979

209 Vp PLC VP. Small Cap Support Services £7.79 19.8 2.1% 32.7 5.2% 79% 7% 6.5 £11

18 Weir Group PLC WEIR FTSE 100 Industrial Engineering £15.37 12.0 2.9% 16.6 18.2% 83% 11% 3.7 £280

126 WH Smith PLC SMWH FTSE 250 General Retailers £15.81 20.4 2.2% 32.7 10.8% 71% 34% 0.1 £81

137 Whitbread PLC WTB FTSE 100 Travel & Leisure £51.90 25.0 1.6% 42.1 13.8% 100% 10% 2.0 £290

69 William Hill PLC WMH FTSE 250 Travel & Leisure £4.05 15.8 3.0% 16.8 1.4% 88% 10% 3.9 £183

70 Wood Group (John) PLC WG. FTSE 250 Oil Equipment, Services & Distribution £6.26 12.5 2.7% 9.2 11.6% 71% 9% 2.3 £142

110 WPP Group PLC WPP FTSE 100 Media £14.70 19.1 2.6% 24.1 13.0% 88% 7% 4.7 £1,017

175 Xaar PLC XAR Small Cap Electronic & Electrical Equipment £5.18 20.2 1.7% 35.6 20.9% 63% 14% 2% £16

221 Zotefoams PLC ZTF Small Cap Chemicals £2.95 26.9 1.8% 33.1 5.1% 67% 9% 0.5 £4

Appendix 1: Metrics, maximums and minimumsFinancial metrics on the stock screenRank: The company’s rank on the screen, with 1 being the highest rank. The rank is calculated by sorting all of thecompanies on the screen by each key factor (Growth, Quality, PE10, PD10, ROCE), creating a rank for each factor andthen adding those individual ranks together.

PE: The price to earnings ratio. This is included just for information and doesn’t form part of the ranking calculation.

Yield: The historic dividend yield. This is included for information only and doesn’t form part of the rankingcalculation. Instead, each company’s rank is based on PD10, the ratio between the current share price and theaverage dividend paid over the past 10 years.

PE10: The ratio between the current share price and the company’s average adjusted earnings per share over thepast 10 years. This is used in the rank calculation. (MAXIMUM = 30)

Growth: The company’s Growth Rate. This is used in the rank calculation. It is the average growth of revenues,earnings and dividends where growth in each is measured as the annualised growth of a 3-year rolling average overthe past 7 years. (MINIMUM = 2%)

Quality: The company’s Growth Quality. This is used in the rank calculation. It is the percentage of times that a profithas been made, and that revenues, earnings and dividends have increased, measured over the past decade.(MINIMUM 50%)

ROCE: The company’s median “net” Return on Capital Employed over the last decade. (MINIMUM 7%). Calculated as:

Adjusted profit after tax / (fixed assets + working capital), for non-financial companies

Adjusted profit after tax / shareholder’s equity, for financial companies (banks and insurance companies)

Debt: Debt Ratio – The ratio between a company’s total borrowings (total interest bearing debt) and its CurrentEarnings Power (CEP). Provides a rough guide to a company’s ability to carry its debts in good times and bad. This is“N/A” (not applicable) for banks (where I use a series of ratios defined by banking regulators: Common Equity Tier 1Ratio for leverage and the Liquidity Coverage Ratio and Net Stable Funding Ratio for liquidity). For insurancecompanies the Debt Ratio is “N/K” (not known) as I do not have data on borrowings for insurance companies.(MAXIMUM = 4 for cyclical sector companies, 5 for defensive sector companies)

Earnings Power: Current Earnings Power (£m). Calculated as 5-year average adjusted profit after tax. Used in theDebt Ratio and Pension Liability Ratio when reviewing companies for the model portfolio.

Financial metrics used to analyse companies but which are not on the stock screenPension Ratio: The ratio between the company’s defined benefit pension obligations and its Earnings Power.(MAXIMUM = 10)

Sum of Debt and Pension Ratio: (MAXIMUM = 10)

FCF/Div: 10-yr total free cash flow to 10-year total dividend ratio. Preferred value is above 1, but this is not a hardrule.

Capex/earnings: 10-yr total capital expenditure to 10-yr total adjusted earnings (post-tax profit) ratio. No hard rulebut below 0.5 is defined as LOW, 0.5 to 1 is MEDIUM, above 1 is HIGH.

Acquisition Ratio: The ratio between cash spent on acquisitions and earnings. (MAXIMUM 10-YR AVG = 1)

Insurance company metricsPremium to Surplus Ratio: A measure of how cautious an insurance company’s underwriting business is. Calculatedas the ratio between Net Written Premium and Tangible Net Asset Value. (MAXIMUM 5-YR AVG = 2)

Combined Ratio: Shows whether or not an insurance company is making a profit on its underwriting business.Calculated as the sum of Loss Ratio and Expense Ratio. (MAXIMUM 5-YR AVG = 95%)

Bank metricsCommon Equity Tier 1 Ratio (CET1): A measure of bank leverage. Calculated as the percentage of “high quality”capital relative to risk-adjusted assets. (MINIMUM 5-YR AVG = 10%)

Appendix 2: Strategy overview and stock screen colour-codingPortfolio managementDeliberate diversification - To reduce the risks that come with each individual company it is generally considered agood idea to hold a widely diversified portfolio. The model portfolio is diversified in terms of the number ofcompanies (with a target of 30 equally weighted holdings), the industrial spread of those companies (no more than 2or 3 from the same Sector) and their geographic spread (no more than 50% of portfolio revenue to be generated inthe UK).

Continuous portfolio improvement - A portfolio is a dynamic entity much like a garden. If left unmanaged (as with apure buy-and-hold portfolio) there is a risk that over time it will drift away from its original goal. For example, a highyield portfolio may become an average yield portfolio if the share prices of all the holdings increase faster than thedividends.

To avoid this the portfolio is actively managed so that it always contains a majority of high quality companies withattractively valued shares. Each month a company is either added to or removed from the portfolio based on itsStock Screen rank and various other factors.

Monthly buy and sell decisionsBuy decisions - The first step in each buy decision is to look through the Stock Screen for the highest ranked stockwhich is not already in the portfolio and which meets all the initial criteria (e.g. Debt Ratio under 5, ROCE above 7%).

The second step is to enter the company’s financial results from the past decade into the investment analysisspreadsheet (available on the website) so that some additional quantitative checks can be carried out (such ascalculating the Pension Ratio, Free Cash Flow to Dividend Ratio or Premium to Surplus Ratio).

If all the financial results look okay then the next step is to review the operational history of the company over thepast decade. This involves reading the opening sections of each annual report, as well as more recent interim andquarterly results, in order to build up a picture of what the company does and what problems it has faced or is facing.This analysis is used to answer the YES/NO questions in the investment worksheet (available on the website), whichare then used in combination with the financial results to make a final buy or no-buy decision.

Sell decisions - Sell decisions are based primarily on a company’s stock screen rank, with the lowest rankedcompanies most likely to be sold. However, there is a degree of subjectivity involved and it isn’t a purely mechanicalprocess. For example, companies which are surrounded by a reasonable amount of good news are more likely to besold than those which are still unloved, or which are still in the middle of a turnaround strategy.

Stock screen colour coding● Ranking Factors (PE10, Growth, Quality, ROCE) and Yield:

qGreen = Better than FTSE 100

q Light Red = Worse than FTSE 100

qDark Red = Above maximum or below minimum

● Debt Ratio:

qGreen = Below 4 (acceptable for all companies)

q Light Red = Between 4 and 5 (only acceptable for defensive sector companies)

qDark Red = Above 5 (too high for all companies)

● Rank:

qGreen = Above average rank; Amber = Average rank; Dark Red = Below average rank

Appendix 3: UKVI Income Portfolio

Annual Dividend Income Withdrawn UKVI Income Portfolio Investment Trust Portfolio 4% Inflation-Linked Bond

2012 £20,250 £20,525 £20,000

2013 £20,856 £20,575 £20,504

2014 £26,512 £21,408 £20,797

2015 Year to date £13,746 £12,877 £12,160

Cumulative income £81,364 £75,385 £73,461

This portfolio holds exactly the same shares as the main UKVI Portfolio and represents the portfolio of an investor who is in theincome drawdown phase. It started with £500,000 in March 2011 and pays out all dividends as income. The goal of the portfolio isto show that equities in the drawdown phase can produce inflation-beating dividend and capital growth over the medium tolong-term. The UKVI Income Portfolio is benchmarked against an Investment Trust Portfolio and a 4% Inflation-Linked Bond.

The income in 2014 is exceptionally large for the UKVI Income Portfolio because of a huge one-off special dividend from Vodafoneafter the company sold its stake in Verizon.

This chart of capital value is included to show how capital growth should approximately track dividend growth over the years. The4% Inflation-Linked Bond has a capital value which increases in line with CPI inflation from £500k on 01/01/12. The UKVI IncomePortfolio and the Investment Trust Portfolio should both produce capital gains which at least match the Inflation-Linked Bond overthe long-term.

£-

£100,000

£200,000

£300,000

£400,000

£500,000

£600,000

£700,000

2012 2013 2014 2015

Value

Capital value as at 1st JanuaryUKVI Income Portfolio Investment Trust Portfolio CPI Inflation-Linked 4% Bond

£-

£5,000

£10,000

£15,000

£20,000

£25,000

£30,000

2012 2013 2014 2015 YTD

Income

Dividend Income WithdrawnUKVI Income Portfolio Investment Trust Portfolio CPI Inflation-Linked 4% Bond

IMPORTANT DISCLAIMER: The author is not registered as an investment adviser or as an independent financialadviser and does not provide individual investment advice. As no advice is provided, neither the author nor this documentare regulated by the Financial Services Authority. This document contains the opinions of the author and should neverbe construed as investment advice; it is for information only. The information contained in this document is not an offeror recommendation to buy or sell or a solicitation of an offer to buy or sell any securities.

The specific needs, investment objectives and financial situation of any particular reader have not been taken intoconsideration and the investments mentioned may not be suitable for any individual. You should not base anyinvestment decision solely on the basis of this document. You should carry out your own independent research andverification of facts and data. If you are unsure of any investment and need advice you should seek professional financialadvice.

The information in this document and any expression of opinion by the author have been obtained from or are based onsources believed to be reliable, but the accuracy or completeness of any such sources or the author’s interpretation ofthem cannot be guaranteed although the author believes the document to be clear, fair and not misleading.

The author receives no compensation from and is not affiliated with any company mentioned in this document.

To the maximum possible extent of the law, the author does not accept any liability whatsoever for losses arising fromthe use of the material or information contained herein.

Please see the full Terms and Conditions and Disclaimer at http://www.ukvalueinvestor.com/terms-and-conditions/

INVESTMENT RISK: The value of shares can fall as well as rise. Dividend payments can fall as well as rise. Anyinformation relating to past performance of an investment or investment service is not necessarily a guide to futureperformance. There is an additional risk of making a loss when you buy shares in certain smaller companies. There is abig difference between the buying price and the selling price of some shares and if you have to sell quickly you may getback much less than you paid. Share prices may go down as well as up and you may not get back the original amountinvested. It may be difficult to sell or realize an investment. You should not buy shares with money you cannot afford tolose.

DISCLOSURE RULES: When content is published about a company and the author has a position or beneficial interestin it, that fact will be disclosed.

In addition to the above disclosure requirement, the author follows additional trading restrictions and guidelines. Theserestrictions require that the author:

· Hold any stocks owned for at least 10 full market business days.

· Cannot write about a stock for 2 business days before and after purchasing or selling the stock.

DISCLOSURE: The author owns shares in all of the companies in the model portfolio and intends to buy shares in anynew model portfolio investments, and sell the shares of any model portfolio holdings which are sold, according to thetrading restrictions noted above.

CONFIDENTIALITY: This document is for the personal use of paid members of UKValueInvestor.com only. Theinformation contained in this document may not be used for any commercial endeavour without explicit written consentfrom the author. Please retain this document for your own exclusive use and treat it as confidential.

© John Kingham. Offices at Bramleys House, Bower Road, Mersham, Kent, TN25 6NJ

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august 2015 uk value investor · a few years ago i read a short book called the little book of...

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