Page 1Photo credit: George Rex

UK Value Investor is for investors who want to make their own investment decisions and are capable of doing so withoutprofessional advice. If you think you need advice then you should seek a professional advisor. Please see the importantnotes on the back page for further information.

September 2012

UK Value InvestorValue Investing for Income and Growth

Contents

Market forecast and tactical asset allocation Page 2

Model portfolio review Page 3

Buying: A leading mining company joins the portfolio Page 6

FTSE 350 Rankings: The easy way to find high income and growth Page 9

Special note to readers Page15

Coping with sideways marketsJohn Kingham, Editor

Vitaliy Katsenelson wrote a book published in 2010 called The Little Book of Sideways Markets. I’vementioned this before I’m sure, but it’s an idea that I keep coming back to because it so perfectly sums

up the current environment both in the short, medium and long-term.

In the last month the FTSE 100 has gone from about 5,700 to 5,750. It started the year at 5,600, was at 6,0005 years ago and first moved above 5,500 in 1998. Of course if you look at a long-term graph you can see theindex gyrating up and down in a range between about 3,500 and 6,500. This means that if you can time it rightthere are still huge gains to be made, even in a sideways market. But that doesn’t change the perception of asideways market for most private investors.

They’ll tend to look at the 10 year results (or 1 year more likely) and come to the conclusion that equities havehad their day; that the safety of government bonds or bank savings accounts is the place to be.

For those of us who have been around a while, a sideways market means something else entirely. It means thatgrowing companies are available at prices which represent better and better value. If the underlying companyis growing in terms of revenue, profits and dividends, then a flat or falling share price may be exactly what thealert investor is looking for.

They may not be as exciting as bull markets, but bear markets and sideways markets are where the real moneyis usually made.

Page 2

Market forecast and tactical asset allocationFTSE 100 is still cheap… just

Given my opening comments on this seemingly eternal sideways market, it should be no surprise that themarket’s valuation has not changed significantly. At around 5,700 it is still in the cheap range with 7 yearforecast returns slightly above average.

I guess this is why so much of the media talk incessantly about today’s news, because at least if you do thatthere is always something to talk about. Unfortunately, some of the best minds in the investment world havelong had to grapple with the idea that what goes on today is generally of little consequence to investment resultsmany years from now.

It is times like this, when the market is going nowhere month after month, that dividends really come into theirown. With the index level and share prices zig-zagging within a range, one of the best ways to drive a portfoliohigher is to reinvest the dividends of high yield shares. It’s like having the wind at your back, instead of beingstuck in the doldrums.

FTSE 100 Range Description 7 Year Forecast Annual Returns(including dividends)

11,600 - 13,900 Bubble -3% to 0%

9,300 - 11,600 Bull Top 0% to 3%

6,900 - 9,300 Expensive 3% to 8%

5,800 - 6,900 Normal 8% to 10%

4,600 - 5,800 Cheap 10% to 14%

3,500 - 4,600 Bear Bottom 14% to 19%

2,300 - 3,500 Depression 19% to 26%

With the market going nowhere, the tactical asset allocation model has also barely moved its asset split.I have slightly changed the wording on this graphic so that it more accurately its true intent. Assetallocation in this case is for investors who are worried about the risk of their investments falling in value.The cash buffer is there to reduce this risk, and is adjusted according to the amount of risk implied by theFTSE 100’s valuation. A higher valuation implies more downside risk, requiring a larger cash buffer.

Currently the cash buffer is slightly below the default level of 1/3rd. This is because a cheap marketmeans a drop in share prices over the medium-term is less likely than usual, so less downside protectionis required, according to this model.

Downside Risk Protection

Stocks, 80%Cash buffer, 20%

Page 3

Model portfolio reviewAnother positive month

You can see from the graph below that the market has been in an upswing in recent months. So far this hasworked to the model portfolio’s advantage, with returns in the year to date at an unsustainably attractive 14.9%.That compares well to the wider market’s 6.6% total return.

More importantly, even at this higher valuation the portfolio still has a yield more than 1% clear of thebenchmark. In relative terms this is a 29% increase in income. The reinvestment of dividends, especially highyield dividends, is one of the main drivers of long-term returns.

Centrica is now part of the portfolio following the buy alert of last month. The shares were bought at £3.22 onAugust 10th and as with most holdings, will probably be in the portfolio for several years, but you never know.A sharp rise in share price could lead to an early exit.

Chemring has had a preliminary take-over offer, which I’d rather avoid as it would force the portfolio to realisea loss on those shares. Some better news is that more dividends arrived this month, amounting to £168 fromVodafone, Chemring and MITIE.

Performance (%) Yield 1y YTD 2011 From inceptionModel Portfolio 4.9 8.9 14.9 -6.9 6.9

Index Tracker 3.8 7.4 6.6 -3.4 2.9

Relative to Index Tracker 1.1 1.5 8.3 -3.5 4

Cash Results Current Capital Value Rolling 12 Month IncomeModel Portfolio £53,468 £2,373

Index Tracker £51,459 £1,742

Relative to Index Tracker £2,009 £631

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Ma r-12 May-12 Jul-12 Sep-12

Model Portfolio Total Return FT SE 100 Tracker Total Return

Page 4

Model portfolio current holdings

Rank Weight Name Epic Index Sector Price(£) Growth Yield PE10 Consistency Interest

cover7.0% Cash

27 6.7% Interserve PLC IRV FTSE Mid 250 Support Services 3.57 8.3% 5.3% 13.6 83% 8.6

25 5.3% MITIE Group PLC MTO FTSE Mid 250 Support Services 2.83 15.3% 3.4% 19.8 98% 13.7

70 5.1% UK Mail Group PLC UKM FTSE Small Cap Industrial Transportation 2.36 2.8% 7.7% 11.3 64% 160.8

19 5.1% Vodafone Group PLC VOD FTSE 100 Mobile Telecommunications 1.83 11.1% 5.2% 13.1 88% 8.8

16 5.0% Balfour Beatty PLC BBY FTSE Mid 250 Construction & Materials 2.82 12.6% 4.9% 11.7 88% 7.9

31 5.0% Reckitt Benckiser Group PLC RB. FTSE 100 Household Goods & Home Construction 35.97 18.3% 3.5% 25.2 100% 71.3

14 4.7% BAE Systems PLC BA. FTSE 100 Aerospace & Defense 3.15 12.3% 6.0% 10.8 86% 7.6

28 4.7% Mears Group PLC MER FTSE Small Cap Support Services 2.79 19.7% 2.7% 18.6 98% 11.5

11 4.6% SSE PLC SSE FTSE 100 Electricity 13.79 16.5% 5.8% 15.8 90% 7.9

15 4.5% BHP Billiton PLC BLT FTSE 100 Mining 18.42 22.3% 3.9% 14.3 95% 35.3

5 4.4% AstraZeneca PLC AZN FTSE 100 Pharmaceuticals & Biotechnology 29.61 17.3% 5.9% 11 90% 26.6

53 4.1% BP PLC BP. FTSE 100 Oil & Gas Producers 4.42 2.9% 4.1% 9.4 71% 22.1

3 3.7% Tullett Prebon PLC TLPR FTSE Mid 250 Financial Services 2.9 16.0% 5.7% 8.4 88% 9.9

20 3.5% Tesco PLC TSCO FTSE 100 Food & Drug Retailers 3.4 9.7% 4.3% 14.5 98% 8.6

7 3.4% Braemar Shipping Services PLC BMS FTSE Small Cap Industrial Transportation 3.68 10.8% 7.1% 9.3 86% 399.9

54 3.4% Centrica PLC CNA FTSE 100 Gas; Water & Multiutilities 3.32 10.5% 4.6% 16.7 81% 17.9

21 3.3% Brown (N) Group PLC BWNG FTSE Mid 250 General Retailers 2.69 12.3% 4.9% 14.3 88% 13.6

10 3.2% JD Sports Fashion PLC JD. FTSE Mid 250 General Retailers 6.86 22.8% 3.7% 10.6 95% 73.7

1 3.0% RSA Insurance Group PLC RSA FTSE 100 Nonlife Insurance 1.14 28.4% 8.1% 10.8 82%

51 2.7% Aviva PLC AV. FTSE 100 Life Insurance 3.23 0.3% 8.0% 8.1 68%

13 2.7% Go-Ahead Group (The) PLC GOG FTSE Mid 250 Travel & Leisure 12.95 11.3% 6.3% 9.7 83% 6.6

6 2.7% ICAP PLC IAP FTSE 100 Financial Services 3.19 12.3% 6.9% 12.3 93% 9.6

9 2.2% Chemring Group PLC CHG FTSE Mid 250 Aerospace & Defense 3.29 33.9% 4.5% 13.7 98% 6.2

Industry AllocationHealth Care, 4.8%

Financials, 13.0%

Industrials, 39.8%

Basic Materials, 4.8%

Oil & Gas, 4.4%

Consumer Services, 13.6%

Utilities, 8.7%

Consumer Goods, 5.4%

Telecommunications, 5.5%

Size Allocation

Large-cap, 51%Medium-cap, 35%Small-cap, 14%

Page 5

Recent annual results

22nd August 2012 - BHP Billiton - BLT (joined portfolio 12th September 2011)“We are the world’s largest diversified natural resources company. Our objective is to create long-termshareholder value through the discovery, acquisition, development and marketing of natural resources.”- BHPBilliton.com

Revenue per share

+26.6%

Earnings per share

-31.3%

Dividend per share

+13%Long-term growth

22.3%

Dividend yield

3.9%

3Yr interest cover

35.3

Quotes from the annual resultsOur strategy to own and operate large, long-life, low-cost, expandable, upstream assets diversified bycommodity, geography and market remains a major point of differentiation, particularly in the current,more challenging economic environment.

Weakness in commodity markets and industry wide cost pressure resulted in a 15 per cent decline inUnderlying EBIT and a 21 per cent fall in Attributable profit (excluding exceptional items) in the 2012financial year. Net operating cash flow of US$24.4 billion declined by 19 per cent while Underlying returnon capital was 23 per cent. The value of the Company's diversified strategy was reflected in the Group'sUnderlying EBIT margin, which remained at a robust 39 per cent.

BHP Billiton has an unrivalled portfolio of development options beyond those projects in execution and asignificant number of these are embedded within our existing footprint. As our current expenditurecommitments decline, future capital will be allocated to those options that maximise shareholder value,while also considering the balance between short and long-term returns.

The Group's long stated priorities for capital management remain unchanged: firstly, to invest in highreturn growth opportunities throughout the economic cycle; secondly, to maintain a solid A credit ratingand to grow our progressive dividend; and finally, to return excess capital to shareholders.

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Buying: Rio Tinto (RIO)

Price

2,715p

Index

FTSE 100

Industry

MiningMarket Cap

£38.3 billion

Revenue

£39 billion

Pre-tax Profit

£14.7 billion

“Rio Tinto is a leading international business involved in each stage of metal and mineral production.We find, mine and process the Earth’s mineral resources that fulfil vital consumer needs and improveworld living standards. We produce aluminium, copper, diamonds, coal, iron ore, uranium, gold andindustrial minerals (borates, titanium dioxide, salt, talc)” - RioTinto.com

OverviewIn stark contrast to last month’s investment in Centrica, this month’s new holding for the model portfolio is afar less ‘defensive’ company. Although I call the investment strategy behind this newsletter ‘defensive’ valueinvesting, it has a slightly different meaning to the way that most investors understand that word.

Generally, defensive means a company that is in a non-cyclical businses, like Tesco or Reckitt Benckiser,where demand is not really affected by economic cycles. However, when I’m talking about defensive valueinvesting I mean investing for ‘defensive’ investors, as defined by Ben Graham.

For Graham, the defensive investor was a mainstream investor, interested in the safety of their investment first,with adequate returns a secondary consideration. This doesn’t mean that above average returns aren’t a goal,because they are. It just means that safety is more important and that high risks should be avoided - especiallythe risk of a permanent loss.

As for Rio Tinto, this is a leading business in a cyclical industry. Profits are very high at the moment due to acommodities “super-cycle”, and it seems likely that at some point they will fall back from where they are today.However, cyclical businesses can still make very good investments if the investor avoids paying too much.

Initial screeningYou can see the summarised results of the stock screen in the table below.

Long-term growth rate

21.1%

Dividend yield

3.3%

Valuation (PE10)

10.2Consistency

83%

3Yr Interest cover

35.5

Rank

17 (out of 169)

The long-term growth rate is unlikely to be sustainable at over 20%. However, there are many factors whichmake it plausible that commodity prices will remain elevated relative to the previous decade for some time yet.

What may be more interesting is that, although the yield is currently only 3.3%, there is substantial opportunityfor the dividend to be raised. Earnings and free cash flows are currently much higher than dividend payments.Once the current period of high capital expenditure comes to an end there may be even more cash to pass onto shareholders. Although of course there are no guarantees of dividend increases.

The current PE is extremely low at just over 5, which reflects the market’s view that current earnings areunsustainably high. However, the price is only 10 times the average earnings of the last decade, which is oftena more reliable indicator of good value.

Page 7

Investment checklistA high rank is good, but it is not enough. The following checklist is intended to route out any unsuitableinvestments.

Would this company be the first, or at most the second holding from this particular industry?Rio Tinto would be the second global mining business in the portfolio, after BHP Billiton. This means that nomore mining companies will be added after Rio Tinto.

Does the business generate earnings across multiple geographic regions?Yes, Rio Tinto operates across the globe. Sales are distributed fairly evenly between North and South America,Europe, the Middle East, Africa, China and Australia.

Does the business have diverse operations, including customers, suppliers and key staff?Yes, Rio has wide ranging operations, extracting and processing metals and minerals like gold, silver,diamond, aluminium and iron ore from facilities across the globe. In fact the 2010 annual report says “In theproduction and supply of metals and minerals, Rio Tinto is one of the world’s most diversified companies”. Ifthere is an area of concentrated dependence I would say it is China. I don’t think it’s a particularly dangerousdependence though as China is unlikely to move away from using RIO as a supplier.

Is the company in the leading group within its industry?Yes, Rio is one of the leading mining companies in the world and has a strategic goal to become the world’sleading mining and metals company.

Has the company been highly successful in the past?Yes. Although we are currently in a commodities super-cycle, which means that recent high growth rates areunlikely to be sustainable longer-term, this is still a highly successful business with an excellent track record.

Does the company have any competitive advantages? Are they low cost and durable?Although Rio Tinto may have some advantages in terms of scale, physical assets, staff and contacts, it doesn’tappear to have any low cost or durable advantages. This means that it has to work incredibly hard to surviveand prosper, much like 99% of all companies.

Does the company have a consistent operating history within the same industry?Yes. Rio began concentrating on mining in 1987, and over about 5 years sold off all of its non-miningoperations and the focus on mining continues to this day.

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Has the company been free of any major crises during the last decade? If there were any, how werethey solved and could they happen again?In the late 2000’s Rio fell into the fairly common trap of going on a debt fuelled acquisition spree during boomtimes. This is often a sign of narrow thinking by management, swept up in the excitement of record profits anda constant flow of good news.

In Rio’s case, the company bought Alcan, the giant Canadian supplier of Aluminium, at the height of the lasteconomic boom in 2007. The price paid was almost £24 billion and it was largely funded with debt - net debtwent from about £1 billion in 2007 to £23 billion in 2007. The problem is that when the bust comes, earningsand cash flows fall but the debts still have to be paid. Rio was eventually able to raise almost £10 billion fromshareholders in a rights issue in order to strengthen the balance sheet.

Hopefully the current management have learned the relevant lessons, but you can never be sure. Certainly themost recent annual reports are much more cautious. They frequently mention the benefits of a strong balancesheet and how it will help the company to pick up distressed assets from others during the next crisis.

Is the company free of obvious problems today which could materially impact its future prosperity?Value investors just have to get used to the idea that most good investments come with some degree of badnews. If a company is surrounded only by good news then the prices is rarely attractive. In Rio’s case thereseem to be a couple of major reasons why the share price has fallen from around £45 in the first half of 2011to less than £30 today.

To some extent the fall is just part of a wider fall in the FTSE 100 which reflects the general market sentimentthat things are not getting better in the world. More specifically to the mining sector, it seems that there arefears that the commodity boom may be coming to an end as commodity prices soften. BHP Billiton recentlyshelved tens of billions of pounds worth of development plans, and iron ore prices are dropping fast which willmean a big drop in next year’s profits.

However, the end of the commodity boom is far from a sure thing, with Rio still convinced that it has years,and perhaps decades to run. And even if the boom does come to an end it doesn’t mean that the company isnot attractively valued today.

Does it seem likely that the history of success can continue into the future for many years to come?Rio Tinto operates in a primary industry which is at the foundation of civilisation. It seems unlikely that themining industry will be going anywhere in the next century, at the very least. Within that industry, assumingthe management can avoid loading up on debt again during the peak earnings phase, Rio has as good a chanceof success as any other mining company in the world.

SummaryRio Tinto is one of the world’s leading mining companies, and one of its most diverse. I think it makes a fittingaddition to the model portfolio alongside BHP Billiton and represents exactly the kind of company that I amlooking for.

I will be adding Rio to the portfolio in the days after this newsletter is published. The starting position will bethe usual 1/30th of the current total value.

Higher ranking companies that were rejectedCompany Reason for rejectionFirst Group 3Yr interest cover is only 2.9 which is low for any company no matter how defensive.Vedanta Resources 3Yr interest cover is only 6.6, which is low for a company in a cyclical industry.

Carillion, Atkins (WS) These companies operate in the design, engineering, construction and support services industries. The portfolio alreadyowns several similar companies (MITIE, Interserve, and Balfour Beatty).

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FTSE 350 sorted by UKVI RankThe UKVI ranking system is designed so that the highest ranked shares have the best combination of highlong-term growth rate, high earnings and dividend consistency, low valuation and high dividend yield.

Rank Name Epic Index Sector Price(£) Growth Yield PE10 Consistency Interest

cover1 FirstGroup PLC FGP FTSE Mid 250 Travel & Leisure 2.45 10.2% 9.7% 6.8 93% 2.9

2 RSA Insurance Group PLC RSA FTSE 100 Nonlife Insurance 1.14 18.9% 8.1% 10.8 82%

3 Tullett Prebon PLC TLPR FTSE Mid 250 Financial Services 2.9 16.0% 5.7% 8.4 88% 9.9

4 Vedanta Resources PLC VED FTSE 100 Mining 8.61 27.7% 4.0% 8.9 90% 6.6

5 AstraZeneca PLC AZN FTSE 100 Pharmaceuticals & Biotechnology 29.61 17.3% 5.9% 11 90% 26.6

6 ICAP PLC IAP FTSE 100 Financial Services 3.19 12.3% 6.9% 12.3 93% 9.6

7 Braemar Shipping Services PLC BMS FTSE SmallCap Industrial Transportation 3.68 10.8% 7.1% 9.3 86% 399.9

8 JD Sports Fashion PLC JD. FTSE Mid 250 General Retailers 6.86 22.8% 3.7% 10.6 95% 73.7

9 Chemring Group PLC CHG FTSE Mid 250 Aerospace & Defense 3.29 33.9% 4.5% 13.7 98% 6.2

10 SSE PLC SSE FTSE 100 Electricity 13.79 16.5% 5.8% 15.8 90% 7.9

11 Carillion PLC CLLN FTSE Mid 250 Support Services 2.76 13.5% 6.1% 11.1 86% 7.7

12 Go-Ahead Group (The) PLC GOG FTSE Mid 250 Travel & Leisure 12.95 11.3% 6.3% 9.7 83% 6.6

13 BAE Systems PLC BA. FTSE 100 Aerospace & Defense 3.15 12.3% 6.0% 10.8 86% 7.6

14 BHP Billiton PLC BLT FTSE 100 Mining 18.42 22.3% 3.9% 14.3 95% 35.3

15 Balfour Beatty PLC BBY FTSE Mid 250 Construction & Materials 2.82 12.6% 4.9% 11.7 88% 7.9

16 Atkins (W S) PLC ATK FTSE Mid 250 Support Services 6.6 11.5% 4.6% 10.1 88% 45.1

17 Rio Tinto PLC RIO FTSE 100 Mining 27.16 21.1% 3.3% 10.2 83% 35.5

18 Vodafone Group PLC VOD FTSE 100 Mobile Telecommunications 1.83 11.1% 5.2% 13.1 88% 8.8

19 Amlin PLC AML FTSE Mid 250 Nonlife Insurance 3.8 9.1% 6.1% 10.3 85%

20 Tesco PLC TSCO FTSE 100 Food & Drug Retailers 3.4 9.7% 4.3% 14.5 98% 8.6

21 Brown (N) Group PLC BWNG FTSE Mid 250 General Retailers 2.69 12.3% 4.9% 14.3 88% 13.6

22 Man Group PLC EMG FTSE Mid 250 Financial Services 0.72 5.1% 14.4% 3.1 71% 6.6

23 Cranswick PLC CWK FTSE Mid 250 Food Producers 8.22 11.5% 3.5% 15.2 95% 42.7

24 Xstrata PLC XTA FTSE 100 Mining 9.01 21.2% 2.8% 9.6 86% 28.5

25 MITIE Group PLC MTO FTSE Mid 250 Support Services 2.83 15.3% 3.4% 19.8 98% 13.7

26 Interserve PLC IRV FTSE Mid 250 Support Services 3.57 8.3% 5.3% 13.6 83% 8.6

27 Homeserve PLC HSV FTSE Mid 250 Support Services 2.16 13.1% 5.2% 13.1 79% 52

28 Mears Group PLC MER FTSE SmallCap Support Services 2.79 19.7% 2.7% 18.6 98% 11.5

29 Imperial Tobacco Group PLC IMT FTSE 100 Tobacco 24.74 20.1% 3.8% 22.1 88% 3.7

30 Greene King PLC GNK FTSE Mid 250 Travel & Leisure 5.58 6.8% 4.4% 11.9 88% 2.6

31 Marston's PLC MARS FTSE Mid 250 Travel & Leisure 1.1 0.3% 5.3% 7.7 79% 2.1

32 Reckitt Benckiser Group PLC RB. FTSE 100 Household Goods & Home Construction 35.97 18.3% 3.5% 25.2 100% 71.3

33 Restaurant Group (The) PLC RTN FTSE Mid 250 Travel & Leisure 3.22 15.0% 3.3% 22 95% 32.2

34 Cable & Wireless Communications PLC CWC FTSE Mid 250 Fixed Line Telecommunications 0.34 7.6% 15.1% 11 67% 3.6

35 Intermediate Capital Group PLC ICP FTSE Mid 250 Financial Services 2.81 -0.1% 6.8% 6.4 74% 5.2

36 Cobham PLC COB FTSE Mid 250 Aerospace & Defense 2.17 13.3% 3.7% 17.5 88% 7

37 Brewin Dolphin Holdings PLC BRW FTSE Mid 250 Financial Services 1.47 11.4% 4.8% 16.9 76% 666.2

38 Morrison (Wm) Supermarkets PLC MRW FTSE 100 Food & Drug Retailers 2.81 16.0% 3.8% 18.7 86% 22.1

39 Barclays PLC BARC FTSE 100 Banks 1.84 -10.4% 3.3% 5 74%

40 ITE Group PLC ITE FTSE Mid 250 Media 1.99 14.7% 3.1% 23.5 95% 31.7

41 CRH PLC CRH FTSE 100 Construction & Materials 11.05 7.3% 4.8% 10.7 76% 3.3

42 National Grid PLC NG. FTSE 100 Gas; Water & Multiutilities 6.93 9.3% 5.7% 14.1 76% 3.9

43 Investec PLC INVP FTSE Mid 250 Financial Services 3.74 2.1% 4.5% 9.7 76%

44 Greggs PLC GRG FTSE Mid 250 Food & Drug Retailers 4.91 7.5% 3.9% 16 93%

45 London Stock Exchange Group PLC LSE FTSE Mid 250 Financial Services 9.85 17.4% 2.9% 19.4 86% 7.5

46 Marks & Spencer Group PLC MKS FTSE 100 General Retailers 3.58 4.9% 4.7% 10.8 74% 6.6

47 Pennon Group PLC PNN FTSE 100 Gas; Water & Multiutilities 7.44 11.8% 3.6% 24.8 95% 3.3

48 Hays PLC HAS FTSE Mid 250 Support Services 0.7 3.5% 8.3% 9.3 67% 16.9

49 Close Brothers Group PLC CBG FTSE Mid 250 Financial Services 7.75 1.6% 5.2% 13.1 82%

50 Sage Group (The) PLC SGE FTSE 100 Software & Computer Services 2.95 15.7% 3.3% 22.8 93% 23.6

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Rank Name Epic Index Sector Price(£) Growth Yield PE10 Consistency Interest

cover51 BP PLC BP. FTSE 100 Oil & Gas Producers 4.42 2.9% 4.1% 9.4 71% 22.1

52 Centrica PLC CNA FTSE 100 Gas; Water & Multiutilities 3.32 10.5% 4.6% 16.7 81% 17.9

53 Segro PLC SGRO FTSE Mid 250 Real Estate Investment Trusts 2.32 -8.6% 6.4% 3.6 69% 1.5

54 Aviva PLC AV. FTSE 100 Life Insurance 3.23 0.2% 8.0% 8.1 68%

55 WPP Group PLC WPP FTSE 100 Media 8.19 12.7% 3.0% 19.9 95% 3.9

56 Paragon Group of Companies (The) PLC PAG FTSE Mid 250 Financial Services 1.85 -11.3% 2.2% 2.5 71% 2

57 Capita Group (The) PLC CPI FTSE 100 Support Services 7.22 17.2% 3.0% 26.6 95% 10.4

58 GlaxoSmithKline PLC GSK FTSE 100 Pharmaceuticals & Biotechnology 14.4 5.0% 4.9% 15.9 83% 10.5

59 HSBC Holdings PLC HSBA FTSE 100 Banks 5.48 -3.2% 4.7% 10.4 74%

60 Dairy Crest Group PLC DCG FTSE Mid 250 Food Producers 3.41 1.3% 6.0% 8.3 64% 3.5

61 Kier Group PLC KIE FTSE Mid 250 Construction & Materials 12.99 8.1% 4.9% 14 79% 13.5

62 Domino Printing Sciences PLC DNO FTSE Mid 250 Electronic & Electrical Equipment 5.68 12.8% 3.3% 24.9 95% 159.7

63 IMI PLC IMI FTSE 100 Industrial Engineering 8.42 9.6% 3.6% 19.2 88% 15.4

64 Fidessa Group PLC FDSA FTSE Mid 250 Software & Computer Services 14.23 23.0% 2.6% 32.5 98%

65 British American Tobacco PLC BATS FTSE 100 Tobacco 33.25 12.5% 3.8% 27 93% 10

66 Spirax-Sarco Engineering PLC SPX FTSE Mid 250 Industrial Engineering 19.31 12.7% 2.5% 26.6 100% 86.5

67 Stagecoach Group PLC SGC FTSE Mid 250 Travel & Leisure 2.88 13.7% 2.7% 18.5 83% 6.3

68 UK Mail Group PLC UKM FTSE Small Cap Industrial Transportation 2.36 2.8% 7.7% 11.3 64% 160.8

69 Synergy Health PLC SYR FTSE Mid 250 Health Care Equipment & Services 8.93 20.8% 2.0% 29 98% 5.7

70 Hammerson PLC HMSO FTSE 100 Real Estate Investment Trusts 4.53 -3.6% 3.7% 6.5 74% 2.2

71 Standard Chartered PLC STAN FTSE 100 Banks 14.01 6.4% 3.4% 15.6 85%

72 Schroders PLC SDR FTSE 100 Financial Services 14.07 10.9% 2.8% 20.9 88%

73 FTSE 100 57 4.7% 3.6% 13.3 79%74 Ladbrokes PLC LAD FTSE Mid 250 Travel & Leisure 1.7 -6.3% 4.6% 7.5 64% 11.5

75 British Sky Broadcasting Group PLC BSY FTSE 100 Media 7.6 11.0% 3.3% 24.4 90%

76 RPC Group PLC RPC FTSE Mid 250 General Industrials 4.3 10.8% 3.3% 19.3 88% 6.3

77 Ultra Electronics Holdings PLC ULE FTSE Mid 250 Aerospace & Defense 15.27 15.5% 2.5% 25 90% 31.6

78 Serco Group PLC SRP FTSE 100 Support Services 5.64 18.6% 1.5% 29.1 100% 6.4

79 Legal & General Group PLC LGEN FTSE 100 Life Insurance 1.28 2.5% 5.0% 13.5 74%

80 Premier Farnell PLC PFL FTSE Mid 250 Support Services 1.9 3.9% 5.5% 14.9 69% 7.4

81 RPS Group PLC RPS FTSE Mid 250 Support Services 2.4 14.1% 2.3% 19.3 86% 19.7

82 Sainsbury (J) PLC SBRY FTSE 100 Food & Drug Retailers 3.33 14.7% 4.8% 20.3 60% 7

83 Domino's Pizza UK & IRL PLC DOM FTSE Mid 250 Travel & Leisure 5.37 26.6% 2.3% 57.5 100% 64.9

84 Meggitt PLC MGGT FTSE 100 Aerospace & Defense 3.94 11.4% 2.7% 22 86% 8.1

85 BT Group PLC BT.A FTSE 100 Fixed Line Telecommunications 2.19 -1.6% 3.8% 12.7 71% 4.2

86 Weir Group PLC WEIR FTSE 100 Industrial Engineering 16.01 18.8% 2.1% 30.5 95% 24.3

87 British Land Co PLC BLND FTSE 100 Real Estate Investment Trusts 5.36 -6.4% 4.9% 5.2 64% 3.6

88 Babcock International Group PLC BAB FTSE 100 Support Services 9.15 23.0% 2.5% 32.9 90% 4.8

89 BG Group PLC BG. FTSE 100 Oil & Gas Producers 12.94 18.9% 1.1% 21.7 86% 39.1

90 Millennium & Copthorne Hotels PLC MLC FTSE Mid 250 Travel & Leisure 4.8 12.4% 2.6% 18.2 79% 14.5

91 Aberdeen Asset Management PLC ADN FTSE 100 Financial Services 2.76 20.6% 3.3% 35.4 86% 18.5

92 Land Securities Group PLC LAND FTSE 100 Real Estate Investment Trusts 7.88 -12.4% 3.7% 7.1 62% 2.7

93 Prudential PLC PRU FTSE 100 Life Insurance 7.84 6.8% 3.2% 23.2 91%

94 Rexam PLC REX FTSE 100 General Industrials 4.24 0.4% 3.4% 14 76% 4.1

95 Rotork PLC ROR FTSE Mid 250 Industrial Engineering 21.57 17.5% 1.7% 41.9 100% 859.8

96 Galliford Try PLC GFRD FTSE Mid 250 Construction & Materials 6.21 2.1% 2.6% 11.1 76% 9.1

97 Barr (A G) PLC BAG FTSE Mid 250 Beverages 4.28 10.9% 2.2% 28.9 100% 49.2

98 Telecom plus PLC TEP FTSE Mid 250 Fixed Line Telecommunications 8.14 23.2% 3.3% 45.3 83% 193.1

99 Electrocomponents PLC ECM FTSE Mid 250 Support Services 2.24 0.1% 5.3% 14.9 67% 14.5

100 Stobart Group Ltd STOB FTSE Mid 250 Industrial Transportation 1.13 -9.0% 5.3% 7.5 57% 7.1

101 Savills PLC SVS FTSE Mid 250 Real Estate Investment & Services 3.94 3.8% 3.4% 14.4 76% 28.8

102 Victrex PLC VCT FTSE Mid 250 Chemicals 13.12 15.0% 2.5% 31.6 95% 635.1

103 Aggreko PLC AGK FTSE 100 Support Services 23.05 26.7% 0.9% 56.6 98% 14.2

104 Diploma PLC DPLM FTSE Mid 250 Support Services 4.24 14.2% 2.8% 34.4 95% 45.7

105 PZ Cussons PLC PZC FTSE Mid 250 Personal Goods 3.05 10.6% 2.2% 26.6 95% 27.6

106 Computacenter PLC CCC FTSE Mid 250 Software & Computer Services 3.7 6.8% 4.1% 15.6 74% 31.2

107 Fenner PLC FENR FTSE Mid 250 Industrial Engineering 3.5 12.1% 2.3% 26.8 88% 4.6

108 Intertek Group PLC ITRK FTSE 100 Support Services 27.45 18.1% 1.2% 48.2 100% 10.2

109 Antofagasta PLC ANTO FTSE 100 Mining 10.94 20.3% 1.2% 21.5 81% 27

110 Rathbone Brothers PLC RAT FTSE Mid 250 Financial Services 12.65 3.7% 3.6% 21.6 85%

Page 11

Rank Name Epic Index Sector Price(£) Growth Yield PE10 Consistency Interest

cover111 Croda International PLC CRDA FTSE 100 Chemicals 23.54 22.4% 2.3% 47.3 93% 18.4

112 Bunzl PLC BNZL FTSE 100 Support Services 11.16 9.4% 2.4% 26.9 95% 8

113 Johnson Matthey PLC JMAT FTSE 100 Chemicals 23.58 10.7% 2.4% 25.3 90% 10.2

114 Rolls-Royce Group PLC RR. FTSE 100 Aerospace & Defense 8.21 16.0% 2.1% 29.4 86% 32.1

115 Halma PLC HLMA FTSE Mid 250 Electronic & Electrical Equipment 4.09 9.2% 2.4% 29.6 95% 63.7

116 Pearson PLC PSON FTSE 100 Media 12.01 8.4% 3.5% 25.9 83% 10.8

117 Smith & Nephew PLC SN. FTSE 100 Health Care Equipment & Services 6.69 12.0% 1.6% 21.4 88% 74.2

118 Dechra Pharmaceuticals PLC DPH FTSE Mid 250 Pharmaceuticals & Biotechnology 5.05 12.4% 2.2% 34.4 98% 5.5

119 Next PLC NXT FTSE 100 General Retailers 36.18 8.9% 2.5% 22.1 90% 21

120 Tate & Lyle PLC TATE FTSE 100 Food Producers 6.55 2.1% 3.8% 15.7 71% 10.9

121 Michael Page International PLC MPI FTSE Mid 250 Support Services 3.5 9.7% 2.9% 23 81% 60.1

122 AVEVA Group PLC AVV FTSE Mid 250 Software & Computer Services 17.82 32.3% 1.2% 47.9 90% 2433.2

123 Old Mutual PLC OML FTSE 100 Life Insurance 1.65 -8.1% 3.5% 11.5 71%

124 Associated British Foods PLC ABF FTSE 100 Food Producers 13.32 7.8% 1.9% 25.3 98% 8.3

125 Burberry Group PLC BRBY FTSE 100 Personal Goods 13.28 16.2% 1.9% 39 93% 84.4

126 Spectris PLC SXS FTSE Mid 250 Electronic & Electrical Equipment 16.79 12.4% 2.0% 30.1 93% 12.5

127 Reed Elsevier PLC REL FTSE 100 Media 5.94 6.5% 3.6% 20.7 74% 4.3

128 Bodycote PLC BOY FTSE Mid 250 Industrial Engineering 3.42 4.9% 3.2% 17.8 76% 40.5

129 Shanks Group PLC SKS FTSE Mid 250 Support Services 0.89 -0.6% 3.9% 13.1 60% 3.1

130 BBA Aviation PLC BBA FTSE Mid 250 Industrial Transportation 1.87 -1.8% 4.6% 11.6 55% 5.5

131 Berendsen PLC BRSN FTSE Mid 250 Support Services 5.35 3.9% 4.4% 17 64% 3.4

132 Law Debenture Corporation (The) PLC LWDB FTSE Mid 250 Equity Investment Instruments 4 5.7% 3.4% 32.9 88%

133 William Hill PLC WMH FTSE Mid 250 Travel & Leisure 2.98 -10.2% 3.2% 11.8 64% 8.1

134 SABMiller PLC SAB FTSE 100 Beverages 27.99 14.1% 2.1% 36.7 90% 6

135 ARM Holdings PLC ARM FTSE 100 Technology Hardware & Equipment 5.72 20.5% 0.6% 151.1 93%

136 Ted Baker PLC TED FTSE Mid 250 General Retailers 10.08 9.4% 2.3% 30.2 93% 113.4

137 Provident Financial PLC PFG FTSE Mid 250 Financial Services 13.1 0.7% 5.3% 19.8 67% 2.9

138 De La Rue PLC DLAR FTSE Mid 250 Support Services 10.5 8.8% 4.0% 24.6 71% 19.1

139 Bellway PLC BWY FTSE Mid 250 Household Goods & Home Construction 8.69 -15.9% 1.4% 11 69% 3.8

140 Euromoney Institutional Investor PLC ERM FTSE Mid 250 Media 7.58 5.8% 2.5% 22.8 79% 9.2

141 Senior PLC SNR FTSE Mid 250 Aerospace & Defense 1.97 13.3% 1.9% 27.8 81% 8

142 United Utilities Group PLC UU. FTSE 100 Gas; Water & Multiutilities 7.13 -3.7% 4.5% 16.1 60% 2.5

143 Derwent London PLC DLN FTSE Mid 250 Real Estate Investment Trusts 19.05 6.9% 1.6% 17.1 83% 2.2

144 Smith (DS) PLC SMDS FTSE Mid 250 General Industrials 1.61 -0.6% 3.7% 17.8 71% 3.8

145 Smiths Group PLC SMIN FTSE 100 General Industrials 10.41 3.0% 3.5% 17.1 64% 7.2

146 Laird PLC LRD FTSE Mid 250 Electronic & Electrical Equipment 2.23 -6.7% 3.6% 14.4 62% 5.4

147 John Wood Group PLC WG. FTSE Mid 250 Oil Equipment; Services & Distribution 8.09 17.9% 1.1% 39.2 83% 19.9

148 Tullow Oil PLC TLW FTSE 100 Oil & Gas Producers 13.47 21.8% 0.9% 64.6 83% 10.2

149 Devro PLC DVO FTSE Mid 250 Food Producers 3.09 9.4% 2.6% 28.6 83% 37.3

150 Unilever PLC ULVR FTSE 100 Food Producers 22.65 3.8% 3.4% 18.6 69% 13.1

151 Jardine Lloyd Thompson Group PLC JLT FTSE Mid 250 Nonlife Insurance 7.67 5.3% 3.1% 23.5 69% 20.1

152 Diageo PLC DGE FTSE 100 Beverages 17.43 6.4% 2.5% 28.5 81%

153 Compass Group PLC CPG FTSE 100 Travel & Leisure 7.13 9.3% 2.7% 32 83% 15.8

154 St James's Place PLC STJ FTSE Mid 250 Life Insurance 3.4 8.1% 2.4% 28.4 88%

155 Genus PLC GNS FTSE Mid 250 Pharmaceuticals & Biotechnology 13.34 10.7% 1.0% 46.8 95% 11

156 Severn Trent PLC SVT FTSE 100 Gas; Water & Multiutilities 17.56 3.9% 4.0% 22.7 62% 3

157 Kingfisher PLC KGF FTSE 100 General Retailers 2.76 0.5% 3.2% 15.6 60% 23.4

158 Caledonia Investments PLC CLDN FTSE Mid 250 Equity Investment Instruments 14.24 0.6% 3.0% 20.1 71%

159 Renishaw PLC RSW FTSE Mid 250 Electronic & Electrical Equipment 15.5 10.3% 2.5% 35.3 83% 219.6

160 Daejan Holdings PLC DJAN FTSE Mid 250 Real Estate Investment & Services 30.45 0.3% 2.5% 22.3 71% 6.4

161 Whitbread PLC WTB FTSE 100 Travel & Leisure 21.42 9.0% 2.4% 27.2 74% 10

162 AMEC PLC AMEC FTSE 100 Oil Equipment; Services & Distribution 10.88 9.5% 2.8% 30.4 74%

163 Great Portland Estates PLC GPOR FTSE Mid 250 Real Estate Investment Trusts 4.37 -5.9% 1.9% 13.4 60% 3

164 Templeton Emerging Markets Inv TrPLC TEM FTSE Mid 250 Equity Investment Instruments 5.34 6.5% 1.1% 112.3 88%

165 InterContinental Hotels Group PLC IHG FTSE 100 Travel & Leisure 16 6.5% 2.2% 26.9 67% 8

166 Hunting PLC HTG FTSE Mid 250 Oil Equipment; Services & Distribution 7.79 4.0% 1.9% 34.3 74% 15.6

167 Oxford Instruments PLC OXIG FTSE Mid 250 Electronic & Electrical Equipment 13.04 13.2% 0.8% 75.5 60% 35.9

168 Aegis Group PLC AGS FTSE Mid 250 Media 2.38 0.4% 1.3% 34.7 71% 3.5

169 Dialight PLC DIA FTSE Mid 250 Electronic & Electrical Equipment 11.64 4.8% 0.9% 82.4 52% 344.9

Page 12

FTSE 350 sorted by company nameIf you want to know how a particular company’s shares rank using the UK Value Investor system, just lookthem up in the table below.

Rank Name Epic Index Sector Price(£) Growth Yield PE10 Consistency Interest

cover91 Aberdeen Asset Management PLC ADN FTSE 100 Financial Services 2.76 20.6% 3.3% 35.4 86% 18.5

168 Aegis Group PLC AGS FTSE Mid 250 Media 2.38 0.4% 1.3% 34.7 71% 3.5

103 Aggreko PLC AGK FTSE 100 Support Services 23.05 26.7% 0.9% 56.6 98% 14.2

162 AMEC PLC AMEC FTSE 100 Oil Equipment; Services & Distribution 10.88 9.5% 2.8% 30.4 74%

19 Amlin PLC AML FTSE Mid 250 Nonlife Insurance 3.8 9.1% 6.1% 10.3 85%

109 Antofagasta PLC ANTO FTSE 100 Mining 10.94 20.3% 1.2% 21.5 81% 27

135 ARM Holdings PLC ARM FTSE 100 Technology Hardware & Equipment 5.72 20.5% 0.6% 151.1 93%

124 Associated British Foods PLC ABF FTSE 100 Food Producers 13.32 7.8% 1.9% 25.3 98% 8.3

5 AstraZeneca PLC AZN FTSE 100 Pharmaceuticals & Biotechnology 29.61 17.3% 5.9% 11 90% 26.6

16 Atkins (W S) PLC ATK FTSE Mid 250 Support Services 6.6 11.5% 4.6% 10.1 88% 45.1

122 AVEVA Group PLC AVV FTSE Mid 250 Software & Computer Services 17.82 32.3% 1.2% 47.9 90% 2433.2

54 Aviva PLC AV. FTSE 100 Life Insurance 3.23 0.2% 8.0% 8.1 68%

88 Babcock International Group PLC BAB FTSE 100 Support Services 9.15 23.0% 2.5% 32.9 90% 4.8

13 BAE Systems PLC BA. FTSE 100 Aerospace & Defense 3.15 12.3% 6.0% 10.8 86% 7.6

15 Balfour Beatty PLC BBY FTSE Mid 250 Construction & Materials 2.82 12.6% 4.9% 11.7 88% 7.9

39 Barclays PLC BARC FTSE 100 Banks 1.84 -10.4% 3.3% 5 74%

97 Barr (A G) PLC BAG FTSE Mid 250 Beverages 4.28 10.9% 2.2% 28.9 100% 49.2

130 BBA Aviation PLC BBA FTSE Mid 250 Industrial Transportation 1.87 -1.8% 4.6% 11.6 55% 5.5

139 Bellway PLC BWY FTSE Mid 250 Household Goods & Home Construction 8.69 -15.9% 1.4% 11 69% 3.8

131 Berendsen PLC BRSN FTSE Mid 250 Support Services 5.35 3.9% 4.4% 17 64% 3.4

89 BG Group PLC BG. FTSE 100 Oil & Gas Producers 12.94 18.9% 1.1% 21.7 86% 39.1

14 BHP Billiton PLC BLT FTSE 100 Mining 18.42 22.3% 3.9% 14.3 95% 35.3

128 Bodycote PLC BOY FTSE Mid 250 Industrial Engineering 3.42 4.9% 3.2% 17.8 76% 40.5

51 BP PLC BP. FTSE 100 Oil & Gas Producers 4.42 2.9% 4.1% 9.4 71% 22.1

7 Braemar Shipping Services PLC BMS FTSE SmallCap Industrial Transportation 3.68 10.8% 7.1% 9.3 86% 399.9

37 Brewin Dolphin Holdings PLC BRW FTSE Mid 250 Financial Services 1.47 11.4% 4.8% 16.9 76% 666.2

65 British American Tobacco PLC BATS FTSE 100 Tobacco 33.25 12.5% 3.8% 27 93% 10

87 British Land Co PLC BLND FTSE 100 Real Estate Investment Trusts 5.36 -6.4% 4.9% 5.2 64% 3.6

75 British Sky Broadcasting Group PLC BSY FTSE 100 Media 7.6 11.0% 3.3% 24.4 90%

21 Brown (N) Group PLC BWNG FTSE Mid 250 General Retailers 2.69 12.3% 4.9% 14.3 88% 13.6

85 BT Group PLC BT.A FTSE 100 Fixed Line Telecommunications 2.19 -1.6% 3.8% 12.7 71% 4.2

112 Bunzl PLC BNZL FTSE 100 Support Services 11.16 9.4% 2.4% 26.9 95% 8

125 Burberry Group PLC BRBY FTSE 100 Personal Goods 13.28 16.2% 1.9% 39 93% 84.4

34 Cable & Wireless CommunicationsPLC CWC FTSE Mid 250 Fixed Line Telecommunications 0.34 7.6% 15.1% 11 67% 3.6

158 Caledonia Investments PLC CLDN FTSE Mid 250 Equity Investment Instruments 14.24 0.6% 3.0% 20.1 71%

57 Capita Group (The) PLC CPI FTSE 100 Support Services 7.22 17.2% 3.0% 26.6 95% 10.4

11 Carillion PLC CLLN FTSE Mid 250 Support Services 2.76 13.5% 6.1% 11.1 86% 7.7

52 Centrica PLC CNA FTSE 100 Gas; Water & Multiutilities 3.32 10.5% 4.6% 16.7 81% 17.9

9 Chemring Group PLC CHG FTSE Mid 250 Aerospace & Defense 3.29 33.9% 4.5% 13.7 98% 6.2

49 Close Brothers Group PLC CBG FTSE Mid 250 Financial Services 7.75 1.6% 5.2% 13.1 82%

36 Cobham PLC COB FTSE Mid 250 Aerospace & Defense 2.17 13.3% 3.7% 17.5 88% 7

153 Compass Group PLC CPG FTSE 100 Travel & Leisure 7.13 9.3% 2.7% 32 83% 15.8

106 Computacenter PLC CCC FTSE Mid 250 Software & Computer Services 3.7 6.8% 4.1% 15.6 74% 31.2

23 Cranswick PLC CWK FTSE Mid 250 Food Producers 8.22 11.5% 3.5% 15.2 95% 42.7

41 CRH PLC CRH FTSE 100 Construction & Materials 11.05 7.3% 4.8% 10.7 76% 3.3

111 Croda International PLC CRDA FTSE 100 Chemicals 23.54 22.4% 2.3% 47.3 93% 18.4

160 Daejan Holdings PLC DJAN FTSE Mid 250 Real Estate Investment & Services 30.45 0.3% 2.5% 22.3 71% 6.4

60 Dairy Crest Group PLC DCG FTSE Mid 250 Food Producers 3.41 1.3% 6.0% 8.3 64% 3.5

138 De La Rue PLC DLAR FTSE Mid 250 Support Services 10.5 8.8% 4.0% 24.6 71% 19.1

118 Dechra Pharmaceuticals PLC DPH FTSE Mid 250 Pharmaceuticals & Biotechnology 5.05 12.4% 2.2% 34.4 98% 5.5

88 COOKSON GROUP CKSN FTSE250 GENERAL INDUSTRIALS 566.3 -1.5% 4.0% 11 10.11

Page 13

Rank Name Epic Index Sector Price(£) Growth Yield PE10 Consistency Interest

cover143 Derwent London PLC DLN FTSE Mid 250 Real Estate Investment Trusts 19.05 6.9% 1.6% 17.1 83% 2.2

149 Devro PLC DVO FTSE Mid 250 Food Producers 3.09 9.4% 2.6% 28.6 83% 37.3

152 Diageo PLC DGE FTSE 100 Beverages 17.43 6.4% 2.5% 28.5 81%

169 Dialight PLC DIA FTSE Mid 250 Electronic & Electrical Equipment 11.64 4.8% 0.9% 82.4 52% 344.9

104 Diploma PLC DPLM FTSE Mid 250 Support Services 4.24 14.2% 2.8% 34.4 95% 45.7

62 Domino Printing Sciences PLC DNO FTSE Mid 250 Electronic & Electrical Equipment 5.68 12.8% 3.3% 24.9 95% 159.7

83 Domino's Pizza UK & IRL PLC DOM FTSE Mid 250 Travel & Leisure 5.37 26.6% 2.3% 57.5 100% 64.9

99 Electrocomponents PLC ECM FTSE Mid 250 Support Services 2.24 0.1% 5.3% 14.9 67% 14.5

140 Euromoney Institutional Investor PLC ERM FTSE Mid 250 Media 7.58 5.8% 2.5% 22.8 79% 9.2

107 Fenner PLC FENR FTSE Mid 250 Industrial Engineering 3.5 12.1% 2.3% 26.8 88% 4.6

64 Fidessa Group PLC FDSA FTSE Mid 250 Software & Computer Services 14.23 23.0% 2.6% 32.5 98%

1 FirstGroup PLC FGP FTSE Mid 250 Travel & Leisure 2.45 10.2% 9.7% 6.8 93% 2.9

73 FTSE 100 57 4.7% 3.6% 13.3 79%96 Galliford Try PLC GFRD FTSE Mid 250 Construction & Materials 6.21 2.1% 2.6% 11.1 76% 9.1

155 Genus PLC GNS FTSE Mid 250 Pharmaceuticals & Biotechnology 13.34 10.7% 1.0% 46.8 95% 11

58 GlaxoSmithKline PLC GSK FTSE 100 Pharmaceuticals & Biotechnology 14.4 5.0% 4.9% 15.9 83% 10.5

12 Go-Ahead Group (The) PLC GOG FTSE Mid 250 Travel & Leisure 12.95 11.3% 6.3% 9.7 83% 6.6

163 Great Portland Estates PLC GPOR FTSE Mid 250 Real Estate Investment Trusts 4.37 -5.9% 1.9% 13.4 60% 3

30 Greene King PLC GNK FTSE Mid 250 Travel & Leisure 5.58 6.8% 4.4% 11.9 88% 2.6

44 Greggs PLC GRG FTSE Mid 250 Food & Drug Retailers 4.91 7.5% 3.9% 16 93%

115 Halma PLC HLMA FTSE Mid 250 Electronic & Electrical Equipment 4.09 9.2% 2.4% 29.6 95% 63.7

70 Hammerson PLC HMSO FTSE 100 Real Estate Investment Trusts 4.53 -3.6% 3.7% 6.5 74% 2.2

48 Hays PLC HAS FTSE Mid 250 Support Services 0.7 3.5% 8.3% 9.3 67% 16.9

27 Homeserve PLC HSV FTSE Mid 250 Support Services 2.16 13.1% 5.2% 13.1 79% 52

59 HSBC Holdings PLC HSBA FTSE 100 Banks 5.48 -3.2% 4.7% 10.4 74%

166 Hunting PLC HTG FTSE Mid 250 Oil Equipment; Services & Distribution 7.79 4.0% 1.9% 34.3 74% 15.6

6 ICAP PLC IAP FTSE 100 Financial Services 3.19 12.3% 6.9% 12.3 93% 9.6

63 IMI PLC IMI FTSE 100 Industrial Engineering 8.42 9.6% 3.6% 19.2 88% 15.4

29 Imperial Tobacco Group PLC IMT FTSE 100 Tobacco 24.74 20.1% 3.8% 22.1 88% 3.7

165 InterContinental Hotels Group PLC IHG FTSE 100 Travel & Leisure 16 6.5% 2.2% 26.9 67% 8

35 Intermediate Capital Group PLC ICP FTSE Mid 250 Financial Services 2.81 -0.1% 6.8% 6.4 74% 5.2

26 Interserve PLC IRV FTSE Mid 250 Support Services 3.57 8.3% 5.3% 13.6 83% 8.6

108 Intertek Group PLC ITRK FTSE 100 Support Services 27.45 18.1% 1.2% 48.2 100% 10.2

43 Investec PLC INVP FTSE Mid 250 Financial Services 3.74 2.1% 4.5% 9.7 76%

40 ITE Group PLC ITE FTSE Mid 250 Media 1.99 14.7% 3.1% 23.5 95% 31.7

151 Jardine Lloyd Thompson Group PLC JLT FTSE Mid 250 Nonlife Insurance 7.67 5.3% 3.1% 23.5 69% 20.1

8 JD Sports Fashion PLC JD. FTSE Mid 250 General Retailers 6.86 22.8% 3.7% 10.6 95% 73.7

147 John Wood Group PLC WG. FTSE Mid 250 Oil Equipment; Services & Distribution 8.09 17.9% 1.1% 39.2 83% 19.9

113 Johnson Matthey PLC JMAT FTSE 100 Chemicals 23.58 10.7% 2.4% 25.3 90% 10.2

61 Kier Group PLC KIE FTSE Mid 250 Construction & Materials 12.99 8.1% 4.9% 14 79% 13.5

157 Kingfisher PLC KGF FTSE 100 General Retailers 2.76 0.5% 3.2% 15.6 60% 23.4

74 Ladbrokes PLC LAD FTSE Mid 250 Travel & Leisure 1.7 -6.3% 4.6% 7.5 64% 11.5

146 Laird PLC LRD FTSE Mid 250 Electronic & Electrical Equipment 2.23 -6.7% 3.6% 14.4 62% 5.4

92 Land Securities Group PLC LAND FTSE 100 Real Estate Investment Trusts 7.88 -12.4% 3.7% 7.1 62% 2.7

132 Law Debenture Corporation (The) PLC LWDB FTSE Mid 250 Equity Investment Instruments 4 5.7% 3.4% 32.9 88%

79 Legal & General Group PLC LGEN FTSE 100 Life Insurance 1.28 2.5% 5.0% 13.5 74%

45 London Stock Exchange Group PLC LSE FTSE Mid 250 Financial Services 9.85 17.4% 2.9% 19.4 86% 7.5

22 Man Group PLC EMG FTSE Mid 250 Financial Services 0.72 5.1% 14.4% 3.1 71% 6.6

46 Marks & Spencer Group PLC MKS FTSE 100 General Retailers 3.58 4.9% 4.7% 10.8 74% 6.6

31 Marston's PLC MARS FTSE Mid 250 Travel & Leisure 1.1 0.3% 5.3% 7.7 79% 2.1

28 Mears Group PLC MER FTSE Small Cap Support Services 2.79 19.7% 2.7% 18.6 98% 11.5

84 Meggitt PLC MGGT FTSE 100 Aerospace & Defense 3.94 11.4% 2.7% 22 86% 8.1

121 Michael Page International PLC MPI FTSE Mid 250 Support Services 3.5 9.7% 2.9% 23 81% 60.1

90 Millennium & Copthorne Hotels PLC MLC FTSE Mid 250 Travel & Leisure 4.8 12.4% 2.6% 18.2 79% 14.5

25 MITIE Group PLC MTO FTSE Mid 250 Support Services 2.83 15.3% 3.4% 19.8 98% 13.7

38 Morrison (Wm) Supermarkets PLC MRW FTSE 100 Food & Drug Retailers 2.81 16.0% 3.8% 18.7 86% 22.1

42 National Grid PLC NG. FTSE 100 Gas; Water & Multiutilities 6.93 9.3% 5.7% 14.1 76% 3.9

119 Next PLC NXT FTSE 100 General Retailers 36.18 8.9% 2.5% 22.1 90% 21

123 Old Mutual PLC OML FTSE 100 Life Insurance 1.65 -8.1% 3.5% 11.5 71%

Page 14

Rank Name Epic Index Sector Price(£) Growth Yield PE10 Consistency Interest

cover167 Oxford Instruments PLC OXIG FTSE Mid 250 Electronic & Electrical Equipment 13.04 13.2% 0.8% 75.5 60% 35.9

56 Paragon Group of Companies (The) PLC PAG FTSE Mid 250 Financial Services 1.85 -11.3% 2.2% 2.5 71% 2

116 Pearson PLC PSON FTSE 100 Media 12.01 8.4% 3.5% 25.9 83% 10.8

47 Pennon Group PLC PNN FTSE 100 Gas; Water & Multiutilities 7.44 11.8% 3.6% 24.8 95% 3.3

80 Premier Farnell PLC PFL FTSE Mid 250 Support Services 1.9 3.9% 5.5% 14.9 69% 7.4

137 Provident Financial PLC PFG FTSE Mid 250 Financial Services 13.1 0.7% 5.3% 19.8 67% 2.9

93 Prudential PLC PRU FTSE 100 Life Insurance 7.84 6.8% 3.2% 23.2 91%

105 PZ Cussons PLC PZC FTSE Mid 250 Personal Goods 3.05 10.6% 2.2% 26.6 95% 27.6

110 Rathbone Brothers PLC RAT FTSE Mid 250 Financial Services 12.65 3.7% 3.6% 21.6 85%

32 Reckitt Benckiser Group PLC RB. FTSE 100 Household Goods & Home Construction 35.97 18.3% 3.5% 25.2 100% 71.3

127 Reed Elsevier PLC REL FTSE 100 Media 5.94 6.5% 3.6% 20.7 74% 4.3

159 Renishaw PLC RSW FTSE Mid 250 Electronic & Electrical Equipment 15.5 10.3% 2.5% 35.3 83% 219.6

33 Restaurant Group (The) PLC RTN FTSE Mid 250 Travel & Leisure 3.22 15.0% 3.3% 22 95% 32.2

94 Rexam PLC REX FTSE 100 General Industrials 4.24 0.4% 3.4% 14 76% 4.1

17 Rio Tinto PLC RIO FTSE 100 Mining 27.16 21.1% 3.3% 10.2 83% 35.5

114 Rolls-Royce Group PLC RR. FTSE 100 Aerospace & Defense 8.21 16.0% 2.1% 29.4 86% 32.1

95 Rotork PLC ROR FTSE Mid 250 Industrial Engineering 21.57 17.5% 1.7% 41.9 100% 859.8

76 RPC Group PLC RPC FTSE Mid 250 General Industrials 4.3 10.8% 3.3% 19.3 88% 6.3

81 RPS Group PLC RPS FTSE Mid 250 Support Services 2.4 14.1% 2.3% 19.3 86% 19.7

2 RSA Insurance Group PLC RSA FTSE 100 Nonlife Insurance 1.14 18.9% 8.1% 10.8 82%

134 SABMiller PLC SAB FTSE 100 Beverages 27.99 14.1% 2.1% 36.7 90% 6

50 Sage Group (The) PLC SGE FTSE 100 Software & Computer Services 2.95 15.7% 3.3% 22.8 93% 23.6

82 Sainsbury (J) PLC SBRY FTSE 100 Food & Drug Retailers 3.33 14.7% 4.8% 20.3 60% 7

101 Savills PLC SVS FTSE Mid 250 Real Estate Investment & Services 3.94 3.8% 3.4% 14.4 76% 28.8

72 Schroders PLC SDR FTSE 100 Financial Services 14.07 10.9% 2.8% 20.9 88%

53 Segro PLC SGRO FTSE Mid 250 Real Estate Investment Trusts 2.32 -8.6% 6.4% 3.6 69% 1.5

141 Senior PLC SNR FTSE Mid 250 Aerospace & Defense 1.97 13.3% 1.9% 27.8 81% 8

78 Serco Group PLC SRP FTSE 100 Support Services 5.64 18.6% 1.5% 29.1 100% 6.4

156 Severn Trent PLC SVT FTSE 100 Gas; Water & Multiutilities 17.56 3.9% 4.0% 22.7 62% 3

129 Shanks Group PLC SKS FTSE Mid 250 Support Services 0.89 -0.6% 3.9% 13.1 60% 3.1

117 Smith & Nephew PLC SN. FTSE 100 Health Care Equipment & Services 6.69 12.0% 1.6% 21.4 88% 74.2

144 Smith (DS) PLC SMDS FTSE Mid 250 General Industrials 1.61 -0.6% 3.7% 17.8 71% 3.8

145 Smiths Group PLC SMIN FTSE 100 General Industrials 10.41 3.0% 3.5% 17.1 64% 7.2

126 Spectris PLC SXS FTSE Mid 250 Electronic & Electrical Equipment 16.79 12.4% 2.0% 30.1 93% 12.5

66 Spirax-Sarco Engineering PLC SPX FTSE Mid 250 Industrial Engineering 19.31 12.7% 2.5% 26.6 100% 86.5

10 SSE PLC SSE FTSE 100 Electricity 13.79 16.5% 5.8% 15.8 90% 7.9

154 St James's Place PLC STJ FTSE Mid 250 Life Insurance 3.4 8.1% 2.4% 28.4 88%

67 Stagecoach Group PLC SGC FTSE Mid 250 Travel & Leisure 2.88 13.7% 2.7% 18.5 83% 6.3

71 Standard Chartered PLC STAN FTSE 100 Banks 14.01 6.4% 3.4% 15.6 85%

100 Stobart Group Ltd STOB FTSE Mid 250 Industrial Transportation 1.13 -9.0% 5.3% 7.5 57% 7.1

69 Synergy Health PLC SYR FTSE Mid 250 Health Care Equipment & Services 8.93 20.8% 2.0% 29 98% 5.7

120 Tate & Lyle PLC TATE FTSE 100 Food Producers 6.55 2.1% 3.8% 15.7 71% 10.9

136 Ted Baker PLC TED FTSE Mid 250 General Retailers 10.08 9.4% 2.3% 30.2 93% 113.4

98 Telecom plus PLC TEP FTSE Mid 250 Fixed Line Telecommunications 8.14 23.2% 3.3% 45.3 83% 193.1

164 Templeton Emerging Markets Inv Tr PLC TEM FTSE Mid 250 Equity Investment Instruments 5.34 6.5% 1.1% 112.3 88%

20 Tesco PLC TSCO FTSE 100 Food & Drug Retailers 3.4 9.7% 4.3% 14.5 98% 8.6

3 Tullett Prebon PLC TLPR FTSE Mid 250 Financial Services 2.9 16.0% 5.7% 8.4 88% 9.9

148 Tullow Oil PLC TLW FTSE 100 Oil & Gas Producers 13.47 21.8% 0.9% 64.6 83% 10.2

68 UK Mail Group PLC UKM FTSE Small Cap Industrial Transportation 2.36 2.8% 7.7% 11.3 64% 160.8

77 Ultra Electronics Holdings PLC ULE FTSE Mid 250 Aerospace & Defense 15.27 15.5% 2.5% 25 90% 31.6

150 Unilever PLC ULVR FTSE 100 Food Producers 22.65 3.8% 3.4% 18.6 69% 13.1

142 United Utilities Group PLC UU. FTSE 100 Gas; Water & Multiutilities 7.13 -3.7% 4.5% 16.1 60% 2.5

4 Vedanta Resources PLC VED FTSE 100 Mining 8.61 27.7% 4.0% 8.9 90% 6.6

102 Victrex PLC VCT FTSE Mid 250 Chemicals 13.12 15.0% 2.5% 31.6 95% 635.1

18 Vodafone Group PLC VOD FTSE 100 Mobile Telecommunications 1.83 11.1% 5.2% 13.1 88% 8.8

86 Weir Group PLC WEIR FTSE 100 Industrial Engineering 16.01 18.8% 2.1% 30.5 95% 24.3

161 Whitbread PLC WTB FTSE 100 Travel & Leisure 21.42 9.0% 2.4% 27.2 74% 10

133 William Hill PLC WMH FTSE Mid 250 Travel & Leisure 2.98 -10.2% 3.2% 11.8 64% 8.1

55 WPP Group PLC WPP FTSE 100 Media 8.19 12.7% 3.0% 19.9 95% 3.9

24 Xstrata PLC XTA FTSE 100 Mining 9.01 21.2% 2.8% 9.6 86% 28.5

Page 15

Dear Fellow Investors

Changes to the stock screen and ranking system

I’m sure that by now many of you have read through the investment analysis worksheets which are availableon the web site. The approach laid out in those worksheets represents the latest version of my investmentstrategy. However, due to technical limitations the stock screener and ranking system used in this newsletterhad some slight differences to the worksheets.

In the worksheets a share is valued using four quantitative criteria: growth, yield, value and consistency (fulldetails are in the worksheet).

Growth is measured as the combined growth of a rolling 3 year average for earnings and dividends, over aperiod of 10 years.

Yield is measured as the current dividend yield.

Value is measured using PE10, which is the ratio of the share price to the average earnings of the last 10 years.

Consistency is measured as the combination of the number of profitable years, dividend paying years, recordprofits and record dividends, over the last 10 years.

Many of these are unique measures and are not available from mainstream data providers, which means thatthe ranking system had to use some alternative measures. For example, in the growth measurement, dividendgrowth was taken as the growth between the dividend 10 years ago to today’s dividend, rather than from the 3year average dividend 10 years ago to the most recent 3 year average dividend. Also, the consistency scorewas missing completely from the rankings.

From this issue forward the ranking system represents the system used in the worksheets more closely.

Growth is now measured using the growth of 3 year averages for revenue, earnings and dividends, as per theworksheet.

Stocks are now ranked for dividends by using the 10 year average dividend payments, rather than just thecurrent year. It’s effectively a PD10 ratio like PE10. This still rates high yield shares highly, but will tend toprefer companies that have paid a high dividend relative to today’s price over the longer-term, rather thancompanies that have only recently switched to higher dividend payments.

Value is still ranked using PE10, and now the consistency score is part of the ranking process.

The market is ranked by each of these four factors in turn, generating four ranks for each share. These separateranks are then added together to give the master rank which is the one used in the newsletter.

Non-dividend payers excluded

In order for the calculations to work, and also because of the nature of this investment strategy (capital growthand a reliable, growing income), companies that do not have 10 years of unbroken dividend payments areexcluded.

If you have any questions, comments or suggestions for improvement, please let me know.

Sincerely

John KinghamEditor

Page 16

IMPORTANT DISCLAIMER: The author is not registered as an investment advisor or as an independent financialadvisor and does not provide individual investment advice. Neither the author nor this document are regulated by theFinancial Services Authority. No information provided in this document should ever be construed as investment advice.It is prepared for education and information only. The specific needs, investment objectives and financial situation of anyparticular reader have not been taken into consideration and the investments mentioned may not be suitable for anyindividual. The information contained in this document is not intended to be an offer to buy or sell or a solicitation of anoffer to buy or sell any securities. Readers must not base any investment decision solely on the basis of this document;instead they should seek independent financial advice. The information in this document and any expression of opinionby the author have been obtained from or are based on sources believed to be reliable but the accuracy or completenessof any such sources or the author’s interpretation of them cannot be guaranteed although the author believes thedocument to be clear, fair and not misleading. The author receives no compensation from and is not affiliated with anycompany mentioned in this document other than possibly receiving advertising revenue via a third party. The viewsreflected in this document may be wrong and may change without notice. To the maximum extent possible at law, theauthor does not accept any liability whatsoever arising from the use of the material or information contained herein.

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.

CONFIDENTIALITY: This document is for subscribers only. Please retain it for your own exclusive use and treat it asconfidential.

Copyright John Kingham, 2012. Offices at Unit 5, Pluto House, 19-33 Station Road, Ashford, Kent, TN23 1PP.

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