Shares_magazine__february_08_2018.pdf

STO CKS | FUNDS | I NVESTMENT T RU STS | P E NS I ONS AND SAVI N GS

SHARES VOL 20 / ISSUE 05 / 08 FEBRUARY 2018 / £4.49

WE MAKE INVESTING EASIER

THIS WEEK:

ROYAL MAIL , CAPITA , S, PURPLEBRICK , BT, VODAFONE BP, SHELL AND MORE

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The key points to consider with your investments JUST THE JOB BOOM TIME FOR RECRUITERS

DOMINO’S MARK 2 FRANCHISE BRANDS’ STRATEGY FOR SUCCESS

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RARE SETBACK FOR INFRASTRUCTURE INVESTMENT TRUSTS

EDITOR’S VIEW

Why you should stay calm amid stock market volatility The key points to consider with your investments

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he decline in share prices around the world has dampened the ƐƉŝƌŝƚƐŽĨŵĂŶLJŝŶǀĞƐƚŽƌƐ͘/ŶƟŵĞƐ like this, it is important to stay calm and consider the reasons behind the ŵĂƌŬĞƚƐĞůůͲŽī͘ You should ask whether the fundamentals have changed for your investments. If they haven’t, it’s probably best to do nothing. If they have, you need to do further research ĂŶĚĂƐŬǁŚĞƚŚĞƌLJŽƵƐŚŽƵůĚƐƟůůŽǁŶƚŚĂƚ investment. KŶŽŶĞŚĂŶĚ͕ŐůŽďĂůŐƌŽǁƚŚĞdžƉĞĐƚĂƟŽŶƐŚĂǀĞ been upgraded this year which should be good news for corporate earnings and share prices. ,ŽǁĞǀĞƌ͕ĞƋƵŝƚLJǀĂůƵĂƟŽŶƐŚĂǀĞďĞĞŶŚŝŐŚŝŶŵĂŶLJ ƉĂƌƚƐŽĨƚŚĞǁŽƌůĚʹƉĂƌƟĐƵůĂƌůLJƚŚĞh^ʹĂŶĚƐŽ ŵĂŶLJŽďƐĞƌǀĞƌƐŚĂǀĞďĞĞŶĞdžƉĞĐƟŶŐĂƉƵůůďĂĐŬ ĨŽƌƐŽŵĞƟŵĞ͘

on markets around the world. Investors will now look to places like Germany and Japan to see what’s happening with their ǁĂŐĞŝŶŇĂƟŽŶ͘&ŽƌĞdžĂŵƉůĞ͕'ĞƌŵĂŶ unions and employers agreed a deal on ϲ&ĞďƌƵĂƌLJƚŽůŝŌǁĂŐĞƐĨŽƌϵϬϬ͕ϬϬϬ employees in the metal and electric industries by 4.3%. On a broader basis in Europe, there ŝƐĂŶĂƌŐƵŵĞŶƚƚŽƐƵŐŐĞƐƚŵŽƌĞũŽďƐ ĐŽƵůĚďĞĐƌĞĂƚĞĚǁŝƚŚŽƵƚĐƌĞĂƟŶŐ ƌĂŵƉĂŶƚǁĂŐĞŽƌŝŶŇĂƟŽŶĂƌLJƉƌĞƐƐƵƌĞ͕ŐŝǀĞŶƚŚĂƚ ƵŶĞŵƉůŽLJŵĞŶƚŝŶƚŚĞƵƌŽnjŽŶĞŝƐƐƟůůĂƚϴ͘ϳй͘ dŚĞƵƌŽƉĞĂŶĞŶƚƌĂůĂŶŬŚĂƐĂůƐŽŐŝǀĞŶŶŽ ŝŶĚŝĐĂƟŽŶƚŚĂƚŝƚŝƐƉƌĞƉĂƌĞĚƚŽƌĂŝƐĞŝŶƚĞƌĞƐƚƌĂƚĞƐ ŽƌďƌŝŶŐŝƚƐŵŽŶĞƚĂƌLJƐƟŵƵůƵƐƉƌŽŐƌĂŵŵĞƚŽĂŶ end early.

WHAT HAPPENS NEXT? Remaining invested in the market has historically ďĞĞŶƚŚĞďĞƐƚĐŽƵƌƐĞŽĨĂĐƟŽŶŝĨLJŽƵ͛ƌĞĂůŽŶŐͲ WHY HAVE THE MARKETS WOBBLED? ƚĞƌŵŝŶǀĞƐƚŽƌ͘^ƚŽĐŬŵĂƌŬĞƚƐŚĂǀĞĂƚĞŶĚĞŶĐLJƚŽ >ĂƐƚǁĞĞŬ͛Ɛh^ũŽďƐƌĞƉŽƌƚƐƉƵƌƌĞĚƚĂůŬƚŚĂƚƚŚĞ recover faster than you think, although no one h^ĞĐŽŶŽŵLJŵĂLJďĞƐƚƌŽŶŐĞŶŽƵŐŚƚŽǁĂƌƌĂŶƚ knows exactly when that recovery will happen. ĂĐĐĞůĞƌĂƟŽŶŝŶŝŶƚĞƌĞƐƚƌĂƚĞŚŝŬĞƐ͘dŚĞũŽďƐĚĂƚĂ It is also worth considering the scale of the ůĞĚŵĂŶLJŝŶǀĞƐƚŽƌƐƚŽďĞůŝĞǀĞŝŶŇĂƟŽŶĐŽƵůĚƌŝƐĞ ůĂƚĞƐƚŵĂƌŬĞƚƐĞůůͲŽīŝŶƚŚĞĐŽŶƚĞdžƚŽĨĞĂƌůŝĞƌŐĂŝŶƐ͘ ƋƵŝĐŬůLJƚŚŝƐLJĞĂƌĂƐh^ƚĂdžĐƵƚƐƚĂŬĞĞīĞĐƚĂŶĚŵŽƌĞ DĂŶLJŝŶǀĞƐƚŽƌƐǁŚŽŚĂǀĞďĞĞŶŝŶĞƋƵŝƟĞƐĨŽƌƚŚĞ companies start raising pay and prices. ƉĂƐƚƚǁŽLJĞĂƌƐƐŚŽƵůĚƐƟůůďĞƐŝƫŶŐŽŶĚĞĐĞŶƚ You have to remember the stock market ƌĞƚƵƌŶƐĞǀĞŶĂŌĞƌƚŚĞůĂƚĞƐƚŵĂƌŬĞƚǁŽďďůĞ͘ ŝƐĨŽƌǁĂƌĚůŽŽŬŝŶŐĂŶĚŝƐƉƌŝĐŝŶŐŝŶƉŽƚĞŶƟĂů &ŽƌĞdžĂŵƉůĞ͕ĂŶLJŽŶĞŝŶǀĞƐƟŶŐŝŶƚŚĞ&d^ϭϬϬ events that may not happen for many months. index would have made 24% return in the two ƌĂƉŝĚĂĐĐĞůĞƌĂƟŽŶŝŶŝŶƚĞƌĞƐƚƌĂƚĞƐĐŽƵůĚĐĂƵƐĞ LJĞĂƌƐƚŽϭ&ĞďƌƵĂƌLJϮϬϭϴ͕ďĞŝŶŐƚŚĞŶŝŐŚƚďĞĨŽƌĞ consumers and businesses to cut back on their ƚŚĞŐůŽďĂůƐĞůůͲŽīďĞŐĂŶ͘KǀĞƌƚŚĞƐĂŵĞƟŵĞ spending as borrowing costs would become more ƉĞƌŝŽĚ͕LJŽƵǁŽƵůĚŚĂǀĞŵĂĚĞϱϵйĨƌŽŵŝŶǀĞƐƟŶŐ expensive, thereby damaging the economy. in the Dow Jones index. /ŶǀĞƐƚŽƌƐǁŝůůŶŽǁǁĂŶƚŐƵŝĚĂŶĐĞĨƌŽŵƚŚĞh^ Extending the holding period to early trading on Federal Reserve that rates aren’t going to go up ϲ&ĞďƌƵĂƌLJ;ǁŚĞŶƚŚŝƐĂƌƟĐůĞǁĂƐǁƌŝƩĞŶͿǁŽƵůĚ ƋƵŝĐŬůLJŝŶŽƌĚĞƌƚŽĨĞĞůŵŽƌĞĐŽŶĮĚĞŶƚĂďŽƵƚƚŚĞ ŚĂǀĞƌĞĚƵĐĞĚƚŚŽƐĞŐĂŝŶƐƚŽϭϱ͘ϲйĨŽƌƚŚĞ&d^ stock market. ϭϬϬ͖ĂŶĚϯϵ͘ϳйĨŽƌƚŚĞŽǁ:ŽŶĞƐ͘ dŚĞƉĂƐƚǁĞĞŬŚĂƐďĞĞŶĂůŽŶŐŽǀĞƌĚƵĞƌĞŵŝŶĚĞƌ WHY IS THE SELL-OFF GLOBAL? ƚŚĂƚŵĂƌŬĞƚƐŵŽǀĞƵƉEĚŽǁŶĂŶĚŝŶǀĞƐƟŶŐŝŶ dŚĞh^ŚĂƐĂŵĂũŽƌŝŶŇƵĞŶĐĞŽǀĞƌǁŚĂƚŚĂƉƉĞŶƐ ĞƋƵŝƟĞƐĚŽĞƐĐŽŵĞǁŝƚŚƌŝƐŬĂƩĂĐŚĞĚ͘;Ϳ

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| SHARES | 08 February 2018

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Applications open: 8:00am 24 January 2018 Applications close: 5:00pm 26 February 2018 jpmorgan.co.uk/MATE

LET’S SOLVE IT.

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Long term return objective and initial dividend based on J.P. Morgan Asset Management Long Term Capital Market Assumptions. The stated target returns are the investment manager’s objectives only, and are not necessarily part of the fund’s investment objectives and policies as stated in the prospectus. The objectives are net of fees. There is no guarantee that these objectives will be met. LV-JPM50810 | 01/18 0903c02a8204facd

Contents

INTERACTIVE PAGES CLICK ON PAGE NUMBERS TO JUMP TO THE RELEVANT STORY

08 February 2018 EDI T OR’ S V IE W

0 Why you should stay calm amid stock market volatility

BIG NEWS

06 Weighing up the impact of the market sell-off BIG NEWS

08 Four important stories from the past week: Capita, Purplebricks, BT and Vodafone

18 BIG NEWS

09 Why Royal Mail’s pension breakthrough is such a big share price catalyst

G R EAT ID EAS

14 Snap up Laird before the market wakes up to its turnaround G R EAT ID EAS

BIG NEWS

10 BP wins the battle of the oil majors

15 Time to feast on high quality Cranswick

WEEK AHEAD STORY IN NUMBERS

12 Tech bargains and other stories in numbers

02 DISCLAIMER IMPORTANT Shares publishes information and ideas which are of interest to investors. It does not provide advice in relation to investments or any other financial matters. Comments published in Shares must not be relied upon by readers when they make their investment decisions. Investors who require advice should consult a properly qualified independent adviser. Shares, its staff and AJ Bell Media Limited do not, under any circumstances, accept liability for losses suffered by readers as a result of their investment decisions. Members of staff of Shares may hold shares in companies mentioned in the magazine. This could create a conflict of interests. Where such a conflict exists it will be disclosed. Shares adheres to a strict code of conduct for reporters, as set out below. 1. In keeping with the existing practice, reporters who intend to write about any

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| SHARES | 08 February 2018

16 Financial results and ex-dividends over the coming week FEAT U R E

18 Boom time for recruiters securities, derivatives or positions with spread betting organisations that they have an interest in should first clear their writing with the editor. If the editor agrees that the reporter can write about the interest, it should be disclosed to readers at the end of the story. Holdings by third parties including families, trusts, self-select pension funds, self select ISAs and PEPs and nominee accounts are included in such interests. 2. Reporters will inform the editor on any occasion that they transact shares, derivatives or spread betting positions. This will overcome situations when the interests they are considering might conflict with reports by other writers in the magazine. This notification should be confirmed by e-mail. 3. Reporters are required to hold a full personal interest register. The whereabouts of this register should be revealed to the editor. 4. A reporter should not have made a transaction of shares, derivatives or spread betting positions for seven working days before the publication of an article that mentions such interest. Reporters who have an interest in a company they have written about should not transact the shares within seven working days after the on-sale date of the magazine.

Contents 26

UND ER THE BO N N E T

24 Can Domino’s Pizza gurus repeat success with another franchise business? FUND S

26 The search for funds that invest in specific themes INVESTMENT TRUSTS

30 Rare setback for many infrastructure trusts FEAT URE

32 When should you use a dealing account to invest?

MON E Y MATT ER S

34 It is possible to build an investment portfolio just using ETFs?

MONEY MATTE RS

33 The simple planning tip that could save you over £1,000

LARGER COMPANIES

37 Dividend warning for SSE ahead of proposed asset merger with Npower SMALLER COMPANIES

38 Why ScS may not suffer the same fate as rivals SMALLER COMPANIES

39 Why Hostelworld could shell out up to €22m in special dividends IND EX

41 Index of companies and funds in this issue

33 WHO WE ARE DEPUTY EDITOR:

NEWS EDITOR:

Tom Sieber @SharesMagTom

Steven Frazer @SharesMagSteve

EDITOR:

Daniel Coatsworth @SharesMagDan FUNDS AND INVESTMENT TRUSTS EDITOR:

REPORTER:

REPORTER:

CONTRIBUTORS

David Stevenson @SharesMagDavid

Lisa-Marie Janes @SharesMagLisaMJ

Emily Perryman Tom Selby

James Crux @SharesMagJames MANAGING DIRECTOR Mike Boydell CONTACT US: [email protected]

PRODUCTION Head of Design Rebecca Bodi Designer Darren Rapley

ADVERTISING Senior Sales Executive Nick Frankland 020 7378 4592 [email protected]

Shares magazine is published weekly every Thursday (50 times per year) by AJ Bell Media Limited, 49 Southwark Bridge Road, London, SE1 9HH. Company Registration No: 3733852. All Shares material is copyright. Reproduction in whole or part is not permitted without written permission from the editor.

BROKER RATINGS EXPLAINED: We use traffic light symbols in the magazine to illustrate broker views on stocks. Green means buy, Orange means hold, Red means sell. The numbers refer to how many different brokers have that rating. Eg: 4 2 1 means four brokers have buy ratings, two brokers have hold ratings and one broker has a sell rating. The traffic light system gives an illustration of market views but isn’t always a fully comprehensive list of ratings as some banks/stockbrokers don’t publicly release this information.

08 February 2018 | SHARES |

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BIG NEWS

Weighing up the impact of the market sell-off We discuss the warning signs, where the sell-off ranks historically and the UK stocks and sectors which have been worst affected

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ŚĞƉĂƐƚǁĞĞŬŚĂƐďĞĞŶĂŚĂƵŶƟŶŐĞdžƉĞƌŝĞŶĐĞ ĨŽƌŵĂŶLJŝŶǀĞƐƚŽƌƐǁŝƚŚĂƉƵůůďĂĐŬŝŶƐƚŽĐŬ ŵĂƌŬĞƚƐĂƌŽƵŶĚƚŚĞǁŽƌůĚ͘ dŚĞh^Žǁ:ŽŶĞƐ/ŶĚƵƐƚƌŝĂůǀĞƌĂŐĞĞŶĚƵƌĞĚŝƚƐ ǁŽƌƐƚĞǀĞƌŽŶĞͲĚĂLJĨĂůůŽŶϱ&ĞďƌƵĂƌLJ͕ĚŽǁŶϭ͕ϭϳϱ ƉŽŝŶƚƐƚŽϮϰ͕ϯϰϱ͘ ƐǁĞǁƌŝƚĞ;ϲ&ĞďͿƚŚĞ&d^ůůͲtŽƌůĚŝŶĚĞdžŚĂƐ ĨĂůůĞŶϱ͘ϰйƐŝŶĐĞƚŚĞďĞŐŝŶŶŝŶŐŽĨ&ĞďƌƵĂƌLJʹĂǀĞƌLJ ďŝŐŵŽǀĞŝŶũƵƐƚĂŚĂŶĚĨƵůŽĨƚƌĂĚŝŶŐĚĂLJƐ͘ dŚĞs/yŝŶĚĞdž͕ǁŚŝĐŚŵĞĂƐƵƌĞƐŵĂƌŬĞƚǀŽůĂƟůŝƚLJ͕ ƐƵƌŐĞĚƚŽũƵƐƚŽǀĞƌϱϬŽŶϲ&ĞďƌƵĂƌLJ͕ŝƚƐŚŝŐŚĞƐƚ ůĞǀĞůƐŝŶĐĞϮϬϭϱĂŶĚƵƉĨƌŽŵϭϯ͘ϳϱĂƚƚŚĞƐƚĂƌƚŽĨ ƚŚĞŵŽŶƚŚ͘ dŚĞƐĞůůŝŶŐƉƌĞƐƐƵƌĞƐĞĞŵƐƚŽŚĂǀĞĂĐŚŝĞǀĞĚĂ ŵŽŵĞŶƚƵŵŽĨŝƚƐŽǁŶ͘DŽƐƚŽďƐĞƌǀĞƌƐĂƩƌŝďƵƚĞĚ ƚŚĞǁĞĂŬŶĞƐƐƚŽĞdžƉĞĐƚĂƟŽŶƐĨŽƌĂĐĐĞůĞƌĂƟŽŶŝŶh^ ŝŶƚĞƌĞƐƚƌĂƚĞŚŝŬĞƐĂƐƚŚĞ&ĞĚĞƌĂůZĞƐĞƌǀĞĐŽŶƚĞŶĚƐ ǁŝƚŚƚŚĞƚŚƌĞĂƚŽĨƌŝƐŝŶŐŝŶŇĂƟŽŶ͘

WERE THERE ANY WARNING SIGNS? tĞĚŝƐĐƵƐƐĞĚƚŚĞƌŝƐŬŽĨĂŶŝŵŵŝŶĞŶƚŵĂƌŬĞƚ ĐŽƌƌĞĐƟŽŶŝŶƚŚĞh^ŝŶƚŚĞϮϱ:ĂŶƵĂƌLJĞĚŝƟŽŶŽĨ SharesĂŌĞƌƚŚĞLJŝĞůĚŽŶƚǁŽͲLJĞĂƌh^ŐŽǀĞƌŶŵĞŶƚ ďŽŶĚƐĞĐůŝƉƐĞĚƚŚĞĚŝǀŝĚĞŶĚLJŝĞůĚĨƌŽŵh^ƐƚŽĐŬƐ͘ ϬϬϬΖƐ ϯϬ Ϯϱ

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Source: Thomson Reuters Datastream

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ARE THERE ANY CONCERNS ABOUT THE ‘REAL’ ECONOMY? ůƚŚŽƵŐŚĂƉƌŽůŽŶŐĞĚƐĞůůͲŽīŝŶƚŚĞŵĂƌŬĞƚƐǁŽƵůĚ ŚĂǀĞĂǁŝĚĞƌĞĐŽŶŽŵŝĐŝŵƉĂĐƚŐŝǀĞŶƚŚĞŚŝƚƚŽ ƉĞŽƉůĞ͛ƐƉĞŶƐŝŽŶƉŽƚƐ͕ƐĂǀŝŶŐƐĂŶĚŝŶǀĞƐƚŵĞŶƚƐĂŶĚ ƚŚĞĂǀĂŝůĂďŝůŝƚLJŽĨĐĂƉŝƚĂůĨŽƌĐŽŵƉĂŶŝĞƐ͕ƐŚŽƌƚͲƚĞƌŵ ǀŽůĂƟůŝƚLJŝƐƵŶůŝŬĞůLJƚŽĚŽĂŶLJůĂƐƟŶŐĚĂŵĂŐĞ͘ ,ŽǁĞǀĞƌ͕ƚŚĞƌĞĂƌĞƐŽŵĞƌĞĂƐŽŶƐĨŽƌĐĂƵƟŽŶ ĚĞƐƉŝƚĞŐůŽďĂůŐƌŽǁƚŚĂŶĚĐŽƌƉŽƌĂƚĞĞĂƌŶŝŶŐƐ ůŽŽŬŝŶŐƌŽďƵƐƚĨŽƌŶŽǁ͘ /ŶŇĂƟŽŶŝƐƐŽŵĞƚŚŝŶŐƚŽŵŽŶŝƚŽƌĐůŽƐĞůLJĂƐŝƚ ŚĂƐĂďŝŐŝŶŇƵĞŶĐĞŽŶĐŽŶƐƵŵĞƌĂŶĚĐŽƌƉŽƌĂƚĞ ƐƉĞŶĚŝŶŐŚĂďŝƚƐĂŶĚƚŚĞƌĞĨŽƌĞĞĐŽŶŽŵŝĐĂĐƟǀŝƚLJ͘ DŽƐƚŶŽƚĂďůLJ͕ǁĞ͛ĚƉŽŝŶƚƚŽƚŚĞůĞǀĞůŽĨŐůŽďĂů ŝŶǀĞŶƚŽƌŝĞƐʹƚŚĞƌĂǁŵĂƚĞƌŝĂůƐ͕ƉĂƌƟĂůůLJĮŶŝƐŚĞĚ ƉƌŽĚƵĐƚƐĂŶĚĮŶŝƐŚĞĚŐŽŽĚƐŚĞůĚďLJĐŽŵƉĂŶŝĞƐʹ ŐŽŝŶŐƵƉĨĂƐƚ͘

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dŚĞůŽŐŝĐǁĂƐƚŚĂƚŝĨƚŚĞŝŶĐŽŵĞŽŶŽīĞƌĨƌŽŵ ůŽǁͲƌŝƐŬŐŽǀĞƌŶŵĞŶƚďŽŶĚƐǁĂƐŚŝŐŚĞƌƚŚĂŶŵŽƌĞ ƌŝƐŬLJĞƋƵŝƟĞƐ͕ƚŚĞŶŝŶǀĞƐƚŽƌƐŵŝŐŚƚďĞŐŝŶƚŽƚƌŝŵ ƚŚĞŝƌĞdžƉŽƐƵƌĞƚŽƚŚĞůĂƩĞƌŝŶĨĂǀŽƵƌŽĨƚŚĞĨŽƌŵĞƌ͘ džƉĞƌƚƐŚĂǀĞĂůƐŽďĞĞŶǁĂƌŶŝŶŐƚŚĂƚh^ƐƚŽĐŬƐ ǁĞƌĞďĞĐŽŵŝŶŐŽǀĞƌǀĂůƵĞĚĨŽƌƐŽŵĞƟŵĞ͘

| SHARES | 08 February 2018

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ϮϬϭϳ

BIG NEWS NEWS BIG /ŶǀĞƐƚŵĞŶƚďĂŶŬ>ŝďĞƌƵŵĐŽŵŵĞŶƚƐ͚͗'ůŽďĂů ŝŶǀĞŶƚŽƌŝĞƐĂƌĞŽŶƚŚĞƌŝƐĞ͕ǁŝƚŚǁŝĚĞƐƉƌĞĂĚ ďŽƩůĞŶĞĐŬƐ͘h^ŝŶǀĞŶƚŽƌŝĞƐŝŶĐƌĞĂƐĞĚƐŚĂƌƉůLJƚŚŝƐ ŵŽŶƚŚ͘hŝŶǀĞŶƚŽƌŝĞƐĂƌĞĂďŽǀĞϱϬĨŽƌƚŚĞƚŚŝƌĚ ŵŽŶƚŚŝŶĂƌŽǁ͕ĨŽƌƚŚĞĮƌƐƚƟŵĞƐŝŶĐĞŵŝĚͲϮϬϬϴ͛͘ ĮŐƵƌĞŽǀĞƌϱϬŝŵƉůŝĞƐĞdžƉĂŶƐŝŽŶ͘ ͚dŚŝƐŝƐƚŚĞĨŽƵƌƚĞĞŶƚŚŵŽŶƚŚŽĨh^ŽƌĚĞƌƐĂďŽǀĞ ϲϬ͖ŽǀĞƌƚŚĞůĂƐƚϱϬLJĞĂƌƐh^ŽƌĚĞƌƐƌĞŵĂŝŶĂďŽǀĞ ϲϬĨŽƌϭϬŵŽŶƚŚƐŽŶĂǀĞƌĂŐĞ͕ǁŝƚŚϭϳŵŽŶƚŚƐďĞŝŶŐ ƚŚĞůŽŶŐĞƐƚƉĞƌŝŽĚŝŶϮϬϬϯͲϬϰ͛͘>ŝďĞƌƵŵŝŵƉůŝĞƐƚŚĂƚ ĂĨĂůůŝŶŽƌĚĞƌƐďĞůŽǁϲϬĂŶĚŝŶǀĞŶƚŽƌŝĞƐƌĞŵĂŝŶŝŶŐ ŚŝŐŚĚƵĞƚŽďŽƩůĞŶĞĐŬƐĐŽƵůĚďĞƚŚĞĮƌƐƚƐŝŐŶƚŚĂƚ ĐŽƌƉŽƌĂƚĞĞĂƌŶŝŶŐƐŚĂǀĞƉĞĂŬĞĚ͘

WORST PERFORMING SECTORS IN >d^dDZ<d^>>ͳK&& SECTOR

FEB 2018 PERFORMANCE ΈйΉ

&d^ϯϱϬ^ĞĐƚŽƌDŽďŝůĞ dĞůĞĐŽŵŵƵŶŝĐĂƟŽŶƐ

Ͳϳ͘ϳϵ

&d^ϯϱϬ^ĞĐƚŽƌůĞĐƚƌŝĐŝƚLJ

Ͳϲ͘ϴϴ

&d^ϯϱϬ^ĞĐƚŽƌZĞĂůƐƚĂƚĞ /ŶǀĞƐƚŵĞŶƚdƌƵƐƚƐ

Ͳϱ͘ϳϰ

&d^ϯϱϬ^ĞĐƚŽƌĞƌŽƐƉĂĐĞΘ Defense

Ͳϱ͘ϲϲ

&d^ϯϱϬ^ĞĐƚŽƌŽŶƐƚƌƵĐƟŽŶΘ DĂƚĞƌŝĂůƐ

Ͳϱ͘ϲϮ

&d^ϯϱϬ^ĞĐƚŽƌKŝůΘ'ĂƐ WƌŽĚƵĐĞƌƐ

Ͳϱ͘ϲϬ

&d^ϯϱϬ^ĞĐƚŽƌůĞĐƚƌŽŶŝĐΘ ůĞĐƚƌŝĐĂůƋƵŝƉŵĞŶƚ

Ͳϱ͘ϱϰ

&d^ϯϱϬ^ĞĐƚŽƌ/ŶĚƵƐƚƌŝĂů ŶŐŝŶĞĞƌŝŶŐ

Ͳϱ͘ϰϵ

WHICH STOCKS AND SECTORS HAVE BEEN WORST AFFECTED BY THIS MONTH'S DECLINES ON THE UK STOCK MARKET? dŚĞǁŽƌƐƚƉĞƌĨŽƌŵŝŶŐƐĞĐƚŽƌƐŝŶƚŚĞƐĞůůͲŽīĨŽƌ h<ͲůŝƐƚĞĚƐƚŽĐŬƐĂƌĞŵŽƐƚůLJĂƚƚŚĞĐLJĐůŝĐĂůĞŶĚŽĨ ƚŚĞƐƉĞĐƚƌƵŵ͕ŵĞĂŶŝŶŐƚŚĞLJĂƌĞǀĞƌLJƐĞŶƐŝƟǀĞƚŽ ŇƵĐƚƵĂƟŽŶƐŝŶƚŚĞŵĂƌŬĞƚƐĂŶĚƚŚĞĞĐŽŶŽŵLJ͘ ŵŽŶŐƚŚĞǁŽƌƐƚƉĞƌĨŽƌŵŝŶŐ&d^ϭϬϬƐƚŽĐŬƐŝŶ ƚŚĞǁĂŬĞŽĨƚŚĞŐůŽďĂůŵĂƌŬĞƚƐĞůůͲŽīĂƌĞVodafone

(VOD)͕ǁŚŝĐŚĚŝƐĂƉƉŽŝŶƚĞĚƚŚĞŵĂƌŬĞƚǁŝƚŚĂ ƌĞĐĞŶƚƚƌĂĚŝŶŐƵƉĚĂƚĞ͖ŚĞĂůƚŚĂŶĚƐĂĨĞƚLJŬŝƚĮƌŵ Halma (HLMA)ǁŚŽƐĞƉƌĞŵŝƵŵǀĂůƵĂƟŽŶůĞŌŝƚ ǀƵůŶĞƌĂďůĞƚŽĂŶĞƋƵŝƚLJĚĞͲƌĂƟŶŐ͖ĂŶĚĞƋƵŝƉŵĞŶƚ ŚŝƌĞďƵƐŝŶĞƐƐAshtead (AHT)͘ dŚĞŵŝĚĐĂƉĨĂůůĞƌƐĂƌĞŵĂŝŶůLJĮƌŵƐǁŚŝĐŚŚĂǀĞ ďĞĞŶŚŝƚďLJƵŶƌĞůĂƚĞĚŶĞŐĂƟǀĞŶĞǁƐĂŶĚŝŶĐůƵĚĞ ŽĸĐĞƉƌŽǀŝĚĞƌIWG (IWG)ĂŶĚĚĞĨĞŶĐĞĮƌŵƐ Cobham (COB) ĂŶĚUltra Electronics (ULE)͘dŚĞLJ ƐŝƚĂůŽŶŐƐŝĚĞƚƌĂŶƐƉŽƌƚŽƉĞƌĂƚŽƌƐStagecoach (SGC)͕ ǁŚŝĐŚŝƐƚŽůŽƐĞƚŚĞĂƐƚŽĂƐƚŵĂŝŶůŝŶĞĨƌĂŶĐŚŝƐĞ ĞĂƌůLJ͕ĂŶĚGo-Ahead (GOG)͖ĂƐǁĞůůĂƐĂƐƐĞƚ ŵĂŶĂŐĞŵĞŶƚĮƌŵMan Group (EMG)͘ KŶ/D͕ŐƌŽǁƚŚƐƚŽĐŬƐŚĂǀĞďĞĞŶŚĂƌĚŚŝƚǁŝƚŚ ĚŽƵďůĞĚŝŐŝƚĚĞĐůŝŶĞƐŝŶŵĂŶLJĐŽŵƉĂŶŝĞƐŽŶŚŝŐŚ ĞƋƵŝƚLJǀĂůƵĂƟŽŶƐǁŚŝĐŚŚĂĚƉƌĞǀŝŽƵƐůLJĞŶũŽLJĞĚ ƐƚƌŽŶŐƵƉǁĂƌĚƐŵŽŵĞŶƚƵŵ͘ HOW DOES THIS EVENT COMPARE WITH OTHER SELL OFFS? ,ĞĂĚůŝŶĞƐĐĂůůŝŶŐƚŚĞǁŽƌƐƚĨĂůůĨŽƌƚŚĞŽǁ:ŽŶĞƐ ŽŶƌĞĐŽƌĚĂƌĞƐŽŵĞǁŚĂƚŵŝƐůĞĂĚŝŶŐĂƐƚŚĞLJĂƌĞ ŵĞƌĞůLJĚŝƐĐƵƐƐŝŶŐƚŚĞĚĞĐůŝŶĞŝŶƚĞƌŵƐŽĨƉŽŝŶƚƐʹ ĂŶĚƚŚĞŝŶĚĞdžŚĂĚƌĞĐĞŶƚůLJŚŝƚƌĞĐŽƌĚŚŝŐŚƐ͘ /ŶƉĞƌĐĞŶƚĂŐĞƚĞƌŵƐ͕ƚŚĞŽǁ:ŽŶĞƐǁĂƐĚŽǁŶ ϰ͘ϲй͘dŚŝƐŝƐƵŶĚŽƵďƚĞĚůLJĂďŝŐŵŽǀĞ͕ƚŚĞďŝŐŐĞƐƚ ƐŝŶĐĞƵŐƵƐƚϮϬϭϭ͕ďƵƚŶŽƚĞǀĞŶĐůŽƐĞƚŽƌĂŶŬŝŶŐŝŶ ƚŚĞϮϬďŝŐŐĞƐƚƉĞƌĐĞŶƚĂŐĞĨĂůůƐŽŶƌĞĐŽƌĚ͘ EŽƚĂďůLJĂŌĞƌĂďŝŐĨĂůůĂƚƚŚĞŵĂƌŬĞƚŽƉĞŶŝŶ >ŽŶĚŽŶŽŶϲ&ĞďƌƵĂƌLJ͕ďĂƌŐĂŝŶŚƵŶƚĞƌƐďĞŐĂŶƚŽ ĞŵĞƌŐĞ͕ůŝŌŝŶŐƚŚĞ&d^ϭϬϬŽīŝƚƐůŽǁƐ͘;d^Ϳ HOW WERE OTHER MARKETS AFFECTED? :WEͬE/<</ϮϮϱ

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Source: SharePad. Data 1 Feb close to 6 Feb 3.30pm

08 February 2018 | SHARES |

7

BIG NEWS

Four important stories from the past week: Capita, Purplebricks, BT and Vodafone We look at the latest news from four well-known stocks on the UK market

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ƵƚƐŽƵƌĐĞƌCapita (CPI)ŝƐƐĞĞŬŝŶŐƚŽĂǀŽŝĚ ƚŚĞĨĂƚĞŽĨŝƚƐĚŽŽŵĞĚƉĞĞƌĂƌŝůůŝŽŶďLJ ƚĂŬŝŶŐƐƚĞƉƐƚŽĮdžŝƚƐďĂůĂŶĐĞƐŚĞĞƚƵŶĚĞƌ ŶĞǁĐŚŝĞĨĞdžĞĐƵƟǀĞ:ŽŶĂƚŚĂŶ>ĞǁŝƐ͘ /ŶĂŬŝƚĐŚĞŶƐŝŶŬŝŶŐĞdžĞƌĐŝƐĞ͕>ĞǁŝƐŚĂƐĐĂŶĐĞůůĞĚ ƚŚĞĚŝǀŝĚĞŶĚ͕ĂŶŶŽƵŶĐĞĚƉůĂŶƐĨŽƌĂάϳϬϬŵƌŝŐŚƚƐ ŝƐƐƵĞ͕ƚĂƌŐĞƚĞĚĚŝƐƉŽƐĂůƐŽĨĐĞƌƚĂŝŶďƵƐŝŶĞƐƐĞƐĂŶĚ ĂůƐŽĚŽǁŶŐƌĂĚĞĚƉƌŽĮƚŐƵŝĚĂŶĐĞ͘ /ĨĂƌŝůůŝŽŶŚĂĚƚĂŬĞŶƐŝŵŝůĂƌĂĐƟŽŶƐϭϮŽƌϭϴ ŵŽŶƚŚƐĂŐŽŝƚŵŝŐŚƚŚĂǀĞĂǀŽŝĚĞĚůŝƋƵŝĚĂƟŽŶ͕ ǁŝƚŚReutersĂŶĂůLJƐŝƐƐŚŽǁŝŶŐƚŚĞĐŽŵƉĂŶLJŚĂĚ ƉĂŝĚŽƵƚάϳϮϳŵƚŽƐŚĂƌĞŚŽůĚĞƌƐƐŝŶĐĞŝƚǁĂƐ ĐƌĞĂƚĞĚϭϵLJĞĂƌƐĂŐŽ͘ ^ŚŽƌĞĂƉŝƚĂůĂŶĂůLJƐƚZŽďŝŶ^ƉĞĂŬŵĂŶƐĂLJƐ͗ ͚ĂƉŝƚĂƐƟůůĨĂĐĞƐƐŝŐŶŝĮĐĂŶƚĐŚĂůůĞŶŐĞƐŝŶŝƚƐĐŽƌĞ h<ŵĂƌŬĞƚŽŶĐŽŶƚƌĂĐƚƉƌŝĐŝŶŐĂŶĚǁŝƚŚĐŽŶƟŶƵŝŶŐ ŚŝĂƚƵƐŝŶƉƵďůŝĐƐĞĐƚŽƌƐĞƌǀŝĐĞƐ͕ŝŶŽƵƌŽƉŝŶŝŽŶ͛͘ &ƵŶĚŵĂŶĂŐĞƌĂŶĚĂƉŝƚĂƐŚĂƌĞŚŽůĚĞƌEĞŝů tŽŽĚĨŽƌĚďĞůŝĞǀĞƐŝƚŝƐŶŽǁĂƚĂŬĞŽǀĞƌƚĂƌŐĞƚĨŽƌ ƌŝǀĂůƐŽƌƉƌŝǀĂƚĞĞƋƵŝƚLJďƵLJĞƌƐ͘ PURPLEBRICKS FIGHTS OFF CRITICISM KŶůŝŶĞĞƐƚĂƚĞĂŐĞŶƚPurplebricks (PURP:AIM) has ďĞĞŶŚŝƚďLJĂŶĂůLJƐƚĐƌŝƟĐŝƐŵŽĨŝƚƐďƵƐŝŶĞƐƐŵŽĚĞů ĂŶĚŵĞĚŝĂƌĞƉŽƌƚƐǁŚŝĐŚŚĂǀĞĐĂůůĞĚŝŶƚŽƋƵĞƐƟŽŶ ŝƚƐƐƵĐĐĞƐƐƌĂƚĞĨŽƌƐĞůůŝŶŐŚŽŵĞƐ͘ :ĞīĞƌŝĞƐĂŶĂůLJƐƚŶƚŚŽŶLJŽĚůŝŶŐƐĂLJƐũƵƐƚŚĂůĨ ŽĨƚŚĞĐŽŵƉĂŶLJ͛ƐĐƵƐƚŽŵĞƌƐŝŶEŽǀĞŵďĞƌϮϬϭϲ ƐŽůĚƚŚĞŝƌŚŽŵĞƐǁŝƚŚŝŶϭϬŵŽŶƚŚƐǁŚŝůĞƚŚĞ ĐŽŵƉĂŶLJŚĂƐƌĞŐƵůĂƌůLJƋƵŽƚĞĚƐƵĐĐĞƐƐƌĂƚĞƐ ĂƌŽƵŶĚĂŶĚĂďŽǀĞϴϬй͘ ŽĚůŝŶŐĂůƐŽƐĂLJƐƚŚĞƌĞŝƐĂƉŽƐƐŝďŝůŝƚLJƚŚĂƚ ƌĞǀĞŶƵĞŵĂLJŚĂǀĞďĞĞŶŽǀĞƌƐƚĂƚĞĚ͘dŚĞƐĞĐƌŝƟĐŝƐŵƐ ŚĂǀĞďĞĞŶ͚ĮƌŵůLJ͛ƌĞĨƵƚĞĚďLJƚŚĞĐŽŵƉĂŶLJ͘ FEARS OVER BT DIVIDENDS άϭϰďŶƉĞŶƐŝŽŶďůĂĐŬŚŽůĞ͕ƟŐŚƚĞŶŝŶŐƌĞŐƵůĂƟŽŶ ĂŶĚĂŶĞdžƉĞŶƐŝǀĞͲůŽŽŬŝŶŐƐƉŽƌƚƐďƌŽĂĚĐĂƐƚƌŝŐŚƚƐ ƉƌŽĐĞƐƐĂƌĞďŝŐƌĞĂƐŽŶƐǁŚLJBT (BT.A)ŝŶǀĞƐƚŽƌƐĂƌĞ

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| SHARES | 08 February 2018

ŐĞƫŶŐŚŽƚƵŶĚĞƌƚŚĞĐŽůůĂƌ͘ tĂƚĐŚŝŶŐŝƚƐh<ĐŽŶƐƵŵĞƌĂƌŵŐŽĞdžͲŐƌŽǁƚŚŝŶ ƚŚĞƚŚŝƌĚƋƵĂƌƚĞƌƚŽϯϭĞĐĞŵďĞƌϮϬϭϳĚŽĞƐŶ͛ƚ ŚĞůƉŵĂƩĞƌƐ͘ dŚĞŵĂŝŶǁŽƌƌLJĨŽƌƐŚĂƌĞŚŽůĚĞƌƐŝƐƚŚĂƚƚŚĞƐĞ ŝƐƐƵĞƐĐŽƵůĚƐƋƵĞĞnjĞd͛ƐĨƵƚƵƌĞĐĂƐŚŇŽǁƐĂŶĚ ůŝŵŝƚĞĚŝƚƐĂďŝůŝƚLJƚŽŬĞĞƉƉĂLJŝŶŐŝƚƐŚŝŐŚͲLJŝĞůĚŝŶŐ ĚŝǀŝĚĞŶĚƐ͘d͛ƐƐŚĂƌĞƉƌŝĐĞŚĂƐƉůƵŶŐĞĚƚŽĂĮǀĞͲ LJĞĂƌůŽǁŽĨϮϰϭ͘ϱϱƉ͕ƉƵƫŶŐƚŚĞĨƵůůLJĞĂƌƚŽϯϭ DĂƌĐŚϮϬϭϵŝŶĐŽŵĞLJŝĞůĚĂƚϲ͘ϳй͕ǁŚŝĐŚůŽŽŬƐ ĂƩƌĂĐƟǀĞ͕ďƵƚŽŶůLJŝĨƚŚĞŐƌŽƵƉĐĂŶĂīŽƌĚƚŽƉĂLJŝƚ͘ VODAFONE IN TALKS OVER LIBERTY ASSETS ŽŶĮƌŵĂƟŽŶŽĨĂƐƐĞƚƚĂůŬƐďĞƚǁĞĞŶVodafone (VOD)ĂŶĚsŝƌŐŝŶDĞĚŝĂͲŽǁŶĞƌ>ŝďĞƌƚLJ'ůŽďĂů ŚĂǀĞŐƌĂďďĞĚƚŚĞŵĂƌŬĞƚ͛ƐĂƩĞŶƟŽŶ͘EĞŐŽƟĂƟŽŶƐ ĐŽƵůĚƐĞĞsŽĚĂĨŽŶĞŝŶǀĞƐƚƵƉƚŽΦϭϰďŶƚŽƚĂŬĞ ŽǁŶĞƌƐŚŝƉŽĨǀĂƌŝŽƵƐƵƌŽƉĞĂŶĂƐƐĞƚƐĨƌŽŵ>ŝďĞƌƚLJ͕ ƉĂƌƟĐƵůĂƌůLJĮdžĞĚͲůŝŶĞĂŶĚďƌŽĂĚďĂŶĚĂƐƐĞƚƐ͘ sŽĚĂĨŽŶĞŝŶƐŝƐƚƐƚŚĂƚŝƚŝƐŶŽƚůŽŽŬŝŶŐƚŽůĂƵŶĐŚ ĂĨƵůůƚĂŬĞŽǀĞƌŽĨƚŚĞh^ͲůŝƐƚĞĚĐŽŵƉĂŶLJ͘Ƶƚŝƚ ĚŽĞƐƌĂŝƐĞĂŶŝŶƚĞƌĞƐƟŶŐƋƵĞƐƟŽŶŽǀĞƌƚŚĞĨƵƚƵƌĞ ŽĨ>ŝďĞƌƚLJͲŽǁŶĞĚsŝƌŐŝŶDĞĚŝĂŝŶƚŚĞh<͖ĂŶĂƐƐĞƚ ƚŚĂƚŵĂŶLJĂŶĂůLJƐƚƐďĞůŝĞǀĞǁŽƵůĚĂĚĚĂƵƐĞĨƵůĮďƌĞ ŶĞƚǁŽƌŬĂƐǁĞůůĂƐĐŽŶƚĞŶƚƚŽsŽĚĂĨŽŶĞ͘;d^ͬ^&Ϳ

Purplebricks has been hit by ĐƌŝƟĐŝƐŵŽĨŝƚƐďƵƐŝŶĞƐƐŵŽĚĞů

BIG NEWS NEWS BIG

Why Royal Mail’s pension breakthrough is such a big share price catalyst The company can now focus on productivity gains instead of negotiating with staff to avoid strikes

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ŚĂƌĞƐŝŶƉĂƌĐĞůƐͲƚŽͲůĞƩĞƌƐĚĞůŝǀĞƌLJƐĞƌǀŝĐĞ Royal Mail (RMG)ĂƌĞĞŶũŽLJŝŶŐƚŚĞŝƌďĞƐƚ ƌƵŶŝŶƚǁŽLJĞĂƌƐ͕ĐƵƌƌĞŶƚůLJƚƌĂĚŝŶŐĂƚϱϬϱ͘ϴƉ ǀĞƌƐƵƐĂϭϮͲŵŽŶƚŚůŽǁŽĨϯϳϬ͘ϵƉŝŶEŽǀĞŵďĞƌ ϮϬϭϳ͘dŚĞŵĂƌŬĞƚŚĂƐŐŝǀĞŶĂƉŽƐŝƟǀĞƌĞĂĐƟŽŶƚŽ ĂďƌĞĂŬƚŚƌŽƵŐŚĚĞĂůŽŶƉĂLJĂŶĚƉĞŶƐŝŽŶƐ͘ ůĞdžWĂƚĞƌƐŽŶ͕ĂŶĂŶĂůLJƐƚĂƚŝŶǀĞƐƚŵĞŶƚďĂŶŬ /ŶǀĞƐƚĞĐ͕ƌĞĐŬŽŶƐƚŚĞƐŚĂƌĞƐĐŽƵůĚŚŝƚϲϬϬƉŽǀĞƌ ƚŚĞŶĞdžƚϭϮŵŽŶƚŚƐ͘,ĞƐĂLJƐƚŚĞĐŽŵƉĂŶLJƐŚŽƵůĚ ŶŽǁďĞĂďůĞƚŽĨŽĐƵƐŽŶƉƌŽĚƵĐƚĚĞǀĞůŽƉŵĞŶƚĂŶĚ ŐĞŶĞƌĂƟŶŐĨƵƌƚŚĞƌŽƉĞƌĂƟŽŶĂůĞĸĐŝĞŶĐŝĞƐ͘ ͚&ŽƌĚĞůŝǀĞƌLJƐƚĂī͕ƌŽƵŐŚůLJϵϬйŽĨh<W/> ĞŵƉůŽLJĞĞƐ͕ŽƵƚŽĨĂǁŽƌŬŝŶŐĚĂLJŽĨďĞƚǁĞĞŶϳ ĂŶĚϴŚŽƵƌƐ͕ŽŶůLJďĞƚǁĞĞŶϰĂŶĚϰ͘ϱŚŽƵƌƐ͕Žƌ ĂďŽƵƚϱϲй͕ŝƐƐƉĞŶƚĂĐƚƵĂůůLJĚĞůŝǀĞƌŝŶŐŵĂŝůĂŶĚ ƉĂƌĐĞůƐ͕ǁŝƚŚƚŚĞƌĞŵĂŝŶŝŶŐƟŵĞƐƉĞŶƚŝŶƚŚĞůŽĐĂů ĚĞůŝǀĞƌLJŽĸĐĞǁŚĞƌĞĂŶƵŵďĞƌŽĨĨƵŶĐƟŽŶƐƚĂŬĞ ƉůĂĐĞ͕͛ĐŽŵŵĞŶƚƐWĂƚĞƌƐŽŶ͘h<W/>ŝƐZŽLJĂůDĂŝů͛Ɛ h<ƉĂƌĐĞůƐĂŶĚůĞƩĞƌƐĂƌŵ͘ ͚KŶĞŽĨƚŚĞŵŽƐƚƟŵĞͲĐŽŶƐƵŵŝŶŐĨƵŶĐƟŽŶƐ ŝƐŵĂŶƵĂůůLJƐŽƌƟŶŐĂŶĚƐĞƋƵĞŶĐŝŶŐƉĂƌĐĞůƐĂŶĚ ƵŶĂĚĚƌĞƐƐĞĚŵĂŝůĂŶĚƚŚŝƐĐĂŶŶŽǁďĞĂƵƚŽŵĂƚĞĚ ĂŶĚŚĞŶĐĞƚŚĞϱϲйŽĨƟŵĞƐƉĞŶƚĚĞůŝǀĞƌŝŶŐĐĂŶ ŝŶĐƌĞĂƐĞ͛͘

ĞŶĚŽƌƐĞĚƚŚĞƚĞƌŵƐŽĨƚŚĞĂŐƌĞĞŵĞŶƚĂŶĚƐĂLJƐ ƚŚĞĚĞĂůǁŝůůŶŽǁďĞƌĞĐŽŵŵĞŶĚĞĚƚŽƚŚĞƵŶŝŽŶ͛Ɛ ϭϭϬ͕ϬϬϬŵĞŵďĞƌƐŝŶĂďĂůůŽƚ͘ ůŽŶŐƐŝĚĞŶĞǁƐŽĨƚŚŝƐĂŐƌĞĞŵĞŶƚZŽLJĂůDĂŝů ƌĞƉŽƌƚĞĚƌŽďƵƐƚƚƌĂĚŝŶŐ͘/ƚĞdžƉĞĐƚƐƚŽĚĞůŝǀĞƌ ŽƉĞƌĂƟŶŐƉƌŽĮƚďĞĨŽƌĞƚƌĂŶƐĨŽƌŵĂƟŽŶĂůĐŽƐƚƐŽĨ ĂƚůĞĂƐƚάϲϴϬŵŝŶŝƚƐDĂƌĐŚϮϬϭϴĮŶĂŶĐŝĂůLJĞĂƌ͘ WĂƚĞƌƐŽŶĂƚ/ŶǀĞƐƚĞĐĐŽŵŵĞŶƚƐ͚͗tĞďĞůŝĞǀĞ ƚŚĂƚďLJƵŶůŽĐŬŝŶŐƚŚĞƉŽƚĞŶƟĂůĨŽƌƉƌŽĚƵĐƟǀŝƚLJ ŝŵƉƌŽǀĞŵĞŶƚ͕ƚŚĞŽƵƚůŽŽŬĨŽƌZŽLJĂůDĂŝůŚĂƐďĞĞŶ ƚƌĂŶƐĨŽƌŵĞĚ͘ ͚ZŽLJĂůDĂŝůŝƐƚŚĞůŽǁĞƐƚŵĂƌŐŝŶĂŶĚůŽǁĞƐƚ ƌĂƚĞĚŵĂŝůƐƚŽĐŬŝŶƵƌŽƉĞ͕ŝŶĚŝĐĂƟŶŐƚŚĂƚƚŚĞ ŵĂƌŬĞƚĚŽĞƐŶŽƚďĞůŝĞǀĞƚŚĂƚŵĂƌŐŝŶƐĐĂŶďĞ ŵĂŝŶƚĂŝŶĞĚ͕ŶĞǀĞƌŵŝŶĚŝŶĐƌĞĂƐĞ͘tĞďĞůŝĞǀĞƚŚĂƚ ŵĂƌŐŝŶƐĐĂŶƌŝƐĞ͛͘ SharesƐĂŝĚůĂƐƚKĐƚŽďĞƌƚŽďƵLJZŽLJĂůDĂŝůĂƚϯϴϭƉ ŝŶƚŚĞďĞůŝĞĨƚŚĂƚŝƚƐƉƌŽďůĞŵƐĐŽƵůĚďĞĮdžĞĚʹĂŶĚ ǁĞƌĞŵĂŝŶĨĂŶƐŽĨƚŚĞƐƚŽĐŬĂƚƚŚĞĐƵƌƌĞŶƚƉƌŝĐĞ͘ ǀĞŶĂŌĞƌƚŚĞƌĞĐĞŶƚƐŚĂƌĞƉƌŝĐĞƐƚƌĞŶŐƚŚƚŚĞ ĐŽŵƉĂŶLJŽīĞƌƐĂŐĞŶĞƌŽƵƐƉƌŽƐƉĞĐƟǀĞLJŝĞůĚŽĨ ϰ͘ϵй͘;>D:Ϳ

WHAT DID ROYAL MAIL PROMISE IN ORDER TO END THE DEADLOCK? ZŽLJĂůDĂŝůƐĂLJƐŝƚǁŝůůĐůŽƐĞŝƚƐĚĞĮŶĞĚďĞŶĞĮƚĮŶĂů ƐĂůĂƌLJƉĞŶƐŝŽŶƐĐŚĞŵĞĂƚƚŚĞĞŶĚŽĨDĂƌĐŚďƵƚǁŝůů ŵĂŝŶƚĂŝŶƚƌĂŶƐŝƟŽŶĂůƉĞŶƐŝŽŶĂŐƌĞĞŵĞŶƚƐĂŚĞĂĚ ŽĨƚŚĞĞǀĞŶƚƵĂůůĂƵŶĐŚŽĨĂĚĞĮŶĞĚĐŽŶƚƌŝďƵƟŽŶ ƐĐŚĞŵĞ͘dŚĞŽŶŐŽŝŶŐĂŶŶƵĂůĐĂƐŚĐŽƐƚŽĨƉĞŶƐŝŽŶƐ ǁŝůůƌĞŵĂŝŶĂƚάϰϬϬŵƉĞƌLJĞĂƌ͘ /ŶĞdžĐŚĂŶŐĞĨŽƌĂϱйƉĂLJƌŝƐĞĂŶĚƐŚŽƌƚĞƌ ǁŽƌŬŝŶŐǁĞĞŬ͕ĞŵƉůŽLJĞĞƐǁŝůůǁŽƌŬǁŝƚŚZŽLJĂů DĂŝůƚŽŝŶĐƌĞĂƐĞŽƉĞƌĂƟŽŶĂůĞĸĐŝĞŶĐŝĞƐďLJƵƐŝŶŐ ƚĞĐŚŶŽůŽŐLJƚŽĞĸĐŝĞŶƚůLJƉƌŽĐĞƐƐĂŶĚĚĞůŝǀĞƌƉĂƌĐĞůƐ͘ dŚĞŽŵŵƵŶŝĐĂƟŽŶtŽƌŬĞƌƐhŶŝŽŶŚĂƐ 08 February 2018 | SHARES |

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BIG NEWS

BP wins the battle of the oil majors Company reveals better performance in refining and marketing than Royal Dutch Shell and US peers

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ĨƚŚĞh<͛ƐƚǁŽůĂƌŐĞŝŶƚĞŐƌĂƚĞĚŽŝů ĐŽŵƉĂŶŝĞƐ͕BP (BP.)ůŽŽŬƐƚŽďĞƚŚĞ ǁŝŶŶĞƌŽǀĞƌRoyal Dutch Shell (RDSB)ŝŶ ƚĞƌŵƐŽĨĨŽƵƌƚŚƋƵĂƌƚĞƌĂŶĚĨƵůůLJĞĂƌƌĞƐƵůƚƐ͘ ^ŚĂƌĞƐŝŶďŽƚŚĐŽŵƉĂŶŝĞƐĨĞůůŽŶƚŚĞĚĂLJŽĨƚŚĞŝƌ ƌĞƐƵůƚƐĞĂƌůŝĞƌƚŚŝƐŵŽŶƚŚďƵƚW͛ƐƉĞƌĨŽƌŵĂŶĐĞ ďŽƚŚŝŶƐŚĂƌĞƉƌŝĐĞƚĞƌŵƐĂŶĚŽƉĞƌĂƟŽŶĂůůLJǁĂƐƚŚĞ ŵŽƌĞŝŵƉƌĞƐƐŝǀĞ͕ǁŝƚŚĂŵŽĚĞƐƚĨĂůůŝŶŝƚƐƐŚĂƌĞƐŽŶϲ &ĞďƌƵĂƌLJĐŽŵŝŶŐĂŵŝĚĂŵƵĐŚǁŝĚĞƌŵĂƌŬĞƚĚĞĐůŝŶĞ͘ džƉĞĐƚĂƟŽŶƐĨŽƌďŽƚŚƐĞƚƐŽĨƌĞƐƵůƚƐǁĞƌĞŚŝŐŚ ĂŌĞƌĂƐŝŐŶŝĮĐĂŶƚƌĞĐŽǀĞƌLJŝŶƚŚĞŽŝůƉƌŝĐĞ͘^ŚĞůů͛Ɛ ůĂƌŐĞůLJŝŶͲůŝŶĞŶƵŵďĞƌƐǁĞƌĞŶŽƚĞŶŽƵŐŚƚŽ ŵĂƚĐŚƚŚĞƐĞĞdžƉĞĐƚĂƟŽŶƐ͘ƵƌƌĞŶƚĐŽƐƚŽĨƐƵƉƉůLJ ĞĂƌŶŝŶŐƐ;^ŚĞůů͛ƐƉƌĞĨĞƌƌĞĚŵĞĂƐƵƌĞŽĨƉƌŽĮƚͿ ĞdžĐůƵĚŝŶŐŽŶĞͲŽīŝƚĞŵƐĐĂŵĞŝŶĂƚΨϭϱ͘ϳϲďŶ ĐŽŵƉĂƌĞĚǁŝƚŚΨϳ͘ϭϵďŶĂLJĞĂƌĞĂƌůŝĞƌ͘

Tesco impresses with profit and dividend guidance BRITAIN’S BIGGEST retailer Tesco (TSCO) has issued guidance for better than expected profit and dividend payments. It expects to show at least £1.575bn operating profit before one-off items when full year results are published on 11 April. It has flagged a 2p per share final dividend. The latest grocery share data from Kantar Worldpanel shows Tesco remains the fastest growing of the big four supermarket groups. (JC)

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| SHARES | 08 February 2018

,ŽǁĞǀĞƌ͕ƚŚŝƐǁĂƐŽŶůLJŵĂƌŐŝŶĂůůLJĂŚĞĂĚŽĨ ƚŚĞĂŶĂůLJƐƚĐŽŶƐĞŶƐƵƐĮŐƵƌĞŽĨΨϭϱ͘ϳϮďŶ͘/Ŷ ƉĂƌƚƚŚŝƐǁĂƐĚƵĞƚŽĂǁĞĂŬĞƌƚŚĂŶĞdžƉĞĐƚĞĚ ƉĞƌĨŽƌŵĂŶĐĞĨƌŽŵŝƚƐĚŽǁŶƐƚƌĞĂŵ;ƌĞĮŶŝŶŐĂŶĚ ŵĂƌŬĞƟŶŐͿŽƉĞƌĂƟŽŶƐ͘dŚŝƐƉĂƩĞƌŶǁĂƐƌĞƉĞĂƚĞĚ ŝŶƚŚĞƋƵĂƌƚĞƌůLJƌĞƐƵůƚƐĨƌŽŵh^ƌŝǀĂůƐdždžŽŶDŽďŝů ĂŶĚŚĞǀƌŽŶ͘ WƉŽƐƚĞĚƵŶĚĞƌůLJŝŶŐƌĞƉůĂĐĞŵĞŶƚĐŽƐƚƉƌŽĮƚ ŽĨΨϮ͘ϭďŶĂŐĂŝŶƐƚĐŽŶƐĞŶƐƵƐĞƐƟŵĂƚĞƐĨŽƌΨϭ͘ϵďŶ͕ ƋƵĂĚƌƵƉůŝŶŐLJĞĂƌͲŽŶͲLJĞĂƌ͕ĂŶĚ͕ŝŶĐŽŶƚƌĂƐƚ͕ ĚĞůŝǀĞƌĞĚ͚ǀĞƌLJƐƚƌŽŶŐ͛ĚŽǁŶƐƚƌĞĂŵĞĂƌŶŝŶŐƐ͘ ŽƚŚĐŽŵƉĂŶŝĞƐĂĐŚŝĞǀĞĚĂƌŽďƵƐƚĐĂƐŚŇŽǁ ƉĞƌĨŽƌŵĂŶĐĞǁŚŝĐŚŝƐĞŶĐŽƵƌĂŐŝŶŐĨŽƌƚŚĞ ƐƵƐƚĂŝŶĂďŝůŝƚLJŽĨƚŚĞŝƌƌĞƐƉĞĐƟǀĞĚŝǀŝĚĞŶĚƐ͘ƚ άϮϯ͘ϲϬ͕^ŚĞůůŝƐLJŝĞůĚŝŶŐϱ͘ϳй͖ĂŶĚĂƚϰϳϴƉ͕WŝƐ LJŝĞůĚŝŶŐϲй͘;d^Ϳ

Shoppers keep calm Ocado story and carry on sours again DESPITE A testing backdrop for UK shoppers, total retail sales rose 1.4% in January 2018, versus 0.1% growth in January 2017, according to the latest (6 Feb) BRC-KPMG Retail Sales Monitor. On a like-for-like basis, UK retail sales crept 0.6% higher, a pretty solid performance, albeit one delivered against a weak prior year comparative. ‘The figures paint the same old picture of divided fortunes for food and non-food sales,’ comments BRC CEO Helen Dickinson. Food sales continue to be much stronger than non-food sales (JC)

SHARES IN online supermarket Ocado (OCDO) soured as full year results (6 Feb) revealed a return to a pre-tax loss and a warning that 2018 profits will be pegged back by ongoing investment spend to ‘accelerate’ growth opportunities. Ocado also announced a 5% placing which in the scathing words of Shore Capital analyst Clive Black, ‘reflects the magnitude of cash burn for its NASA-like projects; high in technological detail but one just never sees their benefit from Planet Earth’. (JC)

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STORY IN NUMBERS

18%

DEzh<ƚĞĐŚŶŽůŽŐLJƐƚŽĐŬƐĂƌĞ ŶŽƚĂƐĞdžƉĞŶƐŝǀĞĂƐƚŚĞLJŵĂLJ ĂƚĮƌƐƚĂƉƉĞĂƌ͕ĞƐƉĞĐŝĂůůLJǁŚĞŶ ĐƵƌƌĞŶƚŐƌŽǁƚŚĨŽƌĞĐĂƐƚƐĂƌĞ ƚĂŬĞŶŝŶƚŽĂĐĐŽƵŶƚ͘dŚŝƐŝƐƚŚĞ ĮŶĚŝŶŐŽĨĂƐƚƵĚLJďLJŝŶǀĞƐƚŵĞŶƚ ďĂŶŬ/ŶǀĞƐƚĞĐ͘ /ƚƐĂŶĂůLJƐƚƐĨŽƵŶĚƚŚĞŝƌ ƵŶŝǀĞƌƐĞŽĨƚĞĐŚŶŽůŽŐLJƐƚŽĐŬƐ ǁĞƌĞƚƌĂĚŝŶŐĂƚĂϭϴйĚŝƐĐŽƵŶƚ ƚŽƚŚĞǁŝĚĞƌ&d^ůů^ŚĂƌĞ ŝŶĚĞdž͕ŽŶĂƉƌŝĐĞƚŽĞĂƌŶŝŶŐƐ ŐƌŽǁƚŚŽƌW'ŵƵůƟƉůĞ͘ dŚĞ/ŶǀĞƐƚĞĐƌĞƐĞĂƌĐŚ͕ ƉƵďůŝƐŚĞĚŽŶϯϭ:ĂŶƵĂƌLJ͕ĨŽƵŶĚ ƚŚĂƚƚĞĐŚŶŽůŽŐLJƐƚŽĐŬƐǁĞƌĞ ƚƌĂĚŝŶŐŽŶĂŶĂǀĞƌĂŐĞW'ƌĂƟŽ ŽĨϭ͘ϴ͕ǀĞƌƐƵƐƚŚĞ&d^ůů^ŚĂƌĞ ĞƋƵŝǀĂůĞŶƚŽĨϮ͘Ϯ͘ dŚĞW'ƌĂƟŽŝƐǁŽƌŬĞĚŽƵƚ ďLJĚŝǀŝĚŝŶŐƚŚĞƉƌŝĐĞƚŽĞĂƌŶŝŶŐƐ ;WͿŵƵůƟƉůĞďLJĨŽƌĞĐĂƐƚ ĞĂƌŶŝŶŐƐŐƌŽǁƚŚ͘dLJƉŝĐĂůůLJ͕ ůŽǁĞƌW'ƌĂƟŶŐƐŝŵƉůLJƚŚĂƚ ĞĂƌŶŝŶŐƐŐƌŽǁƚŚŝƐŶŽƚďĞŝŶŐ ĨƵůůLJƌĞŇĞĐƚĞĚŝŶƐŚĂƌĞƉƌŝĐĞ ǀĂůƵĂƟŽŶƐ͘ ůƚŚŽƵŐŚŝƚĚŽĞƐŶ͛ƚŝŶĐůƵĚĞ ĂůůƚĞĐŚŶŽůŽŐLJƐƚŽĐŬƐŽŶƚŚĞ >ŽŶĚŽŶŵĂƌŬĞƚʹ/ŶǀĞƐƚĞĐ͛Ɛ ůŝƐƚĨŽĐƵƐĞƐŽŶƚŚĞ&d^ϯϱϬ ĐŽŶƐƟƚƵĞŶƚƐƉůƵƐĂǁŝĚĞ ƐĞůĞĐƟŽŶŽĨƐŵĂůůƚĞĐŚŶŽůŽŐLJ ĮƌŵƐʹŝƚĚŽĞƐƉƌŽǀŝĚĞĂĨĂŝƌ ŽǀĞƌĂůůǀŝĞǁŽĨƚŚĞƐƉĂĐĞ͘ /ŶǀĞƐƚĞĐĞƐƟŵĂƚĞƐĂǀĞƌĂŐĞ ĞĂƌŶŝŶŐƐŐƌŽǁƚŚŝŶϮϬϭϴĨŽƌŝƚƐ ƚĞĐŚŶŽůŽŐLJůŝƐƚŽĨůŽǁͲƚĞĞŶƐ͘ dŚĞĂŶĂůLJƐƚƐďĞůŝĞǀĞƚŚĂƚŵĂĐƌŽ ŝŶĚŝĐĂƚŽƌƐĂƌĞƐŽƵŶĚĂŶĚƚŚĂƚ ŵĂŶLJďƵƐŝŶĞƐƐŵŽĚĞůƐĂƌĞŝŶ ŐŽŽĚŚĞĂůƚŚ͘ dŚĞh<ƚĞĐŚŶŽůŽŐLJƐĞĐƚŽƌ ŽƵƚƉĞƌĨŽƌŵĞĚƐƚƌŽŶŐůLJ ƚŚƌŽƵŐŚϮϬϭϳ͘ 12

| SHARES | 08 February 2018

A.G. Barr’s sales continue to fizz ^Kd>Eͳ^ƐŽŌĚƌŝŶŬƐ ŵĂŬĞƌA.G. Barr (BAG)ƐĂLJƐŝƚ ŶŽǁĞdžƉĞĐƚƐƵƉƚŽϵϵйŽĨŝƚƐ ŽǁŶƉŽƌƞŽůŝŽǁŝůůďĞĞdžĞŵƉƚ ĨƌŽŵƚŚĞh<ƐƵŐĂƌƚĂdž͕ƵƉĨƌŽŵ ƉƌĞǀŝŽƵƐŐƵŝĚĂŶĐĞŽĨϵϬй ĂŶĚůĞĂǀŝŶŐĂŵĞĂŐƌĞϭйŽĨ ƚŚĞƉŽƌƞŽůŝŽĞdžƉŽƐĞĚƚŽƚŚĞ ůĞǀLJ͘dŚĞIRN-BRU͕Rubicon ĂŶĚStrathmore Water ďƌĂŶĚ ŽǁŶĞƌ͛ƐŝŶŶŽǀĂƟŽŶĂŶĚ ƌĞĨŽƌŵƵůĂƟŽŶƉƌŽŐƌĂŵŵĞ

50.2

ŚĂƐƉƌŽǀĞĚƐŽƐƵĐĐĞƐƐĨƵůƚŚĂƚ ĂůŵŽƐƚĂůůŽĨŝƚƐŽǁŶƉŽƌƞŽůŝŽ ǁŝůůĐŽŶƚĂŝŶůĞƐƐƚŚĂŶϱŐŽĨƚŽƚĂů ƐƵŐĂƌƐƉĞƌϭϬϬŵůďĞĨŽƌĞƚŚĞƐŽŌ ĚƌŝŶŬƐƐƵŐĂƌƚĂdžŝƐŝŵƉůĞŵĞŶƚĞĚ ŝŶƉƌŝů͘dŚŝƐŶĞǁƐĂĐĐŽŵƉĂŶŝĞĚ ĂƉŽƐŝƟǀĞƚƌĂĚŝŶŐƐƚĂƚĞŵĞŶƚ ĨƌŽŵ͘'͘Ăƌƌ͕ŇĂŐŐŝŶŐϳ͘ϱй ƐĂůĞƐŐƌŽǁƚŚƚŽĂƌŽƵŶĚάϮϳϳŵ ĨŽƌƚŚĞLJĞĂƌƚŽϮϳ:ĂŶƵĂƌLJϮϬϭϴ͕ ŽƵƚƉĞƌĨŽƌŵŝŶŐƚŚĞh<ƐŽŌ ĚƌŝŶŬƐŵĂƌŬĞƚ͘

UK construction flatlines

d,>d^dƉƵƌĐŚĂƐŝŶŐ ŵĂŶĂŐĞƌƐ͛ŝŶĚĞdž;WD/ͿĚĂƚĂ ŽŶƚŚĞh<ĐŽŶƐƚƌƵĐƟŽŶƐĞĐƚŽƌ ƐƵŐŐĞƐƚƐƚŚĞĨĂůůͲŽƵƚĨƌŽŵƚŚĞ ĐŽůůĂƉƐĞŽĨCarillion (CLLN) ŝƐ ŚĂǀŝŶŐĂŶĞŐĂƟǀĞŝŵƉĂĐƚ͘ ƌĞĂĚŝŶŐŽĨϱϬ͘ϮŝŶ:ĂŶƵĂƌLJ ŝŵƉůŝĞƐŶĞŐůŝŐŝďůĞŐƌŽǁƚŚ͘ ŶLJĮŐƵƌĞĂďŽǀĞϱϬŵĞĂŶƐ ĞdžƉĂŶƐŝŽŶǁŚŝůĞĂŶLJƚŚŝŶŐ

ďĞůŽǁƚŚŝƐƚŚƌĞƐŚŽůĚŵĞĂŶƐ ĂĐƟǀŝƚLJŝƐƐůŽǁŝŶŐ͘ WD/ƌĞůĞĂƐĞƐĂƌĞƐĞĞŶĂƐ ŽīĞƌŝŶŐĂŐŽŽĚŝŶƐŝŐŚƚŝŶƚŽ ĐƵƌƌĞŶƚĐŽŶĚŝƟŽŶƐĂƐƚŚĞLJ ĂƌĞďĂƐĞĚŽŶƌĞƐƉŽŶƐĞƐĨƌŽŵ ƚŚĞƉĞŽƉůĞǁŝƚŚŝŶĐŽŵƉĂŶŝĞƐ ǁŚŽŚĂǀĞƌĞƐƉŽŶƐŝďŝůŝƚLJĨŽƌ ďƵLJŝŶŐŝŶƌĞƋƵŝƌĞĚŐŽŽĚƐ ĂŶĚƐĞƌǀŝĐĞƐ͘

Is your portfolio strong where it matters? Investec UK Alpha Fund A keystone for your portfolio This core UK equity fund invests in Quality companies. Exceptional businesses with dominant market positions which can help them navigate good and bad economic times. It could be an ideal UK fund to hold for the long-term, within a diversified investment portfolio. Please bear in mind that shares can lose value rapidly, typically involve higher risks than bonds or money market instruments and the value of your investment may fall as a result.

• The Fund seeks to outperform the FTSE All Share Index by 3-5% per year although this is not guaranteed.1 • An experienced investment team, led by Co-Head of Quality investing Simon Brazier, who has been managing funds for more than 14 years. • The Investec UK Alpha Fund is an AJ Bell Favourite Fund. However, this is not a recommendation to buy or sell or an indication of future results.

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1

Gross of fees over rolling 3 years. This is an aim and not a guarantee. The Fund Prospectus and Key Investor Information Documents (KIIDs) may be obtained from www.investecassetmanagement.com. Issued by Investec Asset Management, which is authorised and regulated by the Financial Conduct Authority. January 2018.

GREAT IDEAS

Snap up Laird before the market wakes up to its turnaround Substantial recovery could be on the cards at reshaped electronics expert

WHY THE STOCK IS SO CHEAP? dŚĞƐŚĂƌĞƉƌŝĐĞŚĂƐŵŽƌĞƚŚĂŶ ŚĂůǀĞĚŽǀĞƌƚŚĞƉĂƐƚϭϴŵŽŶƚŚƐ ĂŌĞƌƚŚĞĐŽŵƉĂŶLJŐŽƚŝƚƐĞůĨŝŶƚŽ 14

| SHARES | 08 February 2017

ƌĞĐŽǀĞƌLJĂŶĚƚŚĞŵĂƌŬĞƚŚĂƐ ďĞĞŶƐůŽǁƚŽƉŝĐŬƵƉŽŶƚŚŝƐ (xxx) xxxp (LRD) 118.7p ƉŽŝŶƚ͘tĞďĞůŝĞǀĞƚŚŝƐǁŝůůƐŚŝŶĞ Stop loss: 95p xxp ƚŚƌŽƵŐŚǁŚĞŶϮϬϭϳĨƵůůLJĞĂƌ ƌĞƐƵůƚƐĂƌĞƵŶǀĞŝůĞĚ͕ƉĞŶĐŝůůĞĚŝŶ Market value: £580m xxx ĨŽƌϭDĂƌĐŚ͘ dŚŝƐƚƌĂĚĞŝƐŶŽƚǁŝƚŚŽƵƚ ƌŝƐŬƐ͘>ĂŝƌĚƌĞŵĂŝŶƐĂďŝŐ ĂƚĞƌƌŝďůĞƐƚĂƚĞ͘WŽŽƌŽƉĞƌĂƟŽŶĂů ƉƉůĞƐƵƉƉůŝĞƌ͕ŶŽƚĂůǁĂLJƐĂ ŵĂŶĂŐĞŵĞŶƚ͕ĂŶŽǀĞƌůLJͲĐŽŵƉůĞdž ĐŽŵĨŽƌƚĂďůĞƉŽƐŝƟŽŶƚŽďĞŝŶ͕ ƐƚƌƵĐƚƵƌĞĂŶĚƚŽŽŵƵĐŚĞdžƉŽƐƵƌĞ ǁŚŝůĞǀŝƐŝďŝůŝƚLJŝŶƐŽŵĞŽĨŝƚƐ ŽƚŚĞƌĞŶĚŵĂƌŬĞƚƐŝƐŶŽƚŐƌĞĂƚ͘ ƚŽŵŽďŝůĞƉŚŽŶĞŵĂƌŬĞƚƐǁĞƌĞ dŚĞƌĞŝƐĂůƐŽŽŶŐŽŝŶŐĞdžĞĐƵƟŽŶ ƚŽďůĂŵĞ͘ ƌŝƐŬƚŽƚŚĞƌĞĐŽǀĞƌLJƉůĂŶ͘ ƵƚƚŚĞďŝŐĮdžŝƐƚĂŬŝŶŐƐŚĂƉĞ zĞƚƚŚĞƐĞĨĂĐƚŽƌƐůŽŽŬŽǀĞƌůLJ ŶŽǁƚŚĂƚŝƚƐďĂůĂŶĐĞƐŚĞĞƚŚĂƐ ĚŝƐĐŽƵŶƚĞĚŝŶƚŚĞĐƵƌƌĞŶƚƐŚĂƌĞ ďĞĞŶƌĞƉĂŝƌĞĚ͕ĂƐĞǀŝĚĞŶĐĞĚ ƉƌŝĐĞǁŝƚŚůŝƩůĞǀĂůƵĞŐŝǀĞŶƚŽ ďLJĂŶŝŵƉƌĞƐƐŝǀĞƚƌĂĚŝŶŐ ŽƵƚƉĞƌĨŽƌŵĂŶĐĞ͘/ƚƐƉĞĞƌŐƌŽƵƉ ƵƉĚĂƚĞŝŶKĐƚŽďĞƌϮϬϭϳ͘dŚŝƌĚ ƚƌĂĚĞƐŽŶĂƌŽƵŐŚĨŽƌǁĂƌĚ ƋƵĂƌƚĞƌƌĞƐƵůƚƐƐŚŽǁĞĚĂůŵŽƐƚ ƉƌŝĐĞͲƚŽͲĞĂƌŶŝŶŐƐŵƵůƟƉůĞŽĨ ĞǀĞƌLJƚŚŝŶŐƌŝƐŝŶŐʹƌĞǀĞŶƵĞ͕ ϭϳͲƉůƵƐ͕ĂĐĐŽƌĚŝŶŐƚŽZĞƵƚĞƌƐ͘ ƉƌŽĮƚ͕ŽƉĞƌĂƟŶŐŵĂƌŐŝŶƐĂŶĚ dŚĂƚŝŵƉůŝĞƐĐŽŶƐŝĚĞƌĂďůĞ ĨŽƌĞĐĂƐƚƐʹĞdžĐĞƉƚƚŚĞƐŚĂƌĞ ƐĐŽƉĞĨŽƌ>ĂŝƌĚƚŽĞŶũŽLJĂŚŝŐŚĞƌ ƉƌŝĐĞ͘ ƌĂƟŶŐŽŶĐĞŝƚĐĂŶĐŽŶǀŝŶĐĞƚŚĞ ŚĞĐŬƐĂŶĚďĂůĂŶĐĞƐƉƵƚ ŵĂƌŬĞƚƚŚĂƚŝƚƐƚƵƌŶĂƌŽƵŶĚŝƐŝŶ ŝŶƉůĂĐĞďLJĂƐŚĂŬĞŶͲƵƉ ĨƵůůĞīĞĐƚ͘;^&Ϳ ŵĂŶĂŐĞŵĞŶƚƚĞĂŵŵĞĂŶƐ ŶĞĂƌͲƚĞƌŵŐƌŽǁƚŚŵĂLJďĞŵŽƌĞ ĐŽŶƐŝĚĞƌĞĚ͕ďƵƚĂůƐŽŵŽƌĞ BROKER SAYS: 5 3 0 ƌĞůŝĂďůĞ͘ &ŽƌĞdžĂŵƉůĞ͕ǁŚĞƌĞŽŶĐĞŝƚ LAIRD FTSE ALL SHARE ĞĂƌŶĞĚĂďŽƵƚϯϬйŽĨƌĞǀĞŶƵĞ 165 Rebased to first ĨƌŽŵƉƉůĞ͕ƚŚĞƵƉĞƌƟŶŽŐŝĂŶƚ͛Ɛ 155 ĐŽŶƚƌŝďƵƟŽŶŚĂƐďĞĞŶƌĞĚƵĐĞĚ 145 ƚŽĂƌŽƵŶĚϭϱйʹƐƟůůůĂƌŐĞďƵƚ ŵŽƌĞŵĂŶĂŐĞĂďůĞ͘ 135

XXXX È LAIRD ÈBUY BUY

WHAT NEXT? dŚĞƌĞŝƐŶŽǁƌĞĂůƐĐŽƉĞĨŽƌƌĂƉŝĚ

Source: Thomson Reuters Datastream

T

ŚĞďƌĞĂƚŚůĞƐƐƐĞůůͲŽīŝŶ ƐŚĂƌĞƉƌŝĐĞƐĞĂƌůŝĞƌƚŚŝƐ ǁĞĞŬŝƐĂŐŽŽĚƌĞŵŝŶĚĞƌ ŶŽƚƚŽďĞŽǀĞƌͲĞdžƉŽƐĞĚƚŽƐƚŽĐŬƐ ǁŝƚŚŚŝŐŚǀĂůƵĂƟŽŶƐ͘tŝƚŚ ƚŚĂƚŝŶŵŝŶĚ͕ǁĞ͛ǀĞƐƉŽƩĞĚ ĂŶŝŶƚĞƌĞƐƟŶŐƐƚŽĐŬŽŶĂŶ ƵŶĚĞŵĂŶĚŝŶŐǀĂůƵĂƟŽŶĂŶĚŽŶĞ ǁŝƚŚĂƉŽƚĞŶƟĂůƌĞͲƌĂƟŶŐĐĂƚĂůLJƐƚ ŽŶƚŚĞŚŽƌŝnjŽŶ͘ Laird (LRD)ŝƐĂŐůŽďĂů ƚĞĐŚŶŽůŽŐLJĐŽŵƉĂŶLJ͕ĚĞƐŝŐŶŝŶŐ ĂŶĚŵĂŶƵĨĂĐƚƵƌŝŶŐĐŽŵƉůĞdž ĞŶŐŝŶĞĞƌĞĚĐŽŵƉŽŶĞŶƚƐƚŚĂƚ ĨĂĐŝůŝƚĂƚĞĂŶĚƉƌŽƚĞĐƚŵŽďŝůĞ ĐŽŵŵƵŶŝĐĂƟŽŶƐLJƐƚĞŵƐĂŶĚ ĐŽŶŶĞĐƚĞĚƐŽůƵƟŽŶƐ͘ /ƚŝƐĂŶŝŶĐƌĞĂƐŝŶŐůLJďŝŐƐƵƉƉůŝĞƌ ƚŽŶĞǁĐĂƌƐǁŚŝĐŚĂƌĞďĞĐŽŵŝŶŐ ǁŝƌĞĚĨŽƌƚŚĞŝŶƚĞƌŶĞƚůŝŬĞŶĞǀĞƌ ďĞĨŽƌĞ͘ĂƌƚĞĐŚŶŽůŽŐLJŝƐŽŶĞ ŽĨŝƚƐďŝŐŐƌŽǁƚŚŽƉƉŽƌƚƵŶŝƟĞƐ ĂůŽŶŐƐŝĚĞϱ'ĞdžƚƌĂƐƵƉĞƌĨĂƐƚ ŵŽďŝůĞĐŽŵŵƵŶŝĐĂƟŽŶĂŶĚ ŝŶƚĞƌŶĞƚŽĨƚŚŝŶŐƐĂƉƉůŝĐĂƟŽŶƐ͘ /ƚƐƐŚĂƌĞƐĂƌĞƚƌĂĚŝŶŐŽŶϭϭ͘Ϯ ƟŵĞƐĨŽƌĞĐĂƐƚĞĂƌŶŝŶŐƐƉĞƌ ƐŚĂƌĞĨŽƌϮϬϭϴ͘dŚĂƚƌĂƟŶŐĨĂůůƐ ƚŽϵ͘ϵͲƟŵĞƐďĂƐĞĚŽŶϮϬϭϵ͛Ɛ ĨŽƌĞĐĂƐƚĞĂƌŶŝŶŐƐ͘/ƚĂůƐŽŚĂƐĂ ϯ͘ϰйƉƌŽƐƉĞĐƟǀĞLJŝĞůĚĨŽƌϮϬϭϴ ǁŝƚŚƐĐŽƉĞĨŽƌƌĂƉŝĚĚŝǀŝĚĞŶĚ ŐƌŽǁƚŚ͘

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2018

GREAT IDEAS

Time to feast on high quality Cranswick Cash-generative pork and poultry processor is a tasty pick for uncertain times

POSITIVE TRADING UPDATE ,ƵůůͲŚĞĂĚƋƵĂƌƚĞƌĞĚƌĂŶƐǁŝĐŬ

CRANSWICK È BUY (CWK) £29.32 Stop loss: £23.40

Market value: £1.5bn

ƌĞƉŽƌƚĞĚ;ϭ&ĞďͿĂƐƚƌŽŶŐ ƉĞƌĨŽƌŵĂŶĐĞĨŽƌƚŚĞƚŚŝƌĚ ƋƵĂƌƚĞƌŝŶĐůƵĚŝŶŐŚƌŝƐƚŵĂƐ ǁŝƚŚƚƌĂĚŝŶŐ͚ƐůŝŐŚƚůLJĂŚĞĂĚ͛ŽĨ ŵĂŶĂŐĞŵĞŶƚ͛ƐĞdžƉĞĐƚĂƟŽŶƐ͘/ƚƐ ƚŽƚĂůĂŶĚůŝŬĞͲĨŽƌͲůŝŬĞƐĂůĞƐǁĞƌĞ ďŽƚŚĂŚĞĂĚŽĨƚŚĞƉƌŝŽƌLJĞĂƌ͘ /ŵƉƌĞƐƐŝǀĞůLJ͕ĞĂĐŚƉƌŽĚƵĐƚ ĐĂƚĞŐŽƌLJĚĞůŝǀĞƌĞĚƉŽƐŝƟǀĞ ǀŽůƵŵĞŐƌŽǁƚŚ͕ƐƵƉƉŽƌƚĞĚďLJ ŶĞǁďƵƐŝŶĞƐƐǁŝŶƐŝŶďŽƚŚƉŽƌŬ ĂŶĚƉŽƵůƚƌLJĂŶĚǁŝƚŚďĂĐŽŶ ƉƌŽǀŝŶŐĂƐƚĂŶĚŽƵƚŚƌŝƐƚŵĂƐ ƉĞƌĨŽƌŵĞƌ͘dŽƚĂůĞdžƉŽƌƚƐĂůĞƐ ǁĞƌĞĂůƐŽ͚ǁĞůůĂŚĞĂĚ͛ǁŝƚŚŚŝŶĂ ƉƌŽǀŝŶŐĂƐƚƌŽŶŐŵĂƌŬĞƚĨŽƌŽīͲ ĐƵƚƐŝŶĐůƵĚŝŶŐĐŚŝĐŬĞŶĨĞĞƚ͘ HEADWINDS TO CONSIDER ŌĞƌϭϴŵŽŶƚŚƐŽĨƌŝƐŝŶŐh< ƉŝŐƉƌŝĐĞƐ͕ƚŚĞŵĂƌŬĞƚŝƐŶŽǁ ĚĞŇĂƟŽŶĂƌLJ͘dŚŝƐƚƌĞŶĚĐŽƵůĚ ƉƌŽǀĞĂŚĞĂĚǁŝŶĚĨŽƌƐĞůůŝŶŐ ƉƌŝĐĞƐ͘,ŽǁĞǀĞƌŝŶƚŚĞƐŚŽƌƚͲ ƚĞƌŵ͕ůŽǁĞƌƉŝŐƉƌŝĐĞƐĐŽƵůĚ ƉŽƚĞŶƟĂůůLJƐƚƌĂŶƐǁŝĐŬ͛Ɛ ŵĂƌŐŝŶƐ͕ŐŝǀĞŶƚŚĞƵƐƵĂůůĂŐ ŝŶƉƌŝĐŝŶŐƉĂƐƐͲƚŚƌŽƵŐŚƚŽ ĐƵƐƚŽŵĞƌƐ͘ ƌĂŶƐǁŝĐŬĐŽŶƟŶƵĞƐƚŽƚĂŬĞ ŵĂƌŬĞƚƐŚĂƌĞǀŝĂŽƌŐĂŶŝĐĂŶĚ ĂĐƋƵŝƐŝƟǀĞŵĞĂŶƐ͘/ƚƐĨŽĐƵƐŽŶ ƉƌĞŵŝƵŵŽƌƐƵƉĞƌƉƌĞŵŝƵŵ ƉƌŽĚƵĐƚƐŝƐƐĞƌǀŝŶŐŝƚǁĞůůǁŚŝůĞ

ŝŶǀĞƐƟŶŐŝŶŵĂŶƵĨĂĐƚƵƌŝŶŐ ĐĂƉĂďŝůŝƟĞƐ͘ dŚĞďƵƐŝŶĞƐƐĐŽŶƟŶƵĞƐƚŽŝŶǀĞƐƚ ĨŽƌŐƌŽǁƚŚ͕ďƵƚƌĞƚĂŝŶƐƐŝŐŶŝĮĐĂŶƚ ĮŶĂŶĐŝĂůŇĞdžŝďŝůŝƚLJǁŝƚŚůŝƩůĞŶĞƚ ĚĞďƚĞdžƉĞĐƚĞĚĂƚLJĞĂƌĞŶĚ͕ƐĂLJƐ ŝŶǀĞƐƚŵĞŶƚďĂŶŬ/ŶǀĞƐƚĞĐ͘ ͚ĞƐƉŝƚĞƚŚĞƌĞĐŽƌĚůĞǀĞůƐŽĨ ĐĂƉĞdž͕ǁĞƐƟůůĂŶƟĐŝƉĂƚĞƚŚĞ ĐŽŵƉĂŶLJ͛ƐŶĞƚĚĞďƚǁŝůůĨĂůů ƐůŝŐŚƚůLJĨƌŽŵάϭϭŵƚŽάϵŵƚŚŝƐ LJĞĂƌ͕͛ĐŚŝƉƐŝŶĞƌĞŶďĞƌŐ͘/ƚ ďĞůŝĞǀĞƐƌĂŶƐǁŝĐŬŚĂƐƐŝŐŶŝĮĐĂŶƚ ĮŶĂŶĐŝĂůĐĂƉĂĐŝƚLJƚŽŵĂŬĞ ĂĐƋƵŝƐŝƟŽŶƐ͘ &ŽƌƚŚĞLJĞĂƌƚŽDĂƌĐŚϮϬϭϴ͕ ƐƚŽĐŬďƌŽŬĞƌ^ŚŽƌĞĂƉŝƚĂů ĨŽƌĞĐĂƐƚƐƉƌĞͲƚĂdžƉƌŽĮƚƚŽŐƌŽǁ ďLJϭϴйƚŽάϵϬ͘ϳŵ͘/ƚĞdžƉĞĐƚƐƚŚĞ ĚŝǀŝĚĞŶĚƚŽŝŶĐƌĞĂƐĞďLJϭϱйƚŽ ϱϬ͘ϴƉ͘&ŽƌƚŚĞĨŽůůŽǁŝŶŐLJĞĂƌŝƚ ĨŽƌĞĐĂƐƚάϵϱ͘ϱŵƉƌĞͲƚĂdžƉƌŽĮƚ ĂŶĚϱϰƉĚŝǀŝĚĞŶĚ͘;:Ϳ BROKER SAYS: 4

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CRANSWICK FTSE ALL SHARE

Source: Thomson Reuters Datastream

A

ŶĞƋƵŝƚLJŵĂƌŬĞƚƐĞůůͲŽī ƐŚŽƵůĚƌĞŵŝŶĚŝŶǀĞƐƚŽƌƐŽĨ ƚŚĞŶĞĞĚƚŽŝŶĐůƵĚĞƐŽŵĞ ŚŝŐŚͲƋƵĂůŝƚLJ͕ĐĂƐŚͲŐĞŶĞƌĂƟǀĞ ŐƌŽǁƚŚƐƚŽĐŬƐŝŶĂǁĞůůͲďĂůĂŶĐĞĚ ƉŽƌƞŽůŝŽ͘ ƵLJŝŶŐƐŚĂƌĞƐŝŶƚŚĞĐƵƌƌĞŶƚ ŵĂƌŬĞƚǁŝůůƚĂŬĞƐŽŵĞŶĞƌǀĞ ŐŝǀĞŶƚŚĞŚĞŝŐŚƚĞŶĞĚǀŽůĂƟůŝƚLJ͘Ɛ ƐƵĐŚ͕LJŽƵƐŚŽƵůĚŽŶůLJŵĂŬĞŶĞǁ ŝŶǀĞƐƚŵĞŶƚƐŝĨLJŽƵĨĞĞůĐŽŵĨŽƌƚĂďůĞ ĂďŽƵƚƚŚĞŵĂƌŬĞƚďĂĐŬĚƌŽƉĂŶĚ ƵŶĚĞƌƐƚĂŶĚƚŚĞƌŝƐŬƐ͘ /ĨLJŽƵ͛ƌĞŚĂƉƉLJƚŽƉƌŽĐĞĞĚ͕ ǁĞďĞůŝĞǀĞĂŐŽŽĚƐƚĂƌƟŶŐ ƉŽŝŶƚŝƐĨƌĞƐŚƉŽƌŬͲƚŽͲƉƌĞŵŝƵŵ ĐŽŽŬĞĚƉŽƵůƚƌLJƉƌŽĚƵĐƚƐƐƵƉƉůŝĞƌ Cranswick (CWK)͘dŚĞĨŽŽĚ ƉƌŽĚƵĐĞƌŚĂƐĂŶƵŶďƌŽŬĞŶ ĚŝǀŝĚĞŶĚŐƌŽǁƚŚƚƌĂĐŬƌĞĐŽƌĚ ƐƚƌĞƚĐŚŝŶŐďĂĐŬƚŽϭϵϵϬ͕Ă ƌĞŇĞĐƟŽŶŽĨĂǁĞůůͲƌƵŶďƵƐŝŶĞƐƐ͘ KǀĞƌƚŚĞƉĂƐƚĚĞĐĂĚĞ͕ ƌĂŶƐǁŝĐŬ͛Ɛh<ƉŽƌŬƌĞǀĞŶƵĞŚĂƐ ĨĂƩĞŶĞĚƵƉŝŵƉƌĞƐƐŝǀĞůLJĨƌŽŵ ĂƌŽƵŶĚάϱϬϬŵƚŽŶŽƌƚŚŽĨάϭďŶ ƉĞƌLJĞĂƌ͕ĂŝĚĞĚďLJŝŶǀĞƐƚŵĞŶƚƐŝŶ ƐƟŶŐƉŝŐͲƉƌŽĐĞƐƐŝŶŐĐĂƉĂĐŝƚLJ ĂŶĚŝŶŶĞǁƉƌŽĚƵĐƚĐĂƉĂďŝůŝƚLJ͘ dŚĞάϭ͘ϱďŶďƵƐŝŶĞƐƐŚĂƐ ĂůƐŽďƵŝůƚƐĐĂůĞŝŶƚŚĞƉŽƵůƚƌLJ ŵĂƌŬĞƚƚŚƌŽƵŐŚƚǁŽĂĐƋƵŝƐŝƟŽŶƐ͗ ϮϬϭϰ͛ƐĞŶƐŽŶWĂƌŬĂŶĚϮϬϭϲ͛Ɛ ƌŽǁŶŚŝĐŬĞŶ͘ /ŶǀĞƐƚŵĞŶƚďĂŶŬĞƌĞŶďĞƌŐ ĞdžƉĞĐƚƐƌĂŶƐǁŝĐŬƚŽĚĞůŝǀĞƌ ƐƵďƐƚĂŶƟĂůŽƌŐĂŶŝĐŐƌŽǁƚŚ ĨƌŽŵƉŽƌŬĂŶĚƚŚĞĐŽŶǀĞŶŝĞŶĐĞ ĐŚĂŶŶĞůŽǀĞƌƚŚĞĐŽŵŝŶŐLJĞĂƌƐ͘

3400 Rebased to first 3200 3000 2800 2600 2400 2200

2017

2018

08 February 2017 | SHARES |

15

WEEK AHEAD THURSDAY 9 FEBRUARY TRADING STATEMENTS Victrex VCT AGMS GCP Infrastructure Investments GCP Port Erin Biopharma Investments PEBI Shaftesbury SHB Victrex VCT ECONOMICS UK Construction Output Industrial Production Manufacturing Production

TUESDAY 13 FEBRUARY FINALS Acacia Mining INTERIMS A&J Mucklow Oncimmune Pan African Resources AGMS F&C Capital & Income Investment Trust Pressure Technologies TUI ECONOMICS UK PPI HPI CPI RPI

ACA MKLW ONC PAF

FCI PRES TUI

INTERIMS Galliford Try

CCH

MANAGEMENT WILL be looking to draw a clear line between their charge and liquidated construction services business Carillion (CLLN) when Galliford Try (GFRD) reports its half year results on 14 February. Since the news of Carillion’s collapse on 15 January, Galliford Try’s shares have lost 18% of their

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| SHARES | 08 February 2018

GFRD

THURSDAY 15 FEBRUARY

WEDNESDAY 14 FEBRUARY FINALS Coca-Cola HBC

SUPPLY ISSUES and a fall in full year revenue growth toppled ConvaTec’s (CTEC) shares late last year, leaving the wound care specialist trading below the 225p price at which it joined the stock market in October 2016. Shares in ConvaTec are now trading at 188.65p. The company publishes its half year results on 15 February. Management need to spell out when ConvaTec can resolve its supply problems in its advanced wound and ostomy care division can be resolved.

FINALS ConvaTec

CTEC

value, with the group warning of a potential £30m to £40m cash outflow to complete a joint venture it was working on with Carillion. Alongside its construction business, which has faced problems of its own on legacy contracts, Galliford Try is also active in regeneration and housebuilding.

DEADLINES ARE coming thick and fast for industrial design software supplier AVEVA (AVV). The group expects to get the sign-off from US regulators on 9 February for its proposed £3bn merger with the software arm of French engineer Schneider Electric. That will swiftly be followed on 15 February with a trading update for the Schneider part of the enlarged group. Final merger completion remains on track for some time towards the end of February. On 19 February new chief executive Craig Hayman will start work, and we expect details on the future strategy of the enlarged company during this busy month of news. Indivior INDV Lancashire Holdings LRE Primary Health Properties PHP Relx REL AGMS John Lewis of Hungerford JLH Petro Matad MATD Paragon Banking PAG Sanderson SND EX-DIVIDEND Avon Rubber AVON 8.21p Gateley GTLY 2.2p Henderson Smaller Companies Investment Trust HSL 6p MedicXFund MXX 0.755p Mountview Estates MTVW 200p PRS REIT PRSR 1.5p PZ Cussons PZC 2.67p Rank RNK 2.15p Unilever ULVR 31.55p Click here for complete diary www.sharesmagazine.co.uk/market-diary

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BOOM TIME FOR RECRUITERS WHY GROWING ECONOMIES ARE JUST THE JOB

R

ecruitment companies tend to do well in strong ĞĐŽŶŽŵŝĐĐŽŶĚŝƟŽŶƐ͘ Corporates feel more compelled to hire people and ŝŶĚŝǀŝĚƵĂůƐĨĞĞůĐŽŶĮĚĞŶƚĞŶŽƵŐŚ to move jobs, seeking new ŽƉƉŽƌƚƵŶŝƟĞƐ͘

18

| SHARES | 08 February 2018

Upgrades to global growth forecasts last month by the /ŶƚĞƌŶĂƟŽŶĂůDŽŶĞƚĂƌLJ&ƵŶĚ ;/D&ͿƐƚƌĞŶŐƚŚĞŶƚŚĞŽƵƚůŽŽŬ ĨŽƌƌĞĐƌƵŝƚĞƌƐ͘dŚĞŶĞǁŐůŽďĂů ĨŽƌĞĐĂƐƚŚĂƐďĞĞŶůŝŌĞĚĨƌŽŵ ϯ͘ϳйƚŽϯ͘ϵйĨŽƌďŽƚŚϮϬϭϴĂŶĚ ϮϬϭϵ͘/ƚĂůƐŽĐŽŶƐƟƚƵƚĞƐĨĂƐƚĞƌ

expansion than previous years ;ϯ͘ϳйŝŶϮϬϭϳ͖ϯ͘ϮйŝŶϮϬϭϲͿ͘ 'ƌŽǁƚŚŝƐǁŝĚĞƐƉƌĞĂĚ͘dŚĞ/D& ƐĂLJƐϭϮϬĞĐŽŶŽŵŝĞƐ͕ĂĐĐŽƵŶƟŶŐ for three quarters of world GDP, have seen a pick up in growth in LJĞĂƌͲŽŶͲLJĞĂƌƚĞƌŵƐŝŶϮϬϭϳ͕ƚŚĞ broadest synchronised global

ŐƌŽǁƚŚƵƉƐƵƌŐĞƐŝŶĐĞϮϬϭϬ͘ dŚŝƐƉƌĞƐĞŶƚƐĂƐƚƌŽŶŐ backdrop for recruitment companies with interests in ŵƵůƟƉůĞĐŽƵŶƚƌŝĞƐ͘&ŽƌƚƵŶĂƚĞůLJ for UK investors, the majority of the mid and large cap Londonlisted recruitment agencies have global interests and aren’t solely dependent on the UK to make ŵŽŶĞLJ͘dŚĞ/D&ĚŝĚŶ͛ƚƵƉŐƌĂĚĞ the UK’s growth forecasts for ϮϬϭϴ͕ůĞĂǀŝŶŐƚŚĞŵŇĂƚĂƚϭ͘ϱй͘ tŚŝůĞƚŚĞ/D&ŶŽƚĞĚƚŚĂƚ advanced economies were doing well, these regions paled in comparison to developing ƉŽǁĞƌŚŽƵƐĞƐŝŶƐŝĂ͘ŚŝŶĂŚĂƐ been the growth story of the last decade but is now being challenged by India as the ĐŽƵŶƚƌLJ͛ƐƌĞĨŽƌŵƐďĞĂƌĨƌƵŝƚ͘ dŚĞĨƵŶĚƐĂLJƐ͚ƚŚĞƌĞŐŝŽŶ΀ƐŝĂ΁ ĐŽŶƟŶƵĞƐƚŽĂĐĐŽƵŶƚĨŽƌŽǀĞƌ ŚĂůĨŽĨǁŽƌůĚŐƌŽǁƚŚ͛͘ PAGEGROUP’S GLOBAL ADVANTAGE Recruitment consultant Pagegroup (PAGE) has ŽƉĞƌĂƟŽŶƐŝŶϯϲŵĂƌŬĞƚƐĂĐƌŽƐƐ ƚŚĞŐůŽďĞĂŶĚϴϮйŽĨŝƚƐƌĞǀĞŶƵĞ comes from outside the UK, a point of note considering the /D&͛ƐƉĞƐƐŝŵŝƐƟĐǀŝĞǁŽĨƚŚĞ h<͛ƐŐƌŽǁƚŚƉƌŽƐƉĞĐƚƐ͘ Pagegroup has transformed ƐŝŐŶŝĮĐĂŶƚůLJƐŝŶĐĞŝƚƐƚĂƌƚĞĚĂƐĂ ďƵƐŝŶĞƐƐ͘/ƚƵƐĞĚƚŽŽŶůLJƉůĂĐĞ ĂĐĐŽƵŶƚĂŶƚƐ͘EŽǁƚŚĞĐŽŵƉĂŶLJ has candidates from a wide ǀĂƌŝĞƚLJŽĨƉƌŽĨĞƐƐŝŽŶƐ͘^ƚĞǀĞ /ŶŐŚĂŵ͕K͕ƐĂLJƐ͚ŶŽǁǁĞĐĂŶ adapt our model to what suits ƚŚĞŵĂƌŬĞƚ͛͘ Like most of its peers, it ŐƌŽǁƐŽƌŐĂŶŝĐĂůůLJ͘/ŶŐŚĂŵ says this is because the markets it

ŝƐƚĂƌŐĞƟŶŐƚĞŶĚƚŽďĞƵŶĚĞƌͲ ƉĞŶĞƚƌĂƚĞĚďLJƌĞĐƌƵŝƚŵĞŶƚĮƌŵƐ ƐŽŝƚ͛Ɛ͚ĚŝĸĐƵůƚƚŽďƵLJƐŽŵĞƚŚŝŶŐ ƚŚĂƚŝƐŶ͛ƚƚŚĞƌĞ͛͘ Its recent fourth quarter ƌĞƐƵůƚƐƚŽϯϭĞĐĞŵďĞƌϮϬϭϳ ƐŚŽǁƚŚĞĐŽŵƉĂŶLJ͛ƐƉƌŽĮƚƐƵƉ ϭϵ͘ϯйŝŶƵƌŽƉĞ͕ƚŚĞDŝĚĚůĞ ĂƐƚĂŶĚĨƌŝĐĂĂŶĚϭϰ͘ϵй ŝŶƐŝĂWĂĐŝĮĐ͘,ŽǁĞǀĞƌ͕ƚŚĞ ĐŽŵƉĂŶLJ͛ƐƉƌŽĮƚƐǁĞƌĞĚŽǁŶ Ϯ͘ϴйŝŶƚŚĞh<͘ <ĞĂŶDĂƌĚĞŶ͕ĂŶĂŶĂůLJƐƚ ĂƚŝŶǀĞƐƚŵĞŶƚďĂŶŬ:ĞīĞƌŝĞƐ͕ ƵƉŐƌĂĚĞĚŚŝƐƐƚŽĐŬƌĂƟŶŐŽŶ WĂŐĞŐƌŽƵƉĨƌŽŵ͚ŚŽůĚ͛ƚŽ͚ďƵLJ͛ following the fourth quarter ƌĞƐƵůƚƐ͘ ,ĞĐŽŵŵĞŶƚƐ͚͗/ŶĚƵƐƚƌLJ ƉĞŶĞƚƌĂƟŽŶŝŶ'ĞƌŵĂŶLJĂŶĚƚŚĞ h^ŝƐŝŶĐƌĞĂƐŝŶŐ͕ŚŝŶĂŝƐŶŽǁ Page’s third-largest individual country, and the Brazilian ĞĐŽŶŽŵLJŝƐƐůŽǁůLJŝŵƉƌŽǀŝŶŐ͘/Ĩ synchronised global economic momentum persists then we ďĞůŝĞǀĞĨƵůůLJĞĂƌϮϬϭϴŶĞƚĨĞĞ growth could comfortably ƌĞĂĐŚϭϮй͛͘ HAYS IS THRIVING OUTSIDE OF THE UK Hays (HAS) is the largest UKlisted recruiter with a market ĐĂƉŶƵĚŐŝŶŐάϯďŶ͘

CPL RESOURCES (CPS:AIM) Reported an 11% increase ŝŶƉƌĞͲƚĂdžƉƌŽĮƚƚŽΦϵŵ ĨŽƌƚŚĞƐŝdžŵŽŶƚŚƐƚŽϯϭ ĞĐĞŵďĞƌϮϬϭϳ͘W>ŚĂƐ ďĞĞŶŝŶǀĞƐƟŶŐŚĞĂǀŝůLJŝŶ ƚĞĐŚŶŽůŽŐLJŝŶĐůƵĚŝŶŐƚŚĞ ĚĞǀĞůŽƉŵĞŶƚŽĨĂƌƟĮĐŝĂů ŝŶƚĞůůŝŐĞŶĐĞƚŽŽůƐĨŽƌƵƐĞŝŶ ƚŚĞƌĞĐƌƵŝƚŵĞŶƚƐĞĐƚŽƌ͘

&ŝŶĂŶĐĞĚŝƌĞĐƚŽƌWĂƵů Venables says that outside of the UK all aspects of the ĞĐŽŶŽŵLJĂƌĞŐŽŽĚĂŶĚ͚ƚŚŝƐŝƐ ƚŚĞƚŚŝƌĚLJĞĂƌŽĨƚŚĂƚƚƌĞŶĚ͛͘,Ğ adds that constraints on capital investment by the company’s clients are lower which creates a ͚ŵŽƌĞƐƵƉƉŽƌƟǀĞĞŶǀŝƌŽŶŵĞŶƚ͛͘ ^ŝŵŝůĂƌƚŽWĂŐĞŐƌŽƵƉ͕ƚŚĞǀĂƐƚ ŵĂũŽƌŝƚLJŽĨ,ĂLJƐ͛ĨĞĞƐĐŽŵĞĨƌŽŵ ŽƵƚƐŝĚĞƚŚĞh<Ăƚϳϳй͘ Venables is not overly concerned about a misjudging ŽĨƚŚĞĞĐŽŶŽŵŝĐůĂŶĚƐĐĂƉĞ͘,Ğ views any problems will be of a ŐĞŽƉŽůŝƟĐĂůŶĂƚƵƌĞ͘ Concerns include the maverick h^ƉƌĞƐŝĚĞŶƚŽŶĂůĚdƌƵŵƉĂŶĚ ŚŝƐƌĞůĂƟŽŶƐǁŝƚŚEŽƌƚŚ<ŽƌĞĂ as well as the enduring Brexit ƐĂŐĂ͘,ĞŝƐŶŽƚĂůŽŶĞĂŵŽŶŐ senior recruitment employees in ƚŚŝŶŬŝŶŐƚŚĞƐĞĂƐƚŚĞŵĂŝŶƌŝƐŬƐ͘ REAPPRAISING THE OPPORTUNITIES sĞŶĂďůĞƐƐĂLJƐƚŚĂƚĂƚŽŶĞƟŵĞ h^ŵƵůƟŶĂƟŽŶĂůƐǁŽƵůĚŚĂǀĞ put Europe at the low end of ƚŚĞŝƌŐƌŽǁƚŚŽƉƉŽƌƚƵŶŝƟĞƐ͚͘EŽǁ they see it as the biggest market ĂŶĚĂƌĞƉŝůŝŶŐŝŶ͛͘ &ƵƌƚŚĞƌĞǀŝĚĞŶĐĞŽĨĂƐĞĐƚŽƌͲ ǁŝĚĞƵƉůŝŌǁĂƐƉƌŽǀŝĚĞĚǁŚĞŶ ,ĂLJƐƌĞůĞĂƐĞĚŝƚƐƋƵĂƌƚĞƌůLJ ƌĞƐƵůƚƐƚŽϯϭĞĐĞŵďĞƌϮϬϭϳ͘ Recruiters are judged by net fee income which is another way ŽĨƐĂLJŝŶŐŐƌŽƐƐƉƌŽĮƚ͘,ĂLJƐ͛ŶĞƚ ĨĞĞŝŶĐŽŵĞĨŽƌƐŝĂWĂĐŝĮĐŐƌĞǁ in the three month period ďLJϭϲйǁŚŝůĞŽŶƟŶĞŶƚĂůƵƌŽƉĞ and the rest of the world went ƵƉďLJϭϳй͘ǀĞŶƚŚĞh<ǁĂƐ ƉŽƐŝƟǀĞǁŝƚŚϭйŐƌŽǁƚŚ͘dǁĞŶƚLJ four of its 33 markets grew ďLJŝŶĞdžĐĞƐƐŽĨϭϬйŝŶŶĞƚ ĨĞĞŝŶĐŽŵĞƚĞƌŵƐ͘

08 February 2018 | SHARES |

19

h<ͳYhKdZZh/dDEdKDWE/^ THE GOOD, THE BAD AND THE UGLY ^,ZWZ/,E'

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5 Years

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Robert Walters

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Prime People

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ϴϬ͘Ϯй

Ͳϵ͘Ϭй

Ͳϯ͘Ϯй

Empresaria

ϰϭ͘ϵй

ϯϬϬ͘Ϭй

ϭϳϮ͘Ϭй

Ͳϴ͘ϯй

'ĂƩĂĐĂ

ͲϮϱ͘ϭй

Ϭ͘Ϭй

Ͳϰϳ͘ϰй

Ͳϵ͘Ϭй

^ƚĂŋŝŶĞ

ϳϰϵ͘Ϭй

Ϯϰϳ͘Ϭй

Ϯϲ͘ϱй

ͲϭϬ͘ϱй

EĂŬĂŵĂ

Ͳϲϱ͘ϲй

ͲϮϮ͘ϱй

Ͳϲϲ͘ϱй

Ͳϭϲ͘Ϯй

Impellam

ϯϲϴ͘Ϭй

ϳϱ͘ϰй

ͲϮ͘ϭй

ͲϮϯ͘ϱй

,LJĚƌŽŐĞŶ

Ͳϴϳ͘ϯй

Ͳϲϴ͘ϰй

Ͳϲϭ͘ϳй

ͲϮϯ͘ϴй

InterQuest

Ͳϲϵ͘ϰй

Ͳϱϭ͘ϰй

Ͳϲϵ͘ϱй

ͲϮϴ͘ϵй

^ŽƵƌĐĞ͗^ŚĂƌĞƐ͕^ŚĂƌĞWĂĚ͘ĂƚĂĂƐŽĨϮ&ĞďϮϬϭϴ

20

| SHARES | 08 February 2018

^,D,/E^ Recruitment companies can be ŚŝŐŚůLJĐĂƐŚŐĞŶĞƌĂƟǀĞĂŶĚ,ĂLJƐ ŝƐĐĞƌƚĂŝŶůLJŶŽĞdžĐĞƉƟŽŶ͘ŌĞƌ ƉĂLJŝŶŐάϵϰ͘ϯŵŝŶƐƉĞĐŝĂůĂŶĚ ĮŶĂůĚŝǀŝĚĞŶĚƐŝŶEŽǀĞŵďĞƌ ϮϬϭϳƚŚĞĐŽŵƉĂŶLJƐƟůůŚĂĚĂ άϯϱŵĐĂƐŚƉŽƐŝƟŽŶĂƚƚŚĞƐƚĂƌƚ ŽĨϮϬϭϴ͘ ,^ĂŶĂůLJƐƚDĂƩŚĞǁ>ůŽLJĚ ƐĂLJƐ,ĂLJƐŝƐĂ͚ǁĞůůͲŵĂŶĂŐĞĚ ƐƚĂīĞƌ͛ǁŝƚŚƐƚƌŽŶŐƉŽƚĞŶƟĂů for earnings upgrades if UK performance is not as poor as ǁŝĚĞůLJŵŽĚĞůůĞĚ͘ ZŽďĞƌƚtĂůƚĞƌƐ;ZtͿ is another major recruiter on the UK stock market although perhaps not of the scale of WĂŐĞ'ƌŽƵƉĂŶĚ,ĂLJƐ͘ŚŝĞĨ ĞdžĞĐƵƟǀĞZŽďĞƌƚtĂůƚĞƌƐƐĂLJƐ͗ ͚dŚĞďĞƐƚƚŚŝŶŐǁĞĚŝĚǁĂƐŐŽ ŝŶƚĞƌŶĂƟŽŶĂůĂĨĞǁLJĞĂƌƐĂŐŽ and, as we are organically grown, ƚŚĂƚŚĂƐƚĂŬĞŶƟŵĞĂŶĚĞīŽƌƚ͛͘ While it was certainly a good move, the company is perhaps the odd one out of the major players on the UK stock market as it has almost a third of its ƉƌŽĮƚƐĐŽŵŝŶŐĨƌŽŵƚŚĞh<͘ ,ŽǁĞǀĞƌŝƚƐĨŽƵƌƚŚƋƵĂƌƚĞƌ results show that its net fee ŝŶĐŽŵĞǁĂƐƵƉďLJϭϯйŝŶƚŚĞ h<ŽŶĂLJĞĂƌͲŽŶͲLJĞĂƌďĂƐŝƐ͘ Its fastest growing market is :ĂƉĂŶĂŶĚƚŚĞƐŝĂWĂĐŝĮĐƌĞŐŝŽŶ ĂĐŚŝĞǀĞĚƚŚĞŚŝŐŚĞƐƚƉƌŽƉŽƌƟŽŶ of net fee income in its fourth ƋƵĂƌƚĞƌĂƚάϯϯ͘ϲŵ͘KŶĂŐƌŽƵƉ ďĂƐŝƐŝƚĂĐŚŝĞǀĞĚάϵϬ͘ϱŵŝŶƚŚĞ ƚŚƌĞĞŵŽŶƚŚƉĞƌŝŽĚ͘ Investment bank Liberum ƵƉŐƌĂĚĞĚŝƚƐϮϬϭϳƉƌĞͲƚĂdžƉƌŽĮƚ forecast for Robert Walters by ϭϬйŝŶĞĐĞŵďĞƌƚŽάϯϴ͘ϱŵ ĂŌĞƌĂŶƵŶƵƐƵĂůůLJƐƚƌŽŶŐ

“

THE BEST THING WE DID WAS GO INTERNATIONAL A FEW YEARS AGO

”

ROBERT WALTERS, CHIEF EXECUTIVE

HARVEY NASH (HVN:AIM) WƌĞͲƚĂdžƉƌŽĮƚŝŶĐƌĞĂƐĞĚ ďLJϭϲ͘ϴйƚŽάϰ͘ϰŵŝŶ ƚŚĞƐŝdžŵŽŶƚŚƐƚŽϯϭ:ƵůLJ ϮϬϭϳ͘/ƚƌĞƉŽƌƚĞĚƌĞĐŽƌĚ ƌĞƐƵůƚƐŝŶĞŶĞůƵdžĂŶĚĂŶ ŝŵƉƌŽǀĞŵĞŶƚĨƌŽŵƐŝĂ WĂĐŝĮĐĂŶĚƚŚĞEŽƌĚŝĐƐ͘

STHREE (STHR) ĚũƵƐƚĞĚƉƌĞͲƚĂdžƉƌŽĮƚĨŽƌ ƚŚĞLJĞĂƌƚŽϯϬEŽǀĞŵďĞƌ ϮϬϭϳŝŶĐƌĞĂƐĞĚďLJϵй ƚŽάϰϰ͘ϱŵ͘dŚĞh^ĂŶĚ ŽŶƟŶĞŶƚĂůƵƌŽƉĞǁĞƌĞ ƚŚĞďƌŝŐŚƚƐƉŽƚƐǁŚŝůĞ ƚŚĞh<ĂŶĚ/ƌĞůĂŶĚ ǁĞƌĞǀĞƌLJďĂĚĨŽƌƚŚĞ ďƵƐŝŶĞƐƐĚƵƌŝŶŐƚŚĞϭϮ ŵŽŶƚŚƉĞƌŝŽĚ͘

ĞŶĚƚŽƚŚĞĐĂůĞŶĚĂƌLJĞĂƌ͘ dŚĞƉŽƐŝƟǀĞƚƌĞŶĚŝŶKĐƚŽďĞƌ ĂŶĚEŽǀĞŵďĞƌĐŽŶƟŶƵĞĚŝŶƚŽ December with the company ĂŶŶŽƵŶĐŝŶŐϮϮйĐŽŶƐƚĂŶƚ currency net fee income growth ŝŶƚŚĞĨŽƵƌƚŚƋƵĂƌƚĞƌŽĨϮϬϭϳ͘ ^D>>WZZh/dZ^ While no way near the scale of ƚŚĞĂĨŽƌĞŵĞŶƟŽŶĞĚĐŽŵƉĂŶŝĞƐ͕ ŵƉƌĞƐĂƌŝĂ;DZ͗/DͿshould ďĞĂŶŽƚŚĞƌďĞŶĞĮĐŝĂƌLJŽĨŐůŽďĂů ŐƌŽǁƚŚŐŝǀĞŶŝƚƐĐŽǀĞƌĂŐĞ͘ /ƚĞƐƟŵĂƚĞƐƚŚĂƚϴϬйŽĨŝƚƐ ĂĚũƵƐƚĞĚŽƉĞƌĂƟŶŐƉƌŽĮƚĐŽŵĞƐ ĨƌŽŵŽǀĞƌƐĞĂƐ͘ dŚĞĐŽŵƉĂŶLJŚĂƐϮϭďƌĂŶĚƐŝŶ ϭϵĐŽƵŶƚƌŝĞƐĂůƚŚŽƵŐŚƵŶůŝŬĞŝƚƐ larger peers Empresaria has not ĨŽƵŶĚŽƉĞƌĂƟŶŐŝŶĐĞƌƚĂŝŶƉĂƌƚƐ ŽĨƵƌŽƉĞƉůĂŝŶƐĂŝůŝŶŐ͘ &ŝŶĂŶĐĞĚŝƌĞĐƚŽƌ^ƉĞŶĐĞƌ tƌĞĨŽƌĚƐĂLJƐŶĞǁůĞŐŝƐůĂƟŽŶ in Germany regarding how long a temporary worker can ďĞĞŵƉůŽLJĞĚŚĂƐŶĞŐĂƟǀĞůLJ impacted the company although ŚĞƌĞŵĂŝŶƐƵƉďĞĂƚ͚͘dŚĞƌĞ͛Ɛ a huge opportunity in the German markets as despite the ůĞŐŝƐůĂƟǀĞŝƐƐƵĞƐŝƚ͛ƐĂLJŽƵŶŐ ŵĂƌŬĞƚ͕͛ŚĞĂĚĚƐ͘ dŚĞĐŽŵƉĂŶLJŚĂƐĞdžƉŽƐƵƌĞƚŽ some very high growth markets with limited recruitment sector ƉĞŶĞƚƌĂƟŽŶƐƵĐŚĂƐdŚĂŝůĂŶĚ͕ sŝĞƚŶĂŵ͕DĂůĂLJƐŝĂĂŶĚƚŚĞ WŚŝůŝƉƉŝŶĞƐ͘ Ian Jermin, analyst at stockbroker Allenby Capital, ĐŽŵŵĞŶƚƐ͚͗ŵƉƌĞƐĂƌŝĂ ĐŽŶƟŶƵĞƐƚŽĚĞŵŽŶƐƚƌĂƚĞ ƚŚĞƐƚƌĞŶŐƚŚŽĨŝƚƐĚŝǀĞƌƐŝĮĞĚ ďƵƐŝŶĞƐƐŵŽĚĞůĂŶĚǁĞĐŽŶƟŶƵĞ to look forward to further ŐƌŽǁƚŚŝŶϮϬϭϴ͛͘

08 February 2018 | SHARES |

21

600

PAGEGROUP STARTS TO FALL AHEAD OF THE MARKET

550 500 450 400 350 300

LOOK HOW IT ALSO RECOVERED FASTER THAN THE MARKET

250 200 150

Rebased to first

2007

/&&ZEds/t^KEd, ^dKZ͛^,>d, While many people in the recruitment sector believe we are seeing a broad upsurge in global growth, not everyone ƚŚŝŶŬƐŝƚŝƐƚŚĂƚƐŝŵƉůĞ͘ ^ƚĞǀĞ/ŶŐŚĂŵĂƚWĂŐĞ'ƌŽƵƉ doesn’t believe the whole world ŝƐŽŶƚŚĞƵƉ͖ŚĞƐŚŽƵůĚŚĂǀĞĂ good idea considering how many ŵĂƌŬĞƚƐƚŚĞĐŽŵƉĂŶLJŝƐŝŶ͘ ,ĞƐĂLJƐ͚͗dŚĞh<ŝƐĂ challenge and Australia is ƌĞĂƐŽŶĂďůLJĐŚĂůůĞŶŐŝŶŐ͛͘,Ğ ĂůƐŽƐĞĞƐƚŽƵŐŚƟŵĞƐŝŶƌĂnjŝů͕ ƉĂƌƟĐƵůĂƌůLJŐŝǀĞŶƵŶĐĞƌƚĂŝŶƚLJ ĂƌŽƵŶĚƚŚĞĐŽƵŶƚƌLJ͛ƐĞůĞĐƟŽŶ ƚŚŝƐLJĞĂƌ͘ ŽŶǀĞƌƐĞůLJ͕^ƉĞŶĐĞƌ tƌĞĨŽƌĚĂƚŵƉƌĞƐĂƌŝĂƐĂLJƐ͗ ͚ůůĞĐŽŶŽŵŝĐŝŶĚŝĐĂƚŽƌƐĂƌĞ ƉŽƐŝƟǀĞĨŽƌƚŚĞĮƌƐƚƟŵĞƐŝŶĐĞ ƚŚĞŐůŽďĂůĮŶĂŶĐŝĂůĐƌŝƐŝƐ͘ You’ve got alignment with the largest markets and emerging ĞĐŽŶŽŵŝĞƐĂƌĞƐŚŽǁŝŶŐƉŽƐŝƟǀĞ 'WĨŽƌĞĐĂƐƚƐ͘ǀĞŶƚŚĞh<ŝƐ ƉŽƐŝƟǀĞŝĨũƵƐƚďĂƌĞůLJ͛͘ ,ĞĐŽŶĐůƵĚĞƐƚŚĂƚƚŚĞƐĞ ƉŽƐŝƟǀĞĞĐŽŶŽŵŝĐŝŶĚŝĐĂƚŽƌƐ ͚ƐŚŽƵůĚŵĞĂŶĂŐƌĞĂƚŵĂƌŬĞƚ ĨŽƌƌĞĐƌƵŝƚŵĞŶƚ͛͘

22

| SHARES | 08 February 2018

2008

2009

GATTACA (GATC:AIM) hŶĚĞƌůLJŝŶŐƉƌĞͲƚĂdž ƉƌŽĮƚĨĞůůďLJϮϭйƚŽ άϭϲ͘ϮŵŝŶƚŚĞϭϮŵŽŶƚŚƐ ƚŽϯϭ:ƵůLJϮϬϭϳ͘dŚĞh< ŽƉĞƌĂƟŽŶƐŚĂǀĞƐƚƌƵŐŐůĞĚ ďƵƚƚŚĞƌĞǁĞƌĞŵŽƌĞ ƉƌŽŵŝƐŝŶŐƐŝŐŶƐĨƌŽŵ ŝƚƐŵĞƌŝĐĂƐĂŶĚƐŝĂŶ ďƵƐŝŶĞƐƐĞƐĂƚƚŚĞĮŶĂŶĐŝĂů LJĞĂƌĞŶĚ͘

PARITY (PTY:AIM) /ƚƌĞĐĞŶƚůLJƐĂŝĚŽƉĞƌĂƟŶŐ ƉƌŽĮƚĨŽƌƚŚĞLJĞĂƌƚŽ ϯϭĞĐĞŵďĞƌϮϬϭϳ ǁŽƵůĚĐŽŵĞŝŶĂŚĞĂĚŽĨ ĞdžƉĞĐƚĂƟŽŶƐ͘dŚĞďƵƐŝŶĞƐƐ ŚĂƐďĞĞŶŝŶƚƵƌŶĂƌŽƵŶĚ ŵŽĚĞĂŶĚĚĞĐĞŶƚĐĂƐŚ ŐĞŶĞƌĂƟŽŶŚĂƐŚĞůƉĞĚƚŽ ŬŶŽĐŬĂŐŽŽĚĐŚƵŶŬŽī ŝƚƐŶĞƚĚĞďƚƉŽƐŝƟŽŶ͕ ĨĂůůŝŶŐĨƌŽŵάϳ͘ϱŵĂƚƚŚĞ ĞŶĚŽĨϮϬϭϱƚŽάϮ͘ϯŵďLJ ŵŝĚͲϮϬϭϳ͘

Source: Shares, Thomson Reuters Datastream

PAGEGROUP FTSE ALL SHARE

2010

ZZZh/dZ^>/E' /E/dKZ^&KZd,DZ<d͍ Recruitment companies should in theory see a rising share price ĨƌŽŵŝŶĐƌĞĂƐĞĚĞĐŽŶŽŵŝĐĂĐƟǀŝƚLJ ŝŶƚŚĞŝƌŵĂƌŬĞƚƐ͘,ŽǁĞǀĞƌ͕ƚŚĞ opposite lies true if economic ĂĐƟǀŝƚLJĞĂƐĞƐďĂĐŬ͘ Recruiters are likely to be ĂŵŽŶŐƚŚĞĮƌƐƚƚŽŬŶŽǁǁŚĞŶůŝĨĞ ŝƐŐĞƫŶŐƚŽƵŐŚĞƌĨŽƌĐŽŵƉĂŶŝĞƐ ĂƐŚŽůĚŝŶŐŽīŚŝƌŝŶŐŶĞǁƉĞŽƉůĞ ŝƐĂŶĞĂƐLJǁĂLJƚŽƐĂǀĞŵŽŶĞLJ͘Ɛ such, we believe there is a strong chance that shares in recruitment companies will fall before you ƐĞĞƚŚĞƐŝƚƵĂƟŽŶƌĞŇĞĐƚĞĚŝŶ ĞĐŽŶŽŵŝĐĚĂƚĂ͘ dŚĂƚǁĂƐĐĞƌƚĂŝŶůLJƚŚĞĐĂƐĞŝŶ ϮϬϬϳǁŚĞŶWĂŐĞŐƌŽƵƉ͛ƐƐŚĂƌĞ price started falling well before the broader market as the ƐƵďƉƌŝŵĞŵŽƌƚŐĂŐĞĐƌŝƐŝƐďĞŐĂŶ͘ It also started to rise ahead of ƚŚĞ&d^ůůͲ^ŚĂƌĞ͛ƐƌĞĐŽǀĞƌLJ ĂŌĞƌƚŚĞŐůŽďĂůĮŶĂŶĐŝĂůĐƌŝƐŝƐ͕ ƉĞƌŚĂƉƐĂƌĞŇĞĐƟŽŶŽĨƌĞĐƌƵŝƚĞƌƐ ďĞŝŶŐĂŵŽŶŐƚŚĞĮƌƐƚƚŽƐĞĞ ŝŶŝƟĂůƐŝŐŶƐŽĨŝŶĐƌĞĂƐĞĚĂĐƟǀŝƚLJ ĂŵŽŶŐĐŽƌƉŽƌĂƚĞƐ͘ ^ŽŝĨLJŽƵƐĞĞƐŚĂƌĞƐŝŶ recruiters start to fall in tandem, don’t rule out a broader market decline ƐŽŽŶĂŌĞƌǁĂƌĚƐ͘

KhZdKWW/<K&d,>/^d ZZh/dDEdKDWE/^

KE&KZ/Es^dKZ^t/d,E APPETITE FOR HIGHER RISK

ONE TO AVOID

Hays (HAYS) is our pick of the h<ͲƋƵŽƚĞĚƌĞĐƌƵŝƚŵĞŶƚĮƌŵƐ͘ ƚϮϬϮƉ͕ƚŚĞŐůŽďĂůƉŽǁĞƌŚŽƵƐĞ ƚƌĂĚĞƐŽŶϭϴ͘ϰͲƟŵĞƐϮϬϭϴ͛Ɛ forecast earnings per share of ϭϭƉ͘dŚĞĚŝǀŝĚĞŶĚŝƐĨŽƌĞĐĂƐƚ ƚŽďĞϯ͘ϳƉŝŶϮϬϭϴ͕ŝŵƉůLJŝŶŐĂ ϭ͘ϴйLJŝĞůĚ͘ Liberum forecasts the ĐŽŵƉĂŶLJǁŝůůŚĂǀĞάϭϬϯŵŶĞƚ ĐĂƐŚƉŽƐŝƟŽŶĂƚƚŚĞĞŶĚŽĨŝƚƐ ĮŶĂŶĐŝĂůLJĞĂƌŽŶϯϬ:ƵŶĞϮϬϭϴ͘ dŚĂƚƉƌŽǀŝĚĞƐĮƌĞƉŽǁĞƌƚŽ ƉŽƚĞŶƟĂůůLJƉĂLJĞǀĞŶŐƌĞĂƚĞƌ dividends than is currently forecast, assuming business ŐŽĞƐǁĞůůŝŶƚŚĞĐƵƌƌĞŶƚLJĞĂƌ͘ Unlike some of its main ĐŽŵƉĞƟƚŽƌƐ͕ŝƚŝƐƐƟůů ŵĂŝŶƚĂŝŶŝŶŐƉŽƐŝƟǀĞŶĞƚĨĞĞ income growth in the UK and its performance in its other ŵĂƌŬĞƚƐŝƐƐƚĞůůĂƌ͘&ŽƌĞdžĂŵƉůĞ͕ ŝŶƚŚĞƚŚƌĞĞŵŽŶƚŚƐƚŽϯϭ ĞĐĞŵďĞƌϮϬϭϳ͕ŝƚƌĞƉŽƌƚĞĚ ϭϲйŽƌŐĂŶŝĐŶĞƚĨĞĞŝŶĐŽŵĞ growth at constant currency in ƐŝĂWĂĐŝĮĐ͖ĂŶĚϭϳйŐƌŽǁƚŚ ĨŽƌŽŶƟŶĞŶƚĂůƵƌŽƉĞĂŶĚ ͚ƌĞƐƚŽĨƚŚĞǁŽƌůĚ͛͘ >ŝďĞƌƵŵĐŽŵŵĞŶƚƐ͚͗tĞ ĐŽŶƟŶƵĞƚŽƐĞĞ,ĂLJƐĂƐŽƵƌ preferred large cap recruiter given its greater discipline diversity and exposure to the more defensive contract ŵĂƌŬĞƚ͛͘

ŵƉƌĞƐĂƌŝĂ;DZ͗/DͿďĞŶĞĮƚƐ ĨƌŽŵŚĂǀŝŶŐŐůŽďĂůĞdžƉŽƐƵƌĞ͘ ƚϭϭϬƉ͕ƚŚĞĐŽŵƉĂŶLJƚƌĂĚĞƐ ŽŶϴ͘ϳƟŵĞƐϮϬϭϴ͛ƐĨŽƌĞĐĂƐƚ ϭϮ͘ϲƉĞĂƌŶŝŶŐƐƉĞƌƐŚĂƌĞ͕ ƐƵƉƉŽƌƚĞĚďLJĂϭ͘ϮйƉƌŽƐƉĞĐƟǀĞ ĚŝǀŝĚĞŶĚLJŝĞůĚ͘/ƚƐĞƋƵŝƚLJƌĂƟŶŐ is lower than many of the other ƌĞĐƌƵŝƚĞƌƐĚƵĞƚŽƌĞĐĞŶƚǀŽůĂƟůĞ ƚƌĂĚŝŶŐĐŽŶĚŝƟŽŶƐĂŶĚĂůĂƌŐĞ ŝŶĐƌĞĂƐĞŝŶŶĞƚĚĞďƚƚŽάϭϱ͘ϵŵ ĂƚƚŚĞϮϬϭϳŚĂůĨͲLJĞĂƌƐƚĂŐĞ ǀĞƌƐƵƐάϭϬ͘ϮŵĂLJĞĂƌĞĂƌůŝĞƌ͘ ƌĞĐĞŶƚƚƌĂĚŝŶŐƵƉĚĂƚĞŇĂŐƐ strong performance in various parts of the world including the h<ǁŝƚŚƉƌŽĨĞƐƐŝŽŶĂůƐĞƌǀŝĐĞƐ͖ :ĂƉĂŶǁŝƚŚƚŚĞ/dƐĞĐƚŽƌ͖ĂŶĚ ŚŝůĞǁŝƚŚƚŚĞƌĞƚĂŝůƐĞĐƚŽƌ͘/Ŷ ĐŽŶƚƌĂƐƚ͕ŝƚ͛ƐŚĂǀŝŶŐĂƚŽƵŐŚƟŵĞ with the technical and industrial sector, although not disclosing the countries in which it is ĞdžƉĞƌŝĞŶĐŝŶŐŝƐƐƵĞƐ͘ It has had some problems with a few of its markets underperforming such as the DŝĚĚůĞĂƐƚďƵƚŝƚŚĂƐƚĂŬĞŶ ĂĐƟŽŶƚŽƌĞŵĞĚLJƚŚŝƐƐŝƚƵĂƟŽŶ͘

We are not fans of ^ƚĂŋŝŶĞ ;^d&͗/DͿ mainly due to its ƐŽůĞh<ĨŽĐƵƐ͘/ƚƐƚǁŽĚŝǀŝƐŝŽŶƐ Onsite and PeoplePlus are both UK-focused and the business is low margin at ĂƌŽƵŶĚϰй͘ dŚŝƐŵĞĂŶƐƚŚĂƚŝƚŚĂƐƚŽĮůů lots of roles to make money and while the business is ĚŽŝŶŐĮŶĞĂƚƚŚĞŵŽŵĞŶƚ͕ĂŶLJ decline in the UK economy ĐŽƵůĚŚĂǀĞĚĞǀĂƐƚĂƟŶŐĞīĞĐƚƐ͘ Investment bank Berenberg describes its outlook as ͚ĐŚĂůůĞŶŐŝŶŐ͛ĂŶĚĞdžƉĞĐƚƐ ĐŽƐƚĐƵƫŶŐƚŽŚĞůƉƐƵƉƉŽƌƚ ŵĂƌŐŝŶƐ͘;^Ϳ

180 160 140 120 100 2013

2014

Source: Thomson Reuters Datastream

1400 1200 1000 800 600 400 200

2013

2014

2015

2016

2017

140 120 100 80 60

2013

2014

2015

2016

2017

Source: Thomson Reuters Datastream

200

80

1600

Source: Thomson Reuters Datastream

180 Rebased to first 160

20

220 Rebased to first

1800 Rebased to first

EMPRESARIA GROUP FTSE ALL SHARE

40

HAYS FTSE ALL SHARE

STAFFLINE GROUP FTSE ALL SHARE

2015

2016

2017

08 February 2018 | SHARES |

23

UNDER THE BONNET

We explain what this company does

Can Domino’s Pizza gurus repeat success with another franchise business? Franchise Brands is well worth a look given the pedigree of the people behind the small cap business

A

man walks into a bar. He says: ‘I want to unblock ĂĚƌĂŝŶ͕ůŽŽŬĂŌĞƌĂĚŽŐ ĂŶĚĮdžĂƐĐƌĂƚĐŚŽŶĂĐĂƌ͛͘ tŚŝůĞƚŚŝƐƐŽƵŶĚƐůŝŬĞĂũŽŬĞ͕ ŝƚĚŽĞƐŶ͛ƚŚĂǀĞĂĐŽŵĞĚŝĐƉƵŶĐŚ ůŝŶĞ͘/ŶƐƚĞĂĚ͕ŝƚ͛ƐĂŶĂĐĐƵƌĂƚĞ ĚĞƐĐƌŝƉƟŽŶŽĨĂάϰϳŵďƵƐŝŶĞƐƐ quoted on AIM called Franchise Brands (FRAN:AIM). dŚĞƌĞ͛ƐǀĞƌLJŐŽŽĚƌĞĂƐŽŶƚŽ ƚĂŬĞĂĐůŽƐĞƌůŽŽŬĂƐŝƚ͛ƐĨĂŝƌůLJ ĞĂƐLJƚŽƐĞĞǁŚLJƐŽŵĞŝŶǀĞƐƚŽƌƐ ĂƌĞĞdžĐŝƚĞĚĂďŽƵƚŝƚƐƉƌŽƐƉĞĐƚƐ͘ &ƌĂŶĐŚŝƐĞƌĂŶĚƐŝƐƌƵŶďLJ ĞdžĞĐƵƟǀĞĐŚĂŝƌŵĂŶ^ƚĞƉŚĞŶ ,ĞŵƐůĞLJǁŚŽŝƐĐŽŶƐŝĚĞƌĞĚ ƚŽďĞŽŶĞŽĨƚŚĞh<͛ƐĞdžƉĞƌƚƐ ŽŶĨƌĂŶĐŚŝƐĞďƵƐŝŶĞƐƐĞƐ͘,Ğ͛Ɛ ĐƌĞĚŝƚĞĚǁŝƚŚĚƌŝǀŝŶŐƚŚĞƌĂƉŝĚ ŐƌŽǁƚŚŽĨDomino’s Pizza (DOM)ŝŶƚŚĞh<͕ŚĂǀŝŶŐďĞĞŶ ĐŚŝĞĨĞdžĞĐƵƟǀĞŽĨƚŚĂƚďƵƐŝŶĞƐƐ ďĞƚǁĞĞŶϮϬϬϭĂŶĚϮϬϬϴďĞĨŽƌĞ ƐŚŝŌŝŶŐƚŽƚŚĞĐŚĂŝƌŵĂŶ͛ƐƌŽůĞ ǁŚŝĐŚŚĞƐƟůůŚŽůĚƐƚŽĚĂLJ͘ ,ĞĨŽƵŶĚĞĚ&ƌĂŶĐŚŝƐĞƌĂŶĚƐ ǁŝƚŚǁĞůůͲŬŶŽǁŶŝŶǀĞƐƚŽƌEŝŐĞů tƌĂLJŝŶϮϬϬϴĂŶĚďŽƚŚŽĨƚŚĞŵ ĂƌĞƐƟůůŵĂũŽƌƐŚĂƌĞŚŽůĚĞƌƐ ŽǁŶŝŶŐĂĐŽŵďŝŶĞĚϱϰйƐƚĂŬĞ͘ tƌĂLJǁĂƐĂůƐŽĂƐŚĂƌĞŚŽůĚĞƌ ŝŶŽŵŝŶŽ͛ƐĨŽƌĂůŽŶŐƟŵĞ͕ ƚƵƌŶŝŶŐĂάϲ͘ϭŵŝŶǀĞƐƚŵĞŶƚ ŝŶƚŚĞƉŝnjnjĂďƵƐŝŶĞƐƐŝŶƚŽ ĂŶĞƐƟŵĂƚĞĚάϭϯϳŵďLJƚŚĞ ƟŵĞŚĞƐŽůĚŽƵƚĐŽŵƉůĞƚĞůLJ ŝŶϮϬϭϯ͘

24

| SHARES | 08 February 2018

DĞƚƌŽZŽĚŝƐ&ƌĂŶĐŚŝƐĞƌĂŶĚƐ͛ďŝŐŐĞƐƚŽƉĞƌĂƟŽŶ

DOMINO’S MARK 2? /ƚ͛ƐŶŽǁŽŶĚĞƌƚŚĞƉĂŝƌĂƩƌĂĐƚĞĚ ĚĞĐĞŶƚŝŶƚĞƌĞƐƚǁŚĞŶ&ƌĂŶĐŚŝƐĞ ƌĂŶĚƐŇŽĂƚĞĚŽŶƚŚĞƐƚŽĐŬ ŵĂƌŬĞƚŝŶƵŐƵƐƚϮϬϭϲ͚͘^ŽŵĞ ŽĨŽƵƌďŝŐŐĞƌŝŶǀĞƐƚŽƌƐǁĂŶƚ ƵƐƚŽĚŽĂƌĞƉĞĂƚŽĨŽŵŝŶŽ͛Ɛ ĂŶĚŵĂŬĞƚŚĞŵƌŝĐŚĂŐĂŝŶ͕͛ comments Hemsley. ,ĞůƉŝŶŐƚŚĞĐĂƵƐĞŝƐƚŚĞĨĂĐƚ ƚŚĂƚ,ĞŵƐůĞLJŚĂƐƌĞĐƌƵŝƚĞĚĂĨĞǁ ŽƚŚĞƌŽŵŝŶŽ͛ƐĂůƵŵŶŝŝŶĐůƵĚŝŶŐ ƚŚĞŐƌŽƵƉ͛ƐĨŽƌŵĞƌŵĂƌŬĞƟŶŐ and IT directors. &ƌĂŶĐŚŝƐĞƌĂŶĚƐ͛ƚĂƐŬŝƐƚŽ ŚĞůƉĨƌĂŶĐŚŝƐĞĞƐƚŽďĞĐŽŵĞ ŵŽƌĞĞĸĐŝĞŶƚŽƉĞƌĂƚŽƌƐĂŶĚǁŝŶ ŵŽƌĞďƵƐŝŶĞƐƐ͘dŚĞŵŽƌĞŵŽŶĞLJ ŐĞŶĞƌĂƚĞĚďLJƚŚĞĨƌĂŶĐŚŝƐĞĞƐ ĂŶĚƚŚĞůĞƐƐŚĞůƉƚŚĞLJŶĞĞĚƚŽ ŽƉĞƌĂƚĞƐŵŽŽƚŚůLJ͕ƚŚĞŐƌĞĂƚĞƌ ƚŚĞĂŵŽƵŶƚŽĨŵŽŶĞLJƚŚĂƚŐŽĞƐ ŝŶƚŽ&ƌĂŶĐŚŝƐĞƌĂŶĚƐ͛ƉŽĐŬĞƚ ĂŌĞƌĐŽƐƚƐ͘

EASY TO UNDERSTAND &ƌĂŶĐŚŝƐĞƌĂŶĚƐŚĂƐĂĨĂŝƌůLJ ƐŝŵƉůĞďƵƐŝŶĞƐƐŵŽĚĞů͘/ƚŽǁŶƐ ǀĂƌŝŽƵƐĨƌĂŶĐŚŝƐĞĐŽŵƉĂŶŝĞƐĂŶĚ ĞĂƌŶƐŵŽŶĞLJĨƌŽŵĨƌĂŶĐŚŝƐĞĞƐ ƚŚƌŽƵŐŚƐƚĂƌƚͲƵƉĐŚĂƌŐĞƐĂŶĚ ŵŽŶƚŚůLJŝŶĐŽŵĞĨƌŽŵůŝĐĞŶĐĞ ĨĞĞƐĂŶĚƉƌŽĚƵĐƚƐĂůĞƐ͘ /ƚƉƌŽǀŝĚĞƐĐĞŶƚƌĂůƐĞƌǀŝĐĞƐ ǁŚŝĐŚĐĂŶďĞĂƉƉůŝĞĚƚŽĂŶLJ ŽĨƚŚĞĨƌĂŶĐŚŝƐĞĐŽŵƉĂŶŝĞƐŝŶ ŝƚƐƉŽƌƞŽůŝŽ͕ŶĂŵĞůLJŶĂƟŽŶĂů ďƌĂŶĚŵĂƌŬĞƟŶŐ͕ĐƵƐƚŽŵĞƌ ůĞĂĚŐĞŶĞƌĂƟŽŶ͕ƌĞĐƌƵŝƚŵĞŶƚ͕ ƚƌĂŝŶŝŶŐ͕ƐƵƉƉŽƌƚĂŶĚ/d͘ůů ĨƌĂŶĐŚŝƐĞĞƐƉĂLJŵŽŶĞLJŝŶƚŽĂ ŶĂƟŽŶĂůĂĚǀĞƌƟƐŝŶŐĨƵŶĚ͘ PRINCIPLE INTEREST dŚĞďŝŐŐĞƐƚŽƉĞƌĂƟŽŶŝŶŝƚƐ ƉŽƌƞŽůŝŽŝƐDĞƚƌŽZŽĚǁŚŝĐŚ ƉƌŽǀŝĚĞƐďƵƐŝŶĞƐƐͲƚŽͲďƵƐŝŶĞƐƐ drains clearance, maintenance ĂŶĚƉůƵŵďŝŶŐƐĞƌǀŝĐĞƐŝŶ

UNDER THE BONNET ƚŚĞh<͘/ƚŚĂƐĂƉƉƌŽdžŝŵĂƚĞůLJ ϯ͕ϬϬϬĐƵƐƚŽŵĞƌƐŽŶϯϬ͕ϬϬϬƚŽ ϱϬ͕ϬϬϬƉƌĞŵŝƐĞƐ͘ Hemsley wants it to become ĂάϭϬϬŵƚƵƌŶŽǀĞƌďƵƐŝŶĞƐƐ͘ dŚĂƚ͛ƐĂďŽƵƚĮǀĞƟŵĞƐƚŚĞ ůĞǀĞůŝƚĂĐŚŝĞǀĞĚŝŶϮϬϭϲ͚͘tĞ͛ůů ŚĂǀĞƚŽŝŶǀĞƐƚĂůŽƚŝŶ/dĂŶĚ ĨƌĂŶĐŚŝƐĞĞƐǁŝůůŶĞĞĚƚŽŝŶǀĞƐƚŝŶ ĞƋƵŝƉŵĞŶƚ͘dŚĂƚǁŝůůƚĂŬĞĂůůŽĨ ϮϬϭϴƚŽĂĐŚŝĞǀĞ͛͘ DĞƚƌŽZŽĚŚĂƐĨƌĂŵĞǁŽƌŬ ĐŽŶƚƌĂĐƚƐƚŽƉƌŽǀŝĚĞƌĞĂĐƟǀĞ ƐĞƌǀŝĐĞƐ͕ƐƵĐŚĂƐǁŽƌŬŝŶŐĨŽƌĂ ĨĂĐŝůŝƟĞƐŵĂŶĂŐĞŵĞŶƚďƵƐŝŶĞƐƐ ǁŚŽ͛ĚŚĂǀĞĂĐŽŶƚƌĂĐƚǁŝƚŚƚŚĞ ƉƌŝƐŽŶƐĞƌǀŝĐĞ͕ĨŽƌĞdžĂŵƉůĞ͘ ͚sĞƌLJŽŌĞŶƵŶďůŽĐŬŝŶŐĂĚƌĂŝŶ ŽŶĂƌĞĂĐƟǀĞďĂƐŝƐƌĞǀĞĂůƐĂ ďŝŐŐĞƌƉƌŽďůĞŵǁŝƚŚƚŚĞĚƌĂŝŶ͘ tĞǁŽƵůĚƚŚĞŶƋƵŽƚĞƚŽĚŽƚŚĞ ƵŶĚĞƌůLJŝŶŐƌĞƉĂŝƌ͛͘ /ƚĂůƐŽƵŶĚĞƌƚĂŬĞƐƉůĂŶŶĞĚ ƉƌĞǀĞŶƚĂƟǀĞŵĂŝŶƚĞŶĂŶĐĞƐƵĐŚ ĂƐĐůĞĂŶŝŶŐĨĂƚĂŶĚŐƌĞĂƐĞĨƌŽŵ ĚƌĂŝŶƐ͚͘DĞƚƌŽZŽĚŚĂƐŐŽŽĚ ǀŝƐŝďŝůŝƚLJĂŶĚǁĞŬŶŽǁŚŽǁŽŌĞŶ ƚŚŝƐƚLJƉĞŽĨǁŽƌŬǁŝůůŚĂƉƉĞŶ͛͘ DĞƚƌŽWůƵŵď͕ĂŶŽƚŚĞƌ ďƵƐŝŶĞƐƐŝŶƚŚĞ&ƌĂŶĐŚŝƐĞƌĂŶĚƐ ƉŽƌƞŽůŝŽ͕ǁŽƌŬƐĨŽƌƚŚĞůŝŬĞƐŽĨ AXA and AA (AA.)ĚŽŝŶŐŚŽŵĞ ƉůƵŵďŝŶŐĨŽƌĐƵƐƚŽŵĞƌƐǁŝƚŚ ĞŵĞƌŐĞŶĐLJƌĞƐƉŽŶƐĞƉŽůŝĐŝĞƐ͘ ͚/ŶƐƵƌĞƌƐ͛ƉƌĞĚŝĐƟǀĞŵŽĚĞůƐ are uncannily accurate. We can ƉůĂŶŽƵƌůĂďŽƵƌĨŽƌĐĞĂŶĚŶŽƚƐŝƚ ĂƌŽƵŶĚǁĂŝƟŶŐĨŽƌƚŚĞƉŚŽŶĞƚŽ ƌŝŶŐ͕͛ƐĂLJƐ,ĞŵƐůĞLJ͘ A FEW WEAK POINTS ďƵƐŝŶĞƐƐĐĂůůĞĚ<ĞŵĂĐǁĂƐ ŝŶŚĞƌŝƚĞĚĂƐƉĂƌƚŽĨƚŚĞDĞƚƌŽ ZŽĚĂĐƋƵŝƐŝƟŽŶŝŶƉƌŝůϮϬϭϳ͚͘/ƚ ǁĂƐĂďĂƐŬĞƚĐĂƐĞ͘/ƚǁĂƐĨŽƌŵĞĚ ƚŽŚĞůƉŝŵƉƌŽǀĞǁĂƚĞƌƉƌĞƐƐƵƌĞ ŝƐƐƵĞƐŝŶƚĂůůďƵŝůĚŝŶŐƐĂŶĚŚĂƐ ŐŽŶĞƚŚƌŽƵŐŚŵĂŶLJĚŝīĞƌĞŶƚ ŽǁŶĞƌƐ͘hŶůŝŬĞŽƵƌŽƚŚĞƌ ĐŽŵƉĂŶŝĞƐ͕<ĞŵĂĐŝƐĂĚŝƌĞĐƚ

FRANCHISE BRANDS: FINANCIAL SUMMARY REVENUE (£m) ADJUSTED PRE-TAX PROFIT (£m) EPS (p) DIVIDEND (p) NET CASH / (DEBT) (£m)

2015 ϰ͘ϯϴ

2016 ϰ͘ϴϳ

2017E Ϯϰ͘ϬϬ

2018E ϯϲ͘ϬϬ

1.12

ϭ͘Ϯϰ

2.09

2.90

Ϯ͘ϭϰ n/a ϭ͘Ϯϳ

Ϯ͘ϯϴ Ϭ͘ϭϳ Ϯ͘ϱϴ

Ϯ͘ϰϬ Ϭ͘ϰϱ Ͳϲ͘Ϯϭ

Ϯ͘ϵϲ Ϭ͘ϲϬ Ͳϰ͘ϭϮ

Source: Allenby Capital, Franchise Brands

ůĂďŽƵƌďƵƐŝŶĞƐƐ͛͘ <ĞŵĂĐ͛ƐƉŽŽƌƉĞƌĨŽƌŵĂŶĐĞŝŶ ƚŚĞŵŽŶƚŚƐĨŽůůŽǁŝŶŐƚŚĞDĞƚƌŽ ZŽĚĂĐƋƵŝƐŝƟŽŶĨŽƌĐĞĚĂŶĂůLJƐƚƐ ƚŽĚŽǁŶŐƌĂĚĞƚŚĞŝƌĞĂƌŶŝŶŐƐ ĨŽƌĞĐĂƐƚƐůĂƐƚ^ĞƉƚĞŵďĞƌĂƚƚŚĞ ŐƌŽƵƉ͛ƐŚĂůĨLJĞĂƌƌĞƐƵůƚƐ͘^ŝŶĐĞ ƚŚĞŶ͕,ĞŵƐůĞLJƐĂLJƐƚŚĞďƵƐŝŶĞƐƐ ŚĂƐďĞĞŶƌĞƐƚŽƌĞĚƚŽƉƌŽĮƚĂďŝůŝƚLJ ĂŶĚŚŝŶƚƐŝƚŵĂLJďĞƐŽůĚ͘ dŚĞĞdžĞĐƵƟǀĞĐŚĂŝƌŵĂŶƐĂLJƐ ĂŶŽƚŚĞƌƉĂƌƚŽĨ&ƌĂŶĐŚŝƐĞƌĂŶĚƐ ŝƐ͚ŵŽƌĞŽƌůĞƐƐĚĞĨƵŶĐƚ͕͛ďĞŝŶŐ ƚŚĞDLJ,ŽŵĞĐůĞĂŶŝŶŐďƵƐŝŶĞƐƐ͘ dŚĂƚůĞĂǀĞƐŚŝƉƐǁĂLJ͕ĂƌŬŝŶŐ DĂĚĂŶĚKǀĞŶĐůĞĂŶĂƐƚŚĞ ĐŽƌĞŝŶƚĞƌĞƐƚƐĂůŽŶŐƐŝĚĞDĞƚƌŽ ZŽĚĂŶĚDĞƚƌŽWůƵŵď͘ůůŚĂǀĞ ŐƌŽǁƚŚƉŽƚĞŶƟĂů͕ŚĞƐĂLJƐ͘ GROWTH OPPORTUNITIES ŚŝƉƐǁĂLJƐƉĞĐŝĂůŝƐĞƐŝŶ ŽŶͲƚŚĞͲƐƉŽƚƌĞƉĂŝƌŽĨĐĂƌƐǁŝƚŚ ƐĐƌĂƚĐŚĞƐĂŶĚĚĞŶƚƐ͘ďŝŐƉĂƌƚ ŽĨƚŚĞďƵƐŝŶĞƐƐŝƐǁŽƌŬŝŶŐǁŝƚŚ ŇĞĞƚŵĂŶĂŐĞƌƐĂƐŝƚƐƌĞƉĂŝƌĐŽƐƚƐ ĂƌĞĐŚĞĂƉĞƌƚŚĂŶĂďŽĚLJƐŚŽƉ͘ /ƚŽƌŝŐŝŶĂƚĞĚĂƐĂŵĂŶͲŝŶͲĂͲǀĂŶ ŽƉĞƌĂƟŽŶďƵƚ,ĞŵƐůĞLJƐĂLJƐ ƚŚĞƌĞŝƐŶŽǁĂŶŽƉƉŽƌƚƵŶŝƚLJ to increase scale by some ĨƌĂŶĐŚŝƐĞĞƐŚĂǀŝŶŐƉƌĞŵŝƐĞƐ͘ ͚dŚĞƌŝƐĞŽĨƉĂƌŬĂƐƐŝƐƚ͕ĂŶĚ ĂƵƚŽŶŽŵŽƵƐǀĞŚŝĐůĞƐŝŶƚŚĞ ĨƵƚƵƌĞ͕ƐƵŐŐĞƐƚƐĂĨƌĂŶĐŚŝƐĞĞ ŵĂLJďĞŶĞĮƚĨƌŽŵŚĂǀŝŶŐĐĞƌƚĂŝŶ ĞƋƵŝƉŵĞŶƚƚŽŚĞůƉƌĞĐĂůŝďƌĂƚĞ

ĐĂƌƐLJƐƚĞŵƐĚƵƌŝŶŐƚŚĞƌĞƉĂŝƌ͘ dŚĂƚ͛ƐďĞƩĞƌƐƵŝƚĞĚƚŽďĞŝŶŐ ĚŽŶĞŝŶƐŵĂůůƉƌĞŵŝƐĞƐĂŶĚŶŽƚ ŽƵƚƚŚĞďĂĐŬŽĨĂǀĂŶ͘,ĂǀŝŶŐ ƉƌĞŵŝƐĞƐŵĂLJĂůƐŽǁĂƌƌĂŶƚĚŽŝŶŐ ŵŽƌĞƌĞƐƉƌĂLJŝŶŐũŽďƐĂƐǁĞůů͛͘ ĂƌŬŝŶŐDĂĚŝƐĂƉƌŽĮƚĂďůĞ ĚŽŐƐŝƫŶŐƐĞƌǀŝĐĞĂŶĚŚĂƐ ĂŶĞƐƟŵĂƚĞĚϮϬ͕ϬϬϬĂĐƟǀĞ ĐƵƐƚŽŵĞƌƐ͘&ƌĂŶĐŚŝƐĞĞƐĂƌĞ ƚƵƌŶŝŶŐŽǀĞƌάϳϬ͕ϬϬϬƚŽάϴϬ͕ϬϬϬ ĞĂĐŚ͕ŬĞĞƉŝŶŐďĞůŽǁƚŚĞάϴϱ͕ϬϬϬ ƚƵƌŶŽǀĞƌůĞǀĞůĂƚǁŚŝĐŚƚŚĞLJ ŵƵƐƚƉĂLJsd͘ ƐƐƵĐŚ͕ĨƌĂŶĐŚŝƐĞĞƚƵƌŶŽǀĞƌŝƐ ƵŶůŝŬĞůLJƚŽŐĞƚŵƵĐŚŚŝŐŚĞƌ͕LJĞƚ ,ĞŵƐůĞLJĚŽĞƐďĞůŝĞǀĞƚŚĞƌĞŝƐ ƐĐŽƉĞƚŽŝŶƚƌŽĚƵĐĞŵĂŶLJŵŽƌĞ ĨƌĂŶĐŚŝƐĞĞƚĞƌƌŝƚŽƌŝĞƐŝŶƚŚĞh< ĂŶĚƉŽƚĞŶƟĂůůLJƚƌŝƉůĞƚŚĞƐŝnjĞŽĨ ƚŚĞŶĞƚǁŽƌŬ͘ &ƌĂŶĐŚŝƐĞƌĂŶĚƐŚĂƐ ĂƉƉƌŽdžŝŵĂƚĞůLJάϲŵŶĞƚĚĞďƚ ƉŽƐŝƟŽŶ͘tĞĞdžƉĞĐƚĚĞďƚƚŽĨĂůů ĨĂƐƚŽǀĞƌƚŚĞŶĞdžƚĨĞǁLJĞĂƌƐŐŝǀĞŶ ƚŚĞĐĂƐŚŐĞŶĞƌĂƟǀĞŶĂƚƵƌĞŽĨƚŚĞ ďƵƐŝŶĞƐƐ͘&ƵƌƚŚĞƌĂĐƋƵŝƐŝƟŽŶƐ ŵĂLJĐŚĂŶŐĞƚŚŝƐƐŝƚƵĂƟŽŶ͕ŽĨ ǁŚŝĐŚƚŚĞƌĞĂƌĞƉůĞŶƚLJŽĨƚĂƌŐĞƚƐ ĂĐĐŽƌĚŝŶŐƚŽƚŚĞĐŚĂŝƌŵĂŶ͘ SHARES SAYS: È Looks really interesting but you need to take a long term view and be patient for value creation. Buy at 61p. (DC)

08 February 2018 | SHARES |

25

FUNDS

The search for funds that invest in specific themes Thematic investing is growing in popularity, so why is it so hard to find relevant funds and investment trusts?

W

e’re amazed by how few funds and investment trusts ƉƌŽǀŝĚĞĐůĞĂƌŝŶĨŽƌŵĂƟŽŶŽŶ ƚŚĞŝƌƉŽƌƞŽůŝŽ͛ƐƵŶĚĞƌůLJŝŶŐ themes. Many people choose funds and investment trusts in ŽƌĚĞƌƚŽƉůĂLJƐƉĞĐŝĮĐƚŚĞŵĞƐ͕ LJĞƚŵŽƐƚƚŚĞŵĂƟĐƉƌŽĚƵĐƚƐ only market themselves based ŽŶŐĞŽŐƌĂƉŚŝĐŽƌƐŝŶŐůĞƐĞĐƚŽƌ ĐŽǀĞƌĂŐĞ͘ WƌŽƉĞƌƚLJĨƵŶĚƐĂƌĞĂƌŐƵĂďůLJ the only area where it is easy ƚŽĮŶĚĚŝīĞƌĞŶƚǁĂLJƐŝŶƚŽƚŚĞ ƐĞĐƚŽƌƐƵĐŚĂƐŵĞĚŝĐĂůĐĞŶƚƌĞƐ͕ ƐƚƵĚĞŶƚĂĐĐŽŵŵŽĚĂƟŽŶŽƌůĂƌŐĞ warehouses. But what if you want to ƉůĂLJƚŚĞŵĞƐůŝŬĞĞͲĐŽŵŵĞƌĐĞ͕ WHAT IS THEMATIC INVESTING? Consultant McKinsey says ƚŚĞŵĂƟĐŝŶǀĞƐƟŶŐƌĞƋƵŝƌĞƐĂ ĨƵŶĚĂŵĞŶƚĂůƵŶĚĞƌƐƚĂŶĚŝŶŐ ŽĨƚŚĞŝŵƉĂĐƚŽĨůŽŶŐͲƚĞƌŵ ĞĐŽŶŽŵŝĐ͕ƉŽůŝƟĐĂůĂŶĚƐŽĐŝĂů ƚƌĞŶĚƐŽŶƌĞŐŝŽŶƐĂŶĚƐĞĐƚŽƌƐ͕ which reveals investable ŽƉƉŽƌƚƵŶŝƟĞƐ͘ ETF provider Global X Funds says many investors already ĂƉƉůLJƉƌŝŶĐŝƉůĞƐŽĨƚŚĞŵĂƟĐ ŝŶǀĞƐƟŶŐ͕ƐƵĐŚĂƐŝĚĞŶƟĨLJŝŶŐ ŝŶǀĞƐƚŵĞŶƚƐƚŚĂƚĐŽƵůĚďĞŶĞĮƚ ŝŶĂƌŝƐŝŶŐŝŶƚĞƌĞƐƚƌĂƚĞƌĞŐŝŵĞ͕ ŝŶƚŚĞŝƌƉŽƌƞŽůŝŽƐ͘ ͚ƵƚƚŚĞŵĂƟĐŝŶǀĞƐƟŶŐ extends far beyond economic

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| SHARES | 08 February 2018

dĂŝůĞLJLJŶĂŵŝĐ&ƵŶĚ͛ƐƚŽƉϭϬŚŽůĚŝŶŐƐŝŶĐůƵĚĞĂƌŽďŽƟĐƐd&

ƉŽůŝĐŝĞƐ͕ĂŶĚĐĂŶƉŽƚĞŶƟĂůůLJ ďĞŵŽƐƚĞīĞĐƟǀĞǁŚĞŶƵƐĞĚ ƚŽŝĚĞŶƟĨLJŽƉƉŽƌƚƵŶŝƟĞƐ ŝŶĂƌĞĂƐƐƵĐŚĂƐĐŚĂŶŐŝŶŐ ĚĞŵŽŐƌĂƉŚŝĐƐ͕ĞǀŽůǀŝŶŐ ĐŽŶƐƵŵĞƌďĞŚĂǀŝŽƵƌƐ͕ ŝŶŶŽǀĂƟǀĞƚĞĐŚŶŽůŽŐŝĞƐ͕ĂŶĚ the availability of natural ƌĞƐŽƵƌĐĞƐ͕͛ŝƚĂĚĚƐ͘ ͚^ƵĐĐĞƐƐĨƵůůLJŝŵƉůĞŵĞŶƟŶŐ ĂƚŚĞŵĂƟĐŝŶǀĞƐƚŵĞŶƚƐƚƌĂƚĞŐLJ ƌĞƋƵŝƌĞƐĐŽƌƌĞĐƚůLJŝĚĞŶƟĨLJŝŶŐ ƐƚƌƵĐƚƵƌĂůƐŚŝŌƐ͕ĮŶĚŝŶŐ ĐŽŵƉĂŶŝĞƐǁŝƚŚŚŝŐŚĞdžƉŽƐƵƌĞ ƚŽƚŚŽƐĞƐŚŝŌƐ͕ĂŶĚƟŵŝŶŐƚŚĞ theme so as to enter early ĞŶŽƵŐŚƚŚĂƚĞĂƌŶŝŶŐƐĂŶĚ forecasts have not fully priced ŝŶƚŚĞƚŚĞŵĞ͛ƐƉŽƚĞŶƟĂů͛͘

the rise of the electric vehicle industry or cyber security? These ĂƌĞĂůůůĂƌŐĞŝŶĚƵƐƚƌŝĞƐǁŝƚŚ ĐŽŶƐŝĚĞƌĂďůĞŐƌŽǁƚŚƉƌŽƐƉĞĐƚƐ so it makes perfect sense to have ƐŽŵĞĂůůŽĐĂƟŽŶƚŽƚŚĞŵŝŶĂ ĚŝǀĞƌƐŝĮĞĚƉŽƌƞŽůŝŽ͘^ŽŚŽǁĚŽ LJŽƵĮŶĚƚŚĞƌŝŐŚƚƉƌŽĚƵĐƚ͍ BROAD INVESTMENT THEMES DŽƐƚĂĐƟǀĞůLJͲŵĂŶĂŐĞĚĨƵŶĚƐ and investment trusts fall under ƚŚĞďƌŽĂĚƵŶŝǀĞƌƐĞŽĨ͗ǀĂůƵĞ͕ ŐƌŽǁƚŚ͕ŝŶĐŽŵĞ͕ŵƵůƟͲĂƐƐĞƚ͕ ŽƉƉŽƌƚƵŶŝƟĞƐ͕ŽƌĐŽŶĐĞŶƚƌĂƚĞĚ ŽŶĂƐƉĞĐŝĮĐƐĞĐƚŽƌůŝŬĞ ƚĞĐŚŶŽůŽŐLJŽƌŐĞŽŐƌĂƉŚLJƐƵĐŚ as North America. These aren’t ĂůǁĂLJƐƚŚĞĞĂƐŝĞƐƚƐƚĂƌƟŶŐƉŽŝŶƚƐ for an investor who wants to play

FUNDS ĂƐƉĞĐŝĮĐƚŚĞŵĞ͘ ^ŽŵĞĨƵŶĚƐĂŶĚŝŶǀĞƐƚŵĞŶƚ ƚƌƵƐƚƐĂƌŐƵĞƚŚĞLJĚŽŶ͛ƚƌĞƐƚƌŝĐƚ ƚŚĞŵƐĞůǀĞƐƚŽĨŽůůŽǁŝŶŐĂ certain industry or theme. That’s ĮŶĞ͖ďƵƚǁŚĂƚĂďŽƵƚƚŚĞŽŶĞƐ who do follow more focused paths? SPECIFIC THEMES dŚĞĞdžĐŚĂŶŐĞƚƌĂĚĞĚĨƵŶĚƐ ;d&ͿŝŶĚƵƐƚƌLJŝƐĂƌŐƵĂďůLJ ďĞƩĞƌĂƚŵĂƌŬĞƟŶŐŝƚƐĞůĨĂƐĂ ƐŽƵƌĐĞŽĨŵŽƌĞŶŝĐŚĞƚŚĞŵĂƟĐ investments. dŚĞƌĞŚĂƐďĞĞŶĂƉƌŽůŝĨĞƌĂƟŽŶ of ETF launches over the past ĨĞǁLJĞĂƌƐŝŶĐůƵĚŝŶŐŽŶĞĞdžƉŽƐĞĚ ƚŽĐŽŵƉĂŶŝĞƐďĂƩůŝŶŐŽďĞƐŝƚLJ͖ ĂŶŽƚŚĞƌƚƌĂĐŬŝŶŐƚŚĞĚƌŽŶĞ ŝŶĚƵƐƚƌLJ͖ĂŶĚŽŶĞƚƌĂĐŬŝŶŐĂ ŐĞŶĚĞƌĚŝǀĞƌƐŝƚLJŝŶĚĞdžǁŚŝĐŚ ĨŽĐƵƐĞƐŽŶůĂƌŐĞh^ĐŽŵƉĂŶŝĞƐ with the most women on ƚŚĞŝƌďŽĂƌĚƐŽƌŝŶƐĞŶŝŽƌƌŽůĞƐ͕ compared with peers. There are many others. dŚĞĂĨŽƌĞŵĞŶƟŽŶĞĚĞdžĂŵƉůĞƐ are all overseas-listed ETFs. KŶƚŚĞh<ŵĂƌŬĞƚLJŽƵ͛ůůĮŶĚĂ ƐŵĂůůĞƌƉŽŽůŽĨŶŝĐŚĞƚŚĞŵĂƟĐ ƉĂƐƐŝǀĞƉƌŽĚƵĐƚƐ͘&ŽƌĞdžĂŵƉůĞ͕ d&^ĞĐƵƌŝƟĞƐůĂƐƚŵŽŶƚŚ launched three products ƉůĂLJŝŶŐƚŚĞƚŚĞŵĞƐŽĨĞŶĞƌŐLJ ƐƚŽƌĂŐĞƐŽůƵƟŽŶƐ͕ĚƌƵŐƐƚƌLJŝŶŐ to combat rare diseases and ĞͲĐŽŵŵĞƌĐĞůŽŐŝƐƟĐƐ͘ SEARCHING FOR THEMES DKE'd/s>zͳDE' FUNDS dŚĞŵĂƟĐd&ƐĂƌĞĨĂŝƌůLJĞĂƐLJƚŽ ĮŶĚŝĨLJŽƵŬŶŽǁǁŚŝĐŚƚŚĞŵĞ LJŽƵǁĂŶƚƚŽƉůĂLJ͕ĂƐƚŚĞƚŚĞŵĞ ƚĞŶĚƐƚŽďĞŝŶƚŚĞƉƌŽĚƵĐƚƟƚůĞ͘ /ƚ͛ƐĂůŽƚŚĂƌĚĞƌƚŽĮŶĚƚŚĞŵĂƟĐ ĂĐƟǀĞůLJͲŵĂŶĂŐĞĚĨƵŶĚƐĂŶĚ investment trusts. Apart from the

DŝĚtLJŶĚ/ŶƚĞƌŶĂƟŽŶĂů/ŶǀĞƐƚŵĞŶƚdƌƵƐƚƌĞĐĞŶƚůLJĂĚĚĞĚƚŽŵĞƌŝĐĂŶƌĂŝůƌŽĂĚ

ĂĨŽƌĞŵĞŶƟŽŶĞĚƉƌŽƉĞƌƚLJŽŶĞƐ͕ you tend to only discover which ƐƉĞĐŝĮĐƚŚĞŵĞƐĂƌĞĐĞŶƚƌĂůƚŽ a fund or investment trust’s ƐƚƌĂƚĞŐLJďLJƌĞĂĚŝŶŐĂŶŶƵĂů ƌĞƉŽƌƚƐŽƌǁĂƚĐŚŝŶŐĨƵŶĚ ŵĂŶĂŐĞƌǀŝĚĞŽƐ͕ďĞLJŽŶĚƚŚĞ ďƌŽĂĚĚĞƐĐƌŝƉƟŽŶƐĚŝƐĐƵƐƐĞĚ ĞĂƌůŝĞƌŝŶƚŚŝƐĂƌƟĐůĞ͘ &ŽƌĞdžĂŵƉůĞ͕T Bailey Dynamic d/>zzED/͵ KEY INVESTMENT THEMES • DEBT INFLATION • ,E'/E/EdZ^d Zd^ • yWK^hZdK'ZKt/E' MIDDLE INCOME 'ZKhW^ • dZE^&KZD/E' KEKD/^ • /^ZhWd/s/E&>hE^ • >/s/E'>KE'Z

Fund (GB00B1LB2Z79)ŝƐďŝŐŽŶ ƚŚĞŵĂƟĐŝŶǀĞƐƟŶŐ͕ĂůƚŚŽƵŐŚ that’s not clear from its website or factsheet. The only hint that it likes themes is the fact its top ϭϬŚŽůĚŝŶŐƐŝŶĐůƵĚĞĂƌŽďŽƟĐƐ ETF and a fund that invests in ďƵƐŝŶĞƐƐĞƐŚĞůƉŝŶŐƚŽƐĂĨĞŐƵĂƌĚ ƚŚĞŝŶƚĞŐƌŝƚLJ͕ŚĞĂůƚŚĂŶĚĨƌĞĞĚŽŵ ŽĨŝŶĚŝǀŝĚƵĂůƐ͕ĐŽŵƉĂŶŝĞƐĂŶĚ ŐŽǀĞƌŶŵĞŶƚƐ͘ We only discovered it followed a series of key investment ƚŚĞŵĞƐĂŌĞƌŝŶƚĞƌǀŝĞǁŝŶŐWĞƚĞƌ ƐŬĞǁ͕ĐŚŝĞĨĞdžĞĐƵƟǀĞŽĨdĂŝůĞLJ ƐƐĞƚDĂŶĂŐĞŵĞŶƚ͘ƐŬĞǁ says he and his team have been ůŽŽŬŝŶŐĂƚǁĂLJƐƚŽŝŶĐůƵĚĞƚŚĞ fund’s preferred themes on the factsheet but so far haven’t ĨŽƵŶĚĂƐŽůƵƟŽŶ͘ ͚tĞ͛ƌĞƵƉĂŐĂŝŶƐƚƐƉĂĐĞ ůŝŵŝƚĂƟŽŶƐĂŶĚƚŚĞƌĞĂƌĞĐĞƌƚĂŝŶ ƚŚŝŶŐƐǁĞŚĂǀĞƚŽŝŶĐůƵĚĞŽŶ ƚŚĞĨĂĐƚƐŚĞĞƚĨŽƌƌĞŐƵůĂƚŽƌLJ ƉƵƌƉŽƐĞƐ͕͛ŚĞĞdžƉůĂŝŶƐ͘ 08 February 2018 | SHARES |

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FUNDS MID WYND KEY INVESTMENT THEMES Theme

йŽĨƉŽƌƞŽůŝŽ

ĞƐĐƌŝƉƟŽŶ

ƵƚŽŵĂƟŽŶ

18.5%

ŽŵƉĂŶŝĞƐŝŶƌŽďŽƟĐƐĂŶĚĨĂĐƚŽƌLJĂƵƚŽŵĂƟŽŶǁŚŝĐŚŝŶĐƌĞĂƐĞ ƉƌŽĚƵĐƟǀŝƚLJĂŶĚƋƵĂůŝƚLJŝŶŵĂŶƵĨĂĐƚƵƌŝŶŐ

Emerging market ĐŽŶƐƵŵĞƌ

16.9%

ϴϱйŽĨƚŚĞǁŽƌůĚ͛ƐƉŽƉƵůĂƟŽŶŚĂǀĞƌĂƉŝĚůLJŐƌŽǁŝŶŐŝŶĐŽŵĞ ĂŶĚĚŽŵŝŶĂƚĞƚŚĞƐĂůĞƐŐƌŽǁƚŚŽĨďƌĂŶĚĞĚŐŽŽĚƐĐŽŵƉĂŶŝĞƐ

Online services

13.9%

dŽƵƌŝƐŵ

12.2%

DĞĚŝĂĐŽŶƚĞŶƚ

10.4%

,ĞĂůƚŚĐĂƌĞĐŽƐƚƐ

10.3%

^ĐŝĞŶƟĮĐ ĞƋƵŝƉŵĞŶƚ

7.0%

High quality assets

5.9%

ZĞƟƌĞĞƐƉĞŶĚŝŶŐ ƉŽǁĞƌ

5.7%

ŐŐƌĞŐĂƚŽƌƐŽĨĚĂƚĂĂŶĚĞͲĐŽŵŵĞƌĐĞƉůĂƞŽƌŵƐĂďůĞƚŽďĞŶĞĮƚ ĨƌŽŵƚŚĞŶĞƚǁŽƌŬĞīĞĐƚ ŽŵƉĂŶŝĞƐďĞŶĞĮƟŶŐĨƌŽŵƚŚĞĐŽŶƐŝƐƚĞŶƚŐƌŽǁƚŚŝŶƚŽƵƌŝƐƚ ŶƵŵďĞƌƐ͖ŚĞůƉĞĚďLJŝŶĐƌĞĂƐŝŶŐǁĞĂůƚŚĂŶĚĞĂƐŝŶŐŽĨǀŝƐĂ ƌĞƐƚƌŝĐƟŽŶƐ WƌŽůŝĨĞƌĂƟŽŶŽĨƌŽƵƚĞƐƚŽĂĐĐĞƐƐŵĞĚŝĂŵĂŬĞƐƋƵĂůŝƚLJŽĨŵĞĚŝĂ ĐŽŶƚĞŶƚĐƌŝƟĐĂů͘WƌŽŐƌĂŵŵĞŵĂŬĞƌƐĂůƐŽƐĞĞŝŶŐƌĂƉŝĚŐƌŽǁƚŚ ŝŶƉƌŽŐƌĂŵŵĞĂŶĚĨŽƌŵĂƚƐĂůĞƐŽƵƚƐŝĚĞƚŚĞŝƌŚŽŵĞŵĂƌŬĞƚƐ ŽŵƉĂŶŝĞƐŚĞůƉŝŶŐŚĞĂůƚŚƐLJƐƚĞŵƐƌĞĚƵĐĞĐŽƐƚƐʹŐĞŶĞƌŝĐ ĚƌƵŐƐĂŶĚĚŝƐƚƌŝďƵƚŽƌƐ ŽŵƉĂŶŝĞƐŵĂŬŝŶŐƚŚĞƚŽŽůƐĂůůŽǁŝŶŐĂĚǀĂŶĐĞƐŝŶ ďŝŽƉŚĂƌŵĂĐĞƵƟĐĂůŵĂƌŬĞƚƐĂŶĚŐƌĞĂƚĞƌƚĞƐƟŶŐŝŶĂƉƉůŝĞĚ ŵĂƌŬĞƚƐ;Ğ͘Ő͘ĨŽŽĚ͕ǁĂƚĞƌ͕ĞŶǀŝƌŽŶŵĞŶƚĂůͿ ŽŵƉĂŶŝĞƐǁŝƚŚƐĐĂƌĐĞĂƐƐĞƚƐĂŶĚŐƌŽǁŝŶŐĚĞŵĂŶĚ /ŶĚĞǀĞůŽƉĞĚŵĂƌŬĞƚƐ͕ƚŚĞƐŚĂƌĞŽĨǁĞĂůƚŚŚĞůĚďLJƚŚĞŽǀĞƌ ϱϱͲLJĞĂƌͲŽůĚƐŚĂƐŐƌŽǁŶ͕ƐƚĞĂĚŝůLJĚƌŝǀŝŶŐƚŚĞƐĂůĞƐŽĨƉƌŽĚƵĐƚƐ which suit this cohort

^ŽƵƌĐĞ͗ƌƚĞŵŝƐ͘ĂƚĂĂƐŽĨϮϵĞĐĞŵďĞƌϮϬϭϳ

It’s not impossible to publish ƚŚĞůŝƐƚŽĨƚŚĞŵĞƐ͕ĂƐƌƚĞŵŝƐͲ run DŝĚtLJŶĚ/ŶƚĞƌŶĂƟŽŶĂů Investment Trust (MWY) has ƐŚŽǁŶ͘&ƵŶĚŵĂŶĂŐĞƌ^ŝŵŽŶ Edelsten believes the investment trust is the only one in the industry to prominently display the theme split on the factsheet.

Edelsten says he tries to ŝĚĞŶƟĨLJƚŚĞŵĞƐĂŶĚŐŽŽĚǀĂůƵĞ stocks before they are picked up by the wider investment market. ,ĞƉĂLJƐĐůŽƐĞĂƩĞŶƟŽŶƚŽ ǀĂůƵĂƟŽŶĂŶĚǁŽŶ͛ƚƉĂLJĂŶLJ ƉƌŝĐĞƐŝŵƉůLJƚŽŐĞƚĞdžƉŽƐƵƌĞƚŽ a certain theme. He will start to ƐĞůůŚŽůĚŝŶŐƐǁŚĞŶƚŚĞLJďĞĐŽŵĞ ŚŝŐŚůLJǀĂůƵĞĚ͕ĞǀĞŶƚŚŽƵŐŚ INVESTORS NEED they may be components of his THE DOWNSIDE OF “HOT” THEMES TRANSPARENCY preferred investment theme. DŝĚtLJŶĚƉƌŝĚĞƐŝƚƐĞůĨĂƐǁĂŶƟŶŐ KŶĞŽĨƚŚĞĚŝƐĂĚǀĂŶƚĂŐĞƐŽĨ ‘We also use themes as a risk ƵƐŝŶŐƚŚĞŵĂƟĐd&ƐŝƐƚŚĂƚ ƚŽƉƌŽĮƚĨƌŽŵůŽŶŐͲƚĞƌŵƚƌĞŶĚƐ ŵĂŶĂŐĞŵĞŶƚƚŽŽů͕͛ĞdžƉůĂŝŶƐƚŚĞ they are likely to have been and publishes a table that breaks ĨƵŶĚŵĂŶĂŐĞƌ͚͘&ŽƌĞdžĂŵƉůĞ͕ constructed as a result of ĚŽǁŶƚŚĞǁĞŝŐŚƟŶŐŽĨĞĂĐŚ we’ve recently added to demand for ‘hot’ themes. As ƚŚĞŵĞŝŶŝƚƐƉŽƌƞŽůŝŽ͘ƚƚŚĞ ŵĞƌŝĐĂŶƌĂŝůƌŽĂĚ͘&ƌĞŝŐŚƚƌĂƚĞƐ ƐƵĐŚ͕ƚŚĞƌĞŝƐĂĐŚĂŶĐĞƚŚĂƚ ŵŽŵĞŶƚ͕ĂƵƚŽŵĂƟŽŶ͕ĞŵĞƌŐŝŶŐ ĂƌĞƌĞŐƵůĂƚĞĚ͖ǁŚĞŶŝŶŇĂƟŽŶ ŵĂƌŬĞƚĐŽŶƐƵŵĞƌ͕ŽŶůŝŶĞƐĞƌǀŝĐĞƐ ǀĂůƵĂƟŽŶƐĨŽƌƚŚĞƵŶĚĞƌůLJŝŶŐ happens they can put prices up. ŚŽůĚŝŶŐƐŵĂLJŚĂǀĞĂůƌĞĂĚLJďĞĞŶ dŚĞŝŶĚƵƐƚƌLJƐŚŽƵůĚĚŽďĞƩĞƌ ĂŶĚƚŽƵƌŝƐŵĂƌĞƚŚĞůĂƌŐĞƐƚ ƉƵƐŚĞĚƵƉĚƵĞƚŽƐƚƌŽŶŐĚĞŵĂŶĚ if the market is worried about themes. ͚tĞǁĂŶƚƚŽŽīĞƌƚƌĂŶƐƉĂƌĞŶĐLJ͘ for the stocks. ŝŶŇĂƟŽŶ͛͘;Ϳ

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INVESTMENT TRUSTS

Rare setback for many infrastructure trusts Carillion collapse leads sector fallout but experts still see value in this niche

T

he once reliable infrastructure investment trust space has come under enormous pressure as investors panic over the collapse of Carillion (CLLN). There are very real fears that Carillion going ƚŽƚŚĞǁĂůůĐŽƵůĚďĞƚŚĞĮƌƐƚŝŶ series of outsourcing failures. ďŝŐƉƌŽĮƚǁĂƌŶŝŶŐĂƚCapita (CPI) has not helped to calm those fears in the interim. The Carillion episode has ĂůƐŽƐƉĂƌŬĞĚŝŶƚĞŶƐĞƉŽůŝƟĐĂů debate about whether so-called WƌŝǀĂƚĞ&ŝŶĂŶĐĞ/ŶŝƟĂƟǀĞ;W&/Ϳ contracts and the whole Public WƌŝǀĂƚĞWĂƌƚŶĞƌƐŚŝƉ;WWWͿĨƵŶĚŝŶŐ ƐĐŚĞŵĞŝƐĮƚĨŽƌƉƵƌƉŽƐĞ͘

Investors may well wonder if there is further fall-out to come, or conversely, whether there is now good value to be had in this typically reliable end of the investment spectrum. CARILLION COLLAPSE The past six months has been remarkably bumpy for the sector. There has been talk for several months about PFI contracts being taken in-house ;ƉůĂĐĞĚƵŶĚĞƌŐŽǀĞƌŶŵĞŶƚ ĐŽŶƚƌŽůͿƵŶĚĞƌĂ>ĂďŽƵƌƉĂƌƚLJ government, prompted by comments from shadow chancellor John McDonnell last year.

Carillion’s collapse has handed ĞdžƚƌĂĨƵĞůƚŽƚŚĞĂŶƟͲW&/ĐůĂŵŽƵƌ͘ This has sparked notable share price declines for leading infrastructure trusts, including a near 10% at HICL Infrastructure Company (HICL) in January ĂůŽŶĞ͕ĂŌĞƌĐŽŶĮƌŵŝŶŐĂůŝŬĞůLJ άϱϬŵŚŝƚƚŽŶĞƚĂƐƐĞƚǀĂůƵĞ;EsͿ as a result of Carillion’s demise. ĐĐŽƌĚŝŶŐƚŽĚĂƚĂĨƌŽŵEƵŵŝƐ ^ĞĐƵƌŝƟĞƐ͕ϭϰйŽĨ,/>͛ƐƉŽƌƞŽůŝŽ is exposed to assets that had been managed by Carillion. sĂůƵĞĚĂƚάϮ͘ϲďŶ͕,/>ŝƐŽŶĞ of the UK’s largest infrastructure investment trusts, and while outsiders may deem this sort of share price decline modest, such

INFRASTRUCTURE INVESTMENT TRUST UNIVERSE TRUST ϯŝ/ŶĨƌĂƐƚƌƵĐƚƵƌĞ;ϯ/EͿ '/^ŝĐĂǀ;'/Ϳ ůƵĞĮĞůĚ^ŽůĂƌ;^/&Ϳ &ŽƌĞƐŝŐŚƚ^ŽůĂƌ;&d^sͿ 'W/ŶĨƌĂƐƚƌƵĐƚƵƌĞ/ŶǀĞƐƚŵĞŶƚƐ;'WͿ 'ƌĞĞŶĐŽĂƚZĞŶĞǁĂďůĞƐ;'ZWͿ 'ƌĞĞŶĐŽĂƚh<tŝŶĚ;h/ŶĨƌĂƐƚƌƵĐƚƵƌĞ;,/>Ϳ /ŶƚĞƌŶĂƟŽŶĂůWƵďůŝĐWĂƌƚŶĞƌƐŚŝƉƐ;/EWWͿ :ŽŚŶ>ĂŝŶŐŶǀŝƌŽŶŵĞŶƚĂůƐƐĞƚƐ;:>EͿ :ŽŚŶ>ĂŝŶŐ/ŶĨƌĂƐƚƌƵĐƚƵƌĞƐƐĞƚƐ;:>/&Ϳ EĞdžƚŶĞƌŐLJ^ŽůĂƌ;E^&Ϳ ZĞŶĞǁĂďůĞƐ/ŶĨƌĂƐƚƌƵĐƚƵƌĞ;dZ/'Ϳ ^ĞƋƵŽŝĂĐŽŶŽŵŝĐ/ŶĨƌĂƐƚƌƵĐƚƵƌĞ;^Y/Ϳ ^ŽƵƌĐĞ͗/͕Ϯ&ĞďƌƵĂƌLJϮϬϭϴ

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| SHARES | 08 February 2018

SHARE PRICE

NAV

PREMIUM / DISCOUNT TO NAV

ϮϬϬ͘ϱƉ 139p ϭϭϰ͘ϱƉ 107p ϭϮϬƉ €1.07 ϭϮϭƉ ϭϰϳ͘ϭƉ 150.8p ϭϬϰ͘ϮϱƉ 118.8p ϭϭϮ͘ϱƉ ϭϬϲ͘ϲƉ 109.5p

ϭϳϮ͘ϯϰƉ ϭϮϮ͘ϬϭƉ ϭϬϲ͘ϬϱƉ 101.85p ϭϭϭ͘ϮϵƉ €0.97 ϭϭϭ͘ϮƉ ϭϰϵ͘ϵϲƉ ϭϰϬ͘ϵϮƉ ϵϲ͘ϵϮƉ 117.51p ϭϬϰ͘ϳƉ 97.38p ϵϳ͘ϱϰƉ

ϭϲ͘ϯй 13.9% 8.0% 11.0% 7.8% 11.0% 8.8% -1.9% 7.0% ϳ͘ϲй 1.1% 7.5% 9.5% ϭϮ͘ϯй

INVESTMENT TRUSTS ƐŚĂƌƉĚĞǀĂůƵĂƟŽŶƐĂƌĞƌĂƌĞŝŶ this niche part of the investment trust universe. The John Laing Infrastructure Fund (JLIF) and the/ŶƚĞƌŶĂƟŽŶĂů Public Partnership (INPP) trust have also endured notable falls in their share price over the past ƐŝdžŵŽŶƚŚƐŽƌƐŽ͘>ŝŬĞ,/>͕ďŽƚŚ are exposed to Carillion via it running various assets within ƚŚĞŝƌƉŽƌƞŽůŝŽƐ͖ϴ͘ϱйĨŽƌ:>/&͕ϯй ĨŽƌ/EWW͘ INFRASTRUCTURE TRUSTS EXPLAINED This sector involves longƚĞƌŵŝŶǀĞƐƚŵĞŶƚ;ϮϬŽƌϯϬ LJĞĂƌƐŝƐŶŽƚƵŶƚLJƉŝĐĂůͿŝŶĐŽƌĞ ƐĞƌǀŝĐĞƐĂŶĚĨĂĐŝůŝƟĞƐ͕ƐƵĐŚĂƐ motorways, energy projects and water treatment works. ,ŝŐŚůLJƌĞŐƵůĂƚĞĚŝŶĚƵƐƚƌŝĞƐĨŽƌŵ the backbone, an area that consultancy KPMG categorises ŝŶƚŽĮǀĞŵĂŝŶƐĞĐƚŽƌƐƐƉĂŶŶŝŶŐ ĂǀŝĂƟŽŶ͕ĞůĞĐƚƌŝĐŝƚLJĂŶĚŐĂƐ͕ƌĂŝů͕ telecoms and water/wastewater, encompassing a wide range of assets.

• • • •

KPMG’S REGULATED ASSET WATCHLIST >ŽŶŐͲĞĐŽŶŽŵŝĐůŝǀĞƐ ŽŌĞŶǁŝƚŚƐƚƌŽŶŐ ŝŶŇĂƟŽŶůŝŶŬĂŐĞ ƐƐĞŶƟĂů͕ŽŌĞŶ ŵŽŶŽƉŽůŝƐƟĐĂƐƐĞƚƐ Financed with investment grade credit Returns based on ĞĸĐŝĞŶƚůLJŝŶǀĞƐƚĞĚ capital/cost recovery

dŚĞƐĞƉƌŽũĞĐƚƐŽŌĞŶĞŶũŽLJ a large degree of government backing, which helps support returns that are typically less ǀŽůĂƟůĞƚŚĂŶƚŚŽƐĞĨƌŽŵƚŚĞ

Rail is one of the main sectors forming the backbone of infrastructure trusts

wider stock market, or other investment trust areas. In theory, spending on infrastructure is likely to increase too, as monetary policy grows ƟƌĞĚĂŶĚŐŽǀĞƌŶŵĞŶƚƐůŽŽŬƚŽ ŽƚŚĞƌƐƟŵƵůƵƐŽƉƟŽŶƐ͘ This means that infrastructure investment trusts can be an ĞĸĐŝĞŶƚĂŶĚǁĞůůͲŵĂŶĂŐĞĚ way for investors to access infrastructure assets and the longƌƵŶĐĂƐŚŇŽǁƐƚŚĂƚƚŚŝƐŝŵƉůŝĞƐ͘ RECOVERY OR FURTHER DECLINES? As the research team at market ŵĂƌŬĞƌtŝŶƚĞƌŇŽŽĚ^ĞĐƵƌŝƟĞƐ points out, ‘investors have not been accustomed to such drama from the infrastructure sector and it has served to intensify ƚŚĞƉŽůŝƟĐĂůƉƌĞƐƐƵƌĞŽŶƚŚĞW&/ model.’ This comes as a shock to a sector where share price premiums to net asset value have been commonplace for ƐŽŵĞƟŵĞ͕ƌĞŇĞĐƟŶŐƚŚĞŚŝŐŚ value ascribed to long-term, ŝŶŇĂƟŽŶͲůŝŶŬĞĚ͕ŐŽǀĞƌŶŵĞŶƚͲ backed income sources. ͚ǀĞŶƚƐŽĨƚŚĞůĂƐƚĨŽƵƌŵŽŶƚŚƐ mean that a reappraisal of the asset class is required,’ says the ƌĞƐĞĂƌĐŚƚĞĂŵĂƚtŝŶƚĞƌŇŽŽĚ͘

REGAINING CONTROL ŽŶĮĚĞŶĐĞŵĂLJƚĂŬĞƟŵĞƚŽ ƌĞƚƵƌŶ͘dŚĞ͚ƉĞƌĐĞƉƟŽŶŽĨƉŽůŝƟĐĂů ƌŝƐŬŝƐůŝŬĞůLJƚŽĐŽŶƟŶƵĞƚŽǁĞŝŐŚ on share prices across the sector, ƉĂƌƟĐƵůĂƌůLJĨŽƌƚŚŽƐĞǁŝƚŚůĂƌŐĞ ĞdžƉŽƐƵƌĞƚŽƚŚĞŵŽƌĞƐĞŶƐŝƟǀĞ UK PFI subsectors,’ believe ĂŶĂůLJƐƚƐĂƚEƵŵŝƐ^ĞĐƵƌŝƟĞƐ͘ Perhaps the best way for infrastructure investment trust ŵĂŶĂŐĞƌƐƚŽƌĞƐƚŽƌĞĐŽŶĮĚĞŶĐĞ ŝƐƚŽƉƌŽǀŝĚĞĐŽŶƟŶƵĂů reassurance over the robustness of contractual revenue streams. Importantly for investors there has been no hint that investment trusts in the infrastructure space may have to rethink their dividend policies, even in the ĨĂĐĞŽĨƚŚĞĂƌŝůůŝŽŶĮĂƐĐŽ͘ For the sector experts at both EƵŵŝƐĂŶĚtŝŶƚĞƌŇŽŽĚƚŚĞƌĞ ĂƌĞƐƟůůĂƩƌĂĐƟǀĞŝŶǀĞƐƚŵĞŶƚ ƉƌŽƉŽƐŝƟŽŶƐǁŝƚŚŝŶƚŚĞ infrastructure trust space. 3i Infrastructure (3IN) is one of the ƐƚƌŽŶŐĞƐƚĐŽŶǀŝĐƟŽŶƐĨŽƌďŽƚŚ research teams, while they also ƐŚĂƌĞĂƉŽƐŝƟǀĞǀŝĞǁŽŶ,/>͘ tŝŶƚĞƌŇŽŽĚĂůƐŽďĞůŝĞǀĞƐ there is value to be had from the Greencoat UK Wind (UKW) investment trust, which ploughs money into large ǁŝŶĚĨĂƌŵƉƌŽũĞĐƚƐ͘;^&Ϳ 08 February 2018 | SHARES |

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I

We explain how it differs to an ISA and the tax implications of using this type of account

nexperienced investors may wonder why ŝŶǀĞƐƚŵĞŶƚƉůĂƞŽƌŵƐŽīĞƌĚĞĂůŝŶŐĂĐĐŽƵŶƚƐ͕ ŐŝǀĞŶƚŚĞǁŝĚĞůLJͲŚĞůĚǀŝĞǁƚŚĂƚŝƚŝƐďĞƩĞƌƚŽ ƵƐĞ/^ƐƚŽŚŽůĚƐƚŽĐŬƐĂŶĚĨƵŶĚƐ͕ƚŚĂŶŬƐƚŽ ƚŚĞǁƌĂƉƉĞƌ͛ƐƚĂdžďĞŶĞĮƚƐ͘ ĞĂůŝŶŐĂĐĐŽƵŶƚƐĂƌĞŐĞŶĞƌĂůůLJŶĞĞĚĞĚĨŽƌ ŝŶǀĞƐƚŽƌƐǁŚŽŝŶǀĞƐƚŵŽƌĞƚŚĂŶάϮϬ͕ϬϬϬĂLJĞĂƌ͕ĂƐ ƚŚĂƚ͛ƐƚŚĞŵĂdžŝŵƵŵLJŽƵĐĂŶŝŶǀĞƐƚŝŶŶĞǁŵŽŶĞLJ ĂĐƌŽƐƐƚŚĞƌĂŶŐĞŽĨ/^ǁƌĂƉƉĞƌƐ͘dŚĞƌĞĂƌĞŶŽ ůŝŵŝƚƐŽŶŚŽǁŵƵĐŚŵŽŶĞLJLJŽƵĐĂŶĚĞƉŽƐŝƚŝŶĂ ĚĞĂůŝŶŐĂĐĐŽƵŶƚĞĂĐŚLJĞĂƌ͘ KŶĐĞLJŽƵ͛ǀĞŵĂdžŝŵŝƐĞĚLJŽƵƌ/^ĂůůŽǁĂŶĐĞ͕ LJŽƵĐĂŶƚŚĞŶƉƵƚĂŶLJĂĚĚŝƟŽŶĂůƉĂLJŵĞŶƚƐŝŶƚŽ ĂĚĞĂůŝŶŐĂĐĐŽƵŶƚ;ŽƌĂƐĞůĨͲŝŶǀĞƐƚĞĚƉĞƌƐŽŶĂů ƉĞŶƐŝŽŶ͕ŝĨƌĞůĞǀĂŶƚͿ͘ DĂŶLJŝŶǀĞƐƚŽƌƐŵĂLJƐƟůůŚĂǀĞĚĞĂůŝŶŐĂĐĐŽƵŶƚƐ ďĞĐĂƵƐĞƚŚĞLJƵƐĞĚƚŽďĞƚŚĞƉůĂĐĞƚŽŚŽůĚŵŽƐƚ /DŵĂƌŬĞƚƐŚĂƌĞƐďĞĨŽƌĞƚŚĞƌƵůĞƐĐŚĂŶŐĞĚŝŶ ϮϬϭϯ͘WƌĞǀŝŽƵƐůLJ/DƐƚŽĐŬƐǁĞƌĞŶ͛ƚĂůůŽǁĞĚƚŽďĞ ŚĞůĚŝŶĂŶ/^ƵŶůĞƐƐƚŚĞĐŽŵƉĂŶLJĂůƐŽŚĂĚĂŶŽƚŚĞƌ ƐƚŽĐŬŵĂƌŬĞƚůŝƐƟŶŐŽŶĂƌĞĐŽŐŶŝƐĞĚĞdžĐŚĂŶŐĞ͘ůů /DƐƚŽĐŬƐĂƌĞŶŽǁƉĞƌŵŝƩĞĚƚŽďĞŚĞůĚŝŶĂŶ/^͘ /ĨLJŽƵŚĂǀĞďŽƚŚĂĚĞĂůŝŶŐĂĐĐŽƵŶƚĂŶĚĂŶ/^͕ ŝƚŝƐĂůǁĂLJƐǁŽƌƚŚƵƐŝŶŐƵƉƚŚĞάϮϬ͕ϬϬϬĂůůŽǁĂŶĐĞ ŽŶĂŶ/^ĮƌƐƚĂƐĂůůĐĂƉŝƚĂůŐĂŝŶƐĂŶĚĚŝǀŝĚĞŶĚ ŝŶĐŽŵĞǁŝůůďĞƚĂdžĨƌĞĞ͘dŚĞŽŶůLJĞdžĐĞƉƟŽŶŝƐŝĨ LJŽƵƌŝŶǀĞƐƚŵĞŶƚƐĂƌĞƐƵďũĞĐƚƚŽǁŝƚŚŚŽůĚŝŶŐƚĂdž ŽŶĚŝǀŝĚĞŶĚƐ͘ /ƚŝƐŝŵƉŽƌƚĂŶƚƚŽŶŽƚĞƐŽŵĞĨŽƌƚŚĐŽŵŝŶŐƌƵůĞ ĐŚĂŶŐĞƐǁŚŝĐŚĐŽƵůĚŚĂǀĞĂŶĞŐĂƟǀĞŝŵƉĂĐƚŽŶ ĂŶLJŽŶĞŚŽůĚŝŶŐĚŝǀŝĚĞŶĚͲƉĂLJŝŶŐŝŶǀĞƐƚŵĞŶƚƐŝŶĂ ĚĞĂůŝŶŐĂĐĐŽƵŶƚ͘ Everyone in the UK has a personal allowance ŽĨάϭϭ͕ϱϬϬ͕ƐĞƚƚŽƌŝƐĞƚŽάϭϭ͕ϴϱϬŽŶϲƉƌŝůϮϬϭϴ͕ ǁŚŝĐŚŝƐƚŚĞĂŵŽƵŶƚŽĨŝŶĐŽŵĞLJŽƵĚŽŶ͛ƚŚĂǀĞ ƚŽƉĂLJƚĂdžŽŶ͘zŽƵĂůƐŽŐĞƚĂάϱ͕ϬϬϬĚŝǀŝĚĞŶĚ ĂůůŽǁĂŶĐĞǁŚŝĐŚŝƐƚŚĞĂŵŽƵŶƚŽĨŝŶĐŽŵĞLJŽƵĐĂŶ ĞĂƌŶĨƌŽŵĚŝǀŝĚĞŶĚƐďĞĨŽƌĞƉĂLJŝŶŐƚĂdž͘ dŚĞĚŝǀŝĚĞŶĚĂůůŽǁĂŶĐĞŝƐƐĞƚƚŽĨĂůůƚŽάϮ͕ϬϬϬ ĨƌŽŵϲƉƌŝůƚŚŝƐLJĞĂƌ͘dŚĞƌĞĨŽƌĞŵĂŶLJƉĞŽƉůĞ ŚŽůĚŝŶŐĚŝǀŝĚĞŶĚͲƉĂLJŝŶŐŝŶǀĞƐƚŵĞŶƚƐŝŶƚŚĞŝƌ

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ĚĞĂůŝŶŐĂĐĐŽƵŶƚƌŝƐŬ ƉĂLJŝŶŐŝŶĐŽŵĞƚĂdž ŽŶƚŚĞŝƌĚŝǀŝĚĞŶĚƐ͘ zŽƵĐŽƵůĚƐĞůů an investment and ƌĞƉƵƌĐŚĂƐĞŝƚŝŶ LJŽƵƌ/^͕ĂƐƐƵŵŝŶŐ LJŽƵŚĂǀĞƵŶƵƐĞĚ /^ĂůůŽǁĂŶĐĞ͕ďƵƚ LJŽƵĐŽƵůĚďĞůŝĂďůĞ ĨŽƌĐĂƉŝƚĂůŐĂŝŶƐƚĂdž ǁŚĞŶƐĞůůŝŶŐŽƵƚŽĨ ƚŚĞĚĞĂůŝŶŐĂĐĐŽƵŶƚ ŝĨƚŚĞǀĂůƵĞŽĨLJŽƵƌ investment has ŐŽŶĞƵƉƐŝŶĐĞƚŚĞ ŽƌŝŐŝŶĂůƉƵƌĐŚĂƐĞ͘ WůĞĂƐĞŶŽƚĞƚŚĂƚ LJŽƵŽŶůLJŚĂǀĞƚŽ ƉĂLJĐĂƉŝƚĂůŐĂŝŶƐ ƚĂdžŽŶLJŽƵƌŽǀĞƌĂůů ŐĂŝŶƐĂďŽǀĞLJŽƵƌ ƚĂdžͲĨƌĞĞĂůůŽǁĂŶĐĞ ǁŚŝĐŚŝƐĐƵƌƌĞŶƚůLJ άϭϭ͕ϯϬϬ͕ƌŝƐŝŶŐƚŽ άϭϭ͕ϳϬϬĨƌŽŵϲ ƉƌŝůϮϬϭϴ͘ ŽƚŚĚĞĂůŝŶŐ ĂĐĐŽƵŶƚƐĂŶĚ/^ƐĐĂŶďĞƵƐĞĚƚŽŚŽůĚƐŚĂƌĞƐ͕ ďŽŶĚƐ͕ĨƵŶĚƐ͕ŝŶǀĞƐƚŵĞŶƚƚƌƵƐƚƐĂŶĚĞdžĐŚĂŶŐĞ ƚƌĂĚĞĚĨƵŶĚƐ͘ dŚĞĐŽƐƚƐŽĨďƵLJŝŶŐĂŶĚƐĞůůŝŶŐƚŚĞƐĞĂƐƐĞƚƐĂƌĞ ŐĞŶĞƌĂůůLJƚŚĞƐĂŵĞĨŽƌďŽƚŚĂĐĐŽƵŶƚƚLJƉĞƐ͖ƚŚĞ ŵĂŝŶĚŝīĞƌĞŶĐĞŝƐƚŚĞƚĂdžƚƌĞĂƚŵĞŶƚ͘ ^ŽŵĞƉĞŽƉůĞƚŚŝŶŬƚŚĞǁŽƌĚ͚ĚĞĂůŝŶŐ͛ŝŶĚĞĂůŝŶŐ ĂĐĐŽƵŶƚƐŝŵƉůŝĞƐƚŚĞĂĐĐŽƵŶƚƚLJƉĞƐŚŽƵůĚďĞƵƐĞĚ ĨŽƌĐĂƐƵĂůƐŚĂƌĞĚĞĂůŝŶŐ͖ĂŶĚƚŚĂƚ/^ƐƐŽƵŶĚƐŵŽƌĞ ƐĞƌŝŽƵƐĂŶĚŝƐĂƐƐŽĐŝĂƚĞĚǁŝƚŚůŽŶŐͲƚĞƌŵŝŶǀĞƐƟŶŐ͘ /ŶƌĞĂůŝƚLJ͕ďŽƚŚĂĐĐŽƵŶƚƚLJƉĞƐĐĂŶďĞƵƐĞĚĨŽƌ ĞŝƚŚĞƌƐƚƌĂƚĞŐLJʹďƵƚƵůƟŵĂƚĞůLJ/^ƐŚĂǀĞƚŚĞĞĚŐĞ ďĞĐĂƵƐĞŽĨƚŚĞŝƌƚĂdžďĞŶĞĮƚƐ͘;>D:Ϳ

MONEY MATTERS

The simple planning tip that could save you over £1,000 We explain to how to avoid incurring nasty tax payments on some of your investments

W

hen it comes to ďƵŝůĚŝŶŐĂƌĞƟƌĞŵĞŶƚ ƉŽƌƞŽůŝŽ͕ƚŚĞƌĞĂƌĞ rarely any no-brainer decisions. Deciding how to split investments between your SIPP ĂŶĚLJŽƵƌ/^͕ĨŽƌĞdžĂŵƉůĞ͕ǁŝůů ĚĞƉĞŶĚŽŶĂŶƵŵďĞƌŽĨĨĂĐƚŽƌƐ͕ not least how readily you need to be able to access the money. And what do you do about ƚŚĞĚĂLJͲƚŽͲĚĂLJƌƵŶŶŝŶŐŽĨLJŽƵƌ ĨƵŶĚ͍^ŚŽƵůĚLJŽƵƉŝĐŬƐŚĂƌĞƐ ĂŶĚďŽŶĚƐLJŽƵƌƐĞůĨŽƌƉĂLJĂ ƉƌŽĨĞƐƐŝŽŶĂůƚŽĚŽŝƚĨŽƌLJŽƵ͍ dŚĞŶƚŚĞƌĞ͛ƐƚŚĞƋƵĞƐƟŽŶŽĨ ƉŝĐŬŝŶŐĨƵŶĚŵĂŶĂŐĞƌƐ;ĨŽƌƚŚŽƐĞ who choose to go down this ƌŽƵƚĞͿ͘/Ɛ͚ĂĐƟǀĞ͛ǁŽƌƚŚŝƚŽƌŝƐ it best to minimise costs – one ŽĨƚŚĞĨĞǁƚŚŝŶŐƐLJŽƵĐĂŶĞdžĞƌƚ at least some control over – by ŝŶǀĞƐƟŶŐŝŶƉĂƐƐŝǀĞŽƌ͚ƚƌĂĐŬĞƌ͛ ĨƵŶĚƐ͍ Such decisions are not easy and require you to weigh up a ŵƵůƟƚƵĚĞŽĨĨĂĐƚŽƌƐďĂƐĞĚŽŶ your own income needs and personal circumstances. ,ŽǁĞǀĞƌ͕ĂƐƚŚĞϮϬϭϳͬϭϴ ƚĂdžLJĞĂƌͲĞŶĚĂƉƉƌŽĂĐŚĞƐƚŚĞƌĞ ŝƐĂƐŝŵƉůĞƉůĂŶŶŝŶŐƟƉƚŚĂƚ ĐŽƵůĚƐĂǀĞLJŽƵŽǀĞƌάϭ͕ϬϬϬŝŶ ϮϬϭϴͬϭϵ͘

ůŝŬĞ^/WWƐĂŶĚ/^ƐĂƌĞƚĂdžͲĨƌĞĞ͕ money held in interest-paying ďĂŶŬĂĐĐŽƵŶƚƐŽƌĚĞĂůŝŶŐ ĂĐĐŽƵŶƚƐŝƐƐƵďũĞĐƚƚŽƐƚƌŝĐƚ 'ŽǀĞƌŶŵĞŶƚůŝŵŝƚƐďĞĨŽƌĞLJŽƵ ƐƚĂƌƚƉĂLJŝŶŐƚĂdž͘ ƚƚŚĞŵŽŵĞŶƚ͕ƚŚĞĚŝǀŝĚĞŶĚ ĂůůŽǁĂŶĐĞŝƐƐĞƚĂƚάϱ͕ϬϬϬ͘ ^ŽŝĨLJŽƵŚĂǀĞĂƉŽƌƞŽůŝŽŽĨ investments in a dealing account ǁŽƌƚŚάϭϬϬ͕ϬϬϬ͕ƉƌŽǀŝĚĞĚLJŽƵƌ ƚŽƚĂůĚŝǀŝĚĞŶĚƐĨŽƌϮϬϭϳͬϭϴ ĚŽŶ͛ƚĞdžĐĞĞĚϱйLJŽƵǁŽŶ͛ƚ ƉĂLJĂŶLJƚĂdž͘^ŽŵĞŽŶĞǁŝƚŚ άϱϬ͕ϬϬϬŚĞůĚŝŶĂƐŝŵŝůĂƌĂĐĐŽƵŶƚ ǁŽƵůĚďĞĂďůĞƚŽĞŶũŽLJƚĂdžͲĨƌĞĞ ĚŝǀŝĚĞŶĚƐŽĨƵƉƚŽϭϬй͘ Chancellor Philip Hammond ŚĂƐĚĞĐŝĚĞĚƚŚŝƐŝƐĨĂƌƚŽŽ ŐĞŶĞƌŽƵƐ͕ƐŽĨƌŽŵƉƌŝůƚŚĞ dividend allowance will be ƐůĂƐŚĞĚƚŽũƵƐƚάϮ͕ϬϬϬĂLJĞĂƌʹĂ ǁŚŽƉƉŝŶŐϲϬйƌĞĚƵĐƟŽŶ͘ dŚĞƚĂdžƌĂƚĞƐƚŚĂƚĂƉƉůLJƚŽ

dividends over this limit are ƉĂƌƟĐƵůĂƌůLJŚĂƌƐŚ͘/ĨLJŽƵ͛ƌĞĂ ďĂƐŝĐͲƌĂƚĞƚĂdžƉĂLJĞƌLJŽƵ͛ůůĨĂĐĞĂ ϳ͘ϱйĐŚĂƌŐĞ͕ǁŚŝůĞĨŽƌŚŝŐŚĞƌͲ ƌĂƚĞƚĂdžƉĂLJĞƌƐŝƚũƵŵƉƐƚŽϯϮ͘ϱй ďĞĨŽƌĞƌŝƐŝŶŐƐƟůůĨƵƌƚŚĞƌƚŽϯϴ͘ϭй ĨŽƌĂĚĚŝƟŽŶĂůͲƌĂƚĞƚĂdžƉĂLJĞƌƐ͘ /ŶƉŽƵŶĚƐĂŶĚƉĞŶĐĞ͕ĂďĂƐŝĐͲ ƌĂƚĞƚĂdžƉĂLJĞƌǁŚŽŝƐƉĂŝĚάϱ͕ϬϬϬ ŝŶĚŝǀŝĚĞŶĚƐŝŶϮϬϭϴͬϭϵǁŽƵůĚďĞ άϮϮϱǁŽƌƐĞŽīŝĨƚŚĞŝŶǀĞƐƚŵĞŶƚ is held in a dealing account. This ŝŶĐƌĞĂƐĞƐƚŽάϵϳϱĨŽƌĂŚŝŐŚĞƌͲ ƌĂƚĞƚĂdžƉĂLJĞƌĂŶĚάϭ͕ϭϳϯĨŽƌĂŶ ĂĚĚŝƟŽŶĂůͲƌĂƚĞƚĂdžƉĂLJĞƌ͘ You can dodge this charge simply by moving your money ŝŶƚŽĂƚĂdžǁƌĂƉƉĞƌƐƵĐŚĂƐĂŶ/^ ŽƌĂ^/WW͘,ŽǁĞǀĞƌ͕ƚŚĞƌĞŵĂLJ ďĞĐĂƉŝƚĂůŐĂŝŶƐƚĂdžƚŽƉĂLJǁŚĞŶ you sell investments in a dealing account. dŽŵ^ĞůďLJ͕ƐĞŶŝŽƌĂŶĂůLJƐƚ͕:Ğůů

WHO DOES IT AFFECT? /ĨLJŽƵŚĂǀĞĂŶLJŝŶǀĞƐƚŵĞŶƚƐŚĞůĚ ŽƵƚƐŝĚĞƚƌĂĚŝƟŽŶĂůƚĂdžǁƌĂƉƉĞƌƐ͕ this could be relevant to you. While dividends and investment growth in products 08 February 2018 | SHARES |

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MONEY MATTERS

Helping you with personal finance issues

It is possible to build an investment portfolio just using ETFs? ETFs offer a low-cost solution for investors wanting instant diversification

A

n exchange-traded fund (ETF) can give you access to a huge range of stocks in one, low-cost product. It’s possible to build an ĞŶƟƌĞƉŽƌƞŽůŝŽũƵƐƚƵƐŝŶŐd&Ɛ͕ ĂůƚŚŽƵŐŚƚŚĞƌĞĂƌĞƐŝƚƵĂƟŽŶƐ ǁŚĞŶĂĐƟǀĞůLJͲŵĂŶĂŐĞĚĨƵŶĚƐ are worth considering.

/^Ed&ͳ^WKZd&K>/K 'KK/͍ There’s a growing trend for ŝŶǀĞƐƚŵĞŶƚƉůĂƞŽƌŵƐ͕ĮŶĂŶĐŝĂů ĂĚǀŝƐĞƌƐ͕ĨƵŶĚŵĂŶĂŐĞƌƐĂŶĚ ƌŽďŽͲĂĚǀŝƐĞƌƐƚŽŽīĞƌƉŽƌƞŽůŝŽƐ that exclusively invest in ETFs. WĂƌƚŽĨƚŚĞĂƩƌĂĐƟŽŶŝƐƚŚĂƚ ETFs are very low cost. An ETF that tracks the FTSE 100 can ĐŽƐƚĂƐůŝƩůĞĂƐϬ͘ϭйŝŶĂŶŶƵĂů 34

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fees and the average charge is ĂƌŽƵŶĚϬ͘Ϯϱй͘ One ETF can give you access to hundreds of underlying ŝŶǀĞƐƚŵĞŶƚƐŝŶŽŶĞƚƌĂĚĞ͕ǁŚŝĐŚ ŵĞĂŶƐLJŽƵĐĂŶŐĞƚŝŶƐƚĂŶƚ ĚŝǀĞƌƐŝĮĐĂƟŽŶ͘ d&ƐĂůƐŽŽīĞƌƚƌĂŶƐƉĂƌĞŶĐLJ ŝŶƚŚĞĨŽƌŵŽĨƌĞĂůͲƟŵĞ͕ intraday pricing and up-to-date ĚŝƐĐůŽƐƵƌĞŽĨƚŚĞŝƌƉŽƌƞŽůŝŽ holdings. They can be bought or sold on an exchange during the day at a price that is clearly visible on a screen. t,ZK/^dZd͍ ĞĨŽƌĞLJŽƵŝŶǀĞƐƚĂŶLJŵŽŶĞLJ you should always ensure the products are suitable for your ŝŶĚŝǀŝĚƵĂůĐŝƌĐƵŵƐƚĂŶĐĞƐ͘

ZƵƐƐDŽƵůĚ͕ŝŶǀĞƐƚŵĞŶƚ director at AJ Bell Youinvest, says you should answer four ƋƵĞƐƟŽŶƐ͗tŚLJĂŵ/ŝŶǀĞƐƟŶŐ͍ tŚĂƚŝƐŵLJƚĂƌŐĞƚƌĞƚƵƌŶ͍tŚĂƚ ŝƐŵLJƟŵĞŚŽƌŝnjŽŶ͍ŶĚǁŚĂƚŝƐ ŵLJĂƉƉĞƟƚĞĨŽƌƌŝƐŬ͍ ‘The answer to these four ƋƵĞƐƟŽŶƐǁŝůůŚĞůƉƚŽƐŚĂƉĞ LJŽƵƌƉŽƌƞŽůŝŽŝŶƚĞƌŵƐŽĨĂƐƐĞƚ ĂůůŽĐĂƟŽŶĂŶĚǁŚĂƚƐŽƌƚŽĨ ƚŚĞŵĞƐ͕ĐŽƵŶƚƌŝĞƐŽƌƐĞĐƚŽƌƐĂƌĞ ŵŽƐƚƐƵŝƚĞĚƚŽLJŽƵƌƉĂƌƟĐƵůĂƌ needs and preferences, be they ůŽǁƌŝƐŬŽƌŚŝŐŚƌŝƐŬ͕ŝŶĐŽŵĞŽƌ ĐĂƉŝƚĂůŐĂŝŶƐŽƌĂďƌŽĂĚŵŝdž͕͛ŚĞ explains. zŽƵĐĂŶĐŚŽŽƐĞĨƌŽŵ ƚŚŽƵƐĂŶĚƐŽĨd&Ɛ͘tĞ͛ĚƐƵŐŐĞƐƚ you start by building up a ĚŝǀĞƌƐŝĮĞĚĐŽƌĞŽĨĂƐƐĞƚƐ͘

MONEY MATTERS ĚĂŵ>ĂŝƌĚ͕ŚĞĂĚŽĨd& strategy, Northern Europe at >LJdžŽƌd&͕ƐĂLJƐƚŚŝƐĐŽƌĞĐŽƵůĚďĞ ƚŚƌĞĞƐŝŵƉůĞůŽǁͲĐŽƐƚŽƉƟŽŶƐ͗Ă global equity ETF, a UK equity ETF and a gilt ETF. džĂŵƉůĞƐŝŶĐůƵĚĞSource D^/tŽƌůĚh/d^d&;DytKͿ, iShares Core FTSE 100 UCITS d&;/^&Ϳ and Vanguard UK Gilt d&;s'KsͿ. ͚dŚĞŵŽƌĞƌŝƐŬLJŽƵĐĂŶďĞĂƌ ƚŚĞŵŽƌĞĞƋƵŝƚLJLJŽƵŵŝŐŚƚŚŽůĚ͕ with fewer bonds and gilts,’ >ĂŝƌĚƐĂLJƐ͘ Once you’ve built a solid core you can then start to add in other ETFs which increase your weight ƚŽŵĂƌŬĞƚƐŽƌƐƚƌĂƚĞŐŝĞƐƚŚĂƚ ƐƵŝƚLJŽƵƌǀŝĞǁƐĂŶĚŝŶǀĞƐƚŵĞŶƚ ƉƌŽĮůĞ͘ Mould says you shouldn’t buy ƚŽŽŵĂŶLJd&ƐďĞĐĂƵƐĞƚƌĂĚŝŶŐ ĐŽƐƚƐǁŽƵůĚƐƚĂƌƚƚŽĂĐĐƵŵƵůĂƚĞ ĂŶĚƚŚĞƉŽƌƞŽůŝŽǁŽƵůĚďĞĐŽŵĞ ŚĂƌĚĞƌƚŽŵĂŶĂŐĞ͘ ‘A range of 10 to 15 ETFs is ƉƌŽďĂďůLJƚŚĞǀĞƌLJŵĂdžŝŵƵŵ ƚŚĂƚŝƐƉƌĂĐƟĐĂůƚŽƌƵŶǁŚŝůĞƐƟůů ƉƌŽǀŝĚŝŶŐĚŝǀĞƌƐŝĮĐĂƟŽŶ͕͛ŚĞĂĚĚƐ͘ ^,Kh>/d/s&hE^ dKDzWKZd&K>/K͍ tŚĞƚŚĞƌLJŽƵĐŚŽŽƐĞƚŽĨŽĐƵƐ ƐŽůĞůLJŽŶd&ƐŽƌĐŽŵďŝŶĞd&Ɛ ǁŝƚŚĂĐƟǀĞĨƵŶĚƐŝƐĂŵĂƩĞƌŽĨ personal preference. ^ŽŵĞĞdžƉĞƌƚƐƚŚŝŶŬƚŚĞƌĞĂƌĞ ƐŝƚƵĂƟŽŶƐǁŚĞŶĂĐƟǀĞĨƵŶĚƐ ĐŽƵůĚƉƌŽǀŝĚĞĂďĞƩĞƌŽƵƚĐŽŵĞ͘ dŚĞƌĞ͛ƐĂĐŚĂŶĐĞƚŚĂƚĂĐƟǀĞ ŵĂŶĂŐĞƌƐǁŝůůŽƵƚƉĞƌĨŽƌŵƚŚĞ ŵĂƌŬĞƚ͕ǁŚĞƌĞĂƐd&ƐĐĂŶ͛ƚďLJ virtue of the fact they’re indexƚƌĂĐŬŝŶŐŝŶǀĞƐƚŵĞŶƚƐ͘ dŚĞĚŝĸĐƵůƚLJŝƐƚƌLJŝŶŐ ƚŽŝĚĞŶƟĨLJƚŚĞĂĐƟǀĞĨƵŶĚ ŵĂŶĂŐĞƌƐǁŚŽǁŝůůŽƵƚƉĞƌĨŽƌŵ͘ tŝůůŝĐŬƐŽŶ͕ŚĞĂĚŽĨƉŽƌƞŽůŝŽ ŵĂŶĂŐĞŵĞŶƚĂƚWϭ/ŶǀĞƐƚŵĞŶƚ

DĂŶĂŐĞŵĞŶƚ͕ƐĂLJƐƚŚĞƌĞĂƌĞ ŵĂƌŬĞƚƐǁŚĞƌĞĂĐƟǀĞŵĂŶĂŐĞƌƐ can add value over and above ƚŚĞĂĚĚŝƟŽŶĂůĨĞĞƐƚŚĞLJĐŚĂƌŐĞ͕ both in absolute and riskĂĚũƵƐƚĞĚƌĞƚƵƌŶƚĞƌŵƐ͘

“

IF YOU’RE ADDING ACTIVELY-MANAGED FUNDS, KEEP AN EYE ON THE COST OF OWNERSHIP, AS THIS IS OFTEN HIGHER THAN WITH ETFS

”

&ŽƌĞdžĂŵƉůĞ͕ƐŽŵĞƵƌŽƉĞĂŶ ĂŶĚh<ĞƋƵŝƚLJĂĐƟǀĞĨƵŶĚƐ ŚĂǀĞďĞĞŶĂďůĞƚŽŽƵƚƉĞƌĨŽƌŵ ĐŽŶƐŝƐƚĞŶƚůLJŽǀĞƌůŽŶŐƟŵĞ ƉĞƌŝŽĚƐĂŶĚŝŶĚŝīĞƌĞŶƚŵĂƌŬĞƚ ĐŽŶĚŝƟŽŶƐ͘ They include ZŽLJĂů>ŽŶĚŽŶh< ƋƵŝƚLJ/ŶĐŽŵĞ;'ϬϬϴzϰϵϭͿ, which has a 10-year annualised ƌĞƚƵƌŶŽĨϵ͘ϵй͕ĂŶĚJupiter ƵƌŽƉĞĂŶ;'ϬϬϱ^d:tϴϰͿ, with a 10-year annualised return ŽĨϭϯ͘ϴй͘ ŝĐŬƐŽŶƐĂLJƐƚŚĞƌĞĂƌĞĂůƐŽ ŵŽƌĞŽƉƉŽƌƚƵŶŝƟĞƐĨŽƌŶŝĐŚĞ ŝŶǀĞƐƚŵĞŶƚƐǁŝƚŚŝŶƚŚĞĂĐƟǀĞ ŵĂŶĂŐĞŵĞŶƚƐƉĂĐĞ͕ǁŚŝĐŚĐĂŶ ĂĚĚƐŝŐŶŝĮĐĂŶƚĚŝǀĞƌƐŝĮĐĂƟŽŶƚŽ ƉŽƌƞŽůŝŽƐ͘ /ĨLJŽƵ͛ƌĞĂĚĚŝŶŐĂĐƟǀĞůLJͲ ŵĂŶĂŐĞĚĨƵŶĚƐƚŽLJŽƵƌƉŽƌƞŽůŝŽ keep an eye on the cost of ŽǁŶĞƌƐŚŝƉ͕ĂƐƚŚŝƐŝƐŽŌĞŶŚŝŐŚĞƌ than with ETFs. :Ğůů͛ƐZƵƐƐDŽƵůĚƐĂLJƐƐŽŵĞ experienced investors like to use a ‘core-satellite’ approach where ƚŚĞŝƌĐŽƌĞŚŽůĚŝŶŐƐĂƌĞŝŶĂĐƟǀĞ ĨƵŶĚƐĂŶĚƚŚĞŝƌƐŚŽƌƚĞƌͲƚĞƌŵ͕ ŵŽƌĞƚĂĐƟĐĂůĂƐƐĞƚĂůůŽĐĂƟŽŶ ĚĞĐŝƐŝŽŶƐĂƌĞŵĂĚĞƚŚƌŽƵŐŚd&Ɛ͘

dŚŝƐŝƐďĞĐĂƵƐĞd&ƐĂƌĞŵŽƌĞ liquid and so are easier to trade. /^d,ZE^ztz dK/Es^d͍ If you don’t want to choose ŝŶǀĞƐƚŵĞŶƚƐLJŽƵƌƐĞůĨ͕ŝƚ͛ƐǁŽƌƚŚ ĐŽŶƐŝĚĞƌŝŶŐĂƌĞĂĚLJͲŵĂĚĞ ƉŽƌƞŽůŝŽ͕ǁŚĞƌĞƚŚĞŚŽůĚŝŶŐƐĂƌĞ ƐĞůĞĐƚĞĚďLJĂŶŝŶǀĞƐƚŵĞŶƚĞdžƉĞƌƚ͘ There is a wide range of readyŵĂĚĞŽƉƟŽŶƐŽŶƚŚĞŵĂƌŬĞƚ͘&Žƌ ĞdžĂŵƉůĞ͕:ĞůůzŽƵŝŶǀĞƐƚŽīĞƌƐ ĮǀĞƉĂƐƐŝǀĞĨƵŶĚƐ͕ǁŚŝĐŚĂƌĞ ĚĞƐŝŐŶĞĚƚŽĐĂƚĞƌĨŽƌĚŝīĞƌĞŶƚ ƌŝƐŬƉƌŽĮůĞƐ͘dŚĞLJĞĂĐŚĐŽŶƚĂŝŶ around 14 ETFs and index-linked funds, tracking a wide range of indices and assets. (EP) ,KtdKW/<Ed& 1. ĞĐŝĚĞŚŽǁŵƵĐŚƌŝƐŬ you’re willing and able to ƚĂŬĞʹƚŚŝƐǁŝůůĚĞƚĞƌŵŝŶĞ LJŽƵƌĂƐƐĞƚĂůůŽĐĂƟŽŶ strategy. 2. tŝƚŚŝŶĞĂĐŚĂƐƐĞƚ ĐůĂƐƐŝĚĞŶƟĨLJƚŚĞŵŽƐƚ appropriate index to follow. 3. ŽŵƉĂƌĞƚŚĞĐŽƐƚƐŽĨ ƐŝŵŝůĂƌƉƌŽĚƵĐƚƐ͘ 4. >ŽŽŬĂƚƚŚĞƚƌĂĐŬŝŶŐĞƌƌŽƌ ʹƚŚĞŚŝŐŚĞƌƚŚĞĮŐƵƌĞ͕ ƚŚĞŵŽƌĞůŝŬĞůLJŝƚŝƐƚŚĂƚ ƚŚĞd&ǁŝůůŽƵƚƉĞƌĨŽƌŵ ŽƌƵŶĚĞƌƉĞƌĨŽƌŵŝƚƐ ďĞŶĐŚŵĂƌŬ͘ 5. >ŽŽŬĂƚƚŚĞ͚ƌĞƉůŝĐĂƟŽŶ ŵĞƚŚŽĚ͛ʹƉŚLJƐŝĐĂůůLJ ƌĞƉůŝĐĂƟŶŐd&ƐŚŽůĚĂůůŽƌ ĂƐĂŵƉůĞŽĨƚŚĞƵŶĚĞƌůLJŝŶŐ ĂƐƐĞƚƐƚŚĂƚŵĂŬĞƵƉƚŚĞ ŝŶĚĞdž͖ƐLJŶƚŚĞƟĐd&Ɛ ƌĞƉůŝĐĂƚĞƚŚĞƉĞƌĨŽƌŵĂŶĐĞ of the index via swap ĂŐƌĞĞŵĞŶƚƐǁŝƚŚĂ counterparty.

08 February 2018 | SHARES |

35

A LITTLE MORE CONVERSATION Ivan Posted 1h ago +

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Just came across the investment forum on Shares – anyone have any more detail?

Dan Posted 1h ago

Ivan, welcome to the Shares forum! It’s where investors stors unite and talk ersonal finance about all things investing related from ISAs, SIPPs and personal to individual stocks and funds.

Ivan Posted 36min ago +

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Thanks Dan, really interested to hear what other likeminded investors are talking about

Becca Posted 25min ago

Well it’s not just about investing, there is a general area so you can get to know your fellow forum users better. I look after customer support so if you have any questions about Shares do ask away.

Come and join your fellow investors on the new Shares Forum, where you can share ideas, ask questions and see what others are up to with their investments. The whole Shares community can enter the Forum but only Shares subscribers can take part in discussions.

Find out more on www.sharesmagazine.co.uk/forum

* The £1 for 1 month and then £12 a month offer is only available to new subscribers. Your first payment will be £1 and thereafter subscriptions will automatically continued, billed at £12 per month unless cancelled. Subscriptions can be cancelled at any time by calling 020 7378 4424 between 8am - 4.30pm on Monday to Friday. No refunds are offered during the cancellations period but all outstanding issues and services will be fulfilled. For enquires contact us at [email protected]

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Dividend warning for SSE ahead of proposed asset merger with Npower A 7.9% prospective dividend yield may be unrealistic if merger is successful

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ƵĞƐƟŽŶƐĂƌĞďĞŝŶŐƌĂŝƐĞĚŽǀĞƌƚŚĞĨƵƚƵƌĞ ŽĨĚŝǀŝĚĞŶĚƐĨƌŽŵĞŶĞƌŐLJƐƵƉƉůŝĞƌSSE (SSE)ŝĨŝƚƐƵĐĐĞƐƐĨƵůŝŶƐƉŝŶŶŝŶŐŽīŝƚƐh< ŚŽƵƐĞŚŽůĚƐƵƉƉůLJŽƉĞƌĂƟŽŶƐĂŶĚŵĞƌŐŝŶŐƚŚĞŵ ǁŝƚŚƌŝǀĂůEƉŽǁĞƌ͘ DĞƌŐĞƌƚĂůŬƐǁĞƌĞĐŽŶĮƌŵĞĚŝŶEŽǀĞŵďĞƌ ϮϬϭϳ͘ĚĞĂůǁŽƵůĚŵĂƌƌLJƚŚĞƉĂŝƌ͛Ɛh<ƌĞƚĂŝů ƵŶŝƚƐ͕ĞīĞĐƟǀĞůLJĐŽŵďŝŶŝŶŐƚǁŽŽĨƚŚĞh<͛ƐďŝŐ ƐŝdžďƵƐŝŶĞƐƐĂŶĚŚŽƵƐĞŚŽůĚŐĂƐĂŶĚĞůĞĐƚƌŝĐŝƚLJ ƉƌŽǀŝĚĞƌƐŝŶƚŽĂƐŝŶŐůĞĞŶƟƚLJ͘ dŚĞĐƵƌƌĞŶƚƉůĂŶŝƐƚŽůŝƐƚƚŚĞĐŽŵďŝŶĞĚĞŶƟƚLJ ĂƐĂƐƚĂŶĚĂůŽŶĞďƵƐŝŶĞƐƐŽŶƚŚĞ>ŽŶĚŽŶƐƚŽĐŬ ŵĂƌŬĞƚŝŶůĂƚĞϮϬϭϴŽƌĞĂƌůLJϮϬϭϵ͘ dŚĞŵĞƌŐĞƌĨĂĐĞƐŝŶƚĞŶƐĞƐĐƌƵƟŶLJĨƌŽŵh< ƌĞŐƵůĂƚŽƌƐŐŝǀĞŶŝƚŝŶǀŽůǀĞƐƚǁŽŽĨƚŚĞh<͛Ɛ ĚŽŵŝŶĂŶƚĞŶĞƌŐLJƐƵƉƉůŝĞƌƐ͘/ŶŝƟĂůĞŶŐĂŐĞŵĞŶƚǁŝƚŚ ƚŚĞh<͛ƐŽŵƉĞƟƟŽŶΘDĂƌŬĞƚƐƵƚŚŽƌŝƚLJ;DͿ ŝƐďĞůŝĞǀĞĚƚŽŚĂǀĞďĞŐƵŶƌĞŐĂƌĚŝŶŐƚŚĞƐƉŝŶͲŽī͕ ĂůƚŚŽƵŐŚƚŚŝƐŝƐũƵƐƚƚŚĞƐƚĂƌƚŽĨǁŚĂƚŝƐůŝŬĞůLJƚŽ ďĞĐŽŵĞĂƉƌŽƚƌĂĐƚĞĚƉƌŽĐĞƐƐ͘ WŚĂƐĞ/ŽĨƚŚĞƌĞǀŝĞǁƉƌŽĐĞƐƐŚĂƐŶŽƚƐƚĂƌƚĞĚLJĞƚ ďƵƚǁŝůůƚĂŬĞϰϬĚĂLJƐŽŶĐĞĐŽŵŵĞŶĐĞĚ͕^^ƐĂLJƐ͘ dŚĞŽŶůLJŐƵŝĚĂŶĐĞĐŽŵŝŶŐĨƌŽŵƚŚĞŐƌŽƵƉƚŚƵƐĨĂƌ ŽŶĨƵƚƵƌĞĚŝǀŝĚĞŶĚƉĂLJŵĞŶƚƐĐĂŵĞŝŶEŽǀĞŵďĞƌ͕ĂŶĚ ƌĞŝƚĞƌĂƚĞĚŽŶϯϭ:ĂŶƵĂƌLJŝŶĂƚŚŝƌĚƋƵĂƌƚĞƌƵƉĚĂƚĞ͘ ^^ƐĂLJƐƚŚĂƚĨŽůůŽǁŝŶŐƚŚĞĚĞŵĞƌŐĞƌŽĨƚŚĞ ŚŽƵƐĞŚŽůĚĞŶĞƌŐLJƐƵƉƉůLJĂŶĚƐĞƌǀŝĐĞƐďƵƐŝŶĞƐƐ͕ ŝƚƐĚŝǀŝĚĞŶĚĂŶĚĚŝǀŝĚĞŶĚƉŽůŝĐLJǁŝůůƌĞŇĞĐƚƚŚĞ ƋƵĂůŝƚLJĂŶĚŶĂƚƵƌĞŽĨŝƚƐĂƐƐĞƚƐĂŶĚŽƉĞƌĂƟŽŶƐ͕ ƚŚĞĞĂƌŶŝŶŐƐĚĞƌŝǀĞĚĨƌŽŵƚŚĞŵĂŶĚƚŚĞůŽŶŐĞƌͲ ƚĞƌŵĮŶĂŶĐŝĂůŽƵƚůŽŽŬ͘DŽƌĞŝŶĨŽƌŵĂƟŽŶǁŝůůďĞ Source: Thomson Reuters Datastream

SSE FTSE ALL SHARE

1650 Rebased to first 1500 1350 1200

2017

ƉƵďůŝƐŚĞĚŝŶ:ƵŶĞϮϬϭϴ͘ ƌĞůŝĂďůĞĂŶĚŚŝŐŚͲLJŝĞůĚŝŶŐŝŶĐŽŵĞŝƐĂƌŐƵĂďůLJ ƚŚĞďŝŐŐĞƐƚƌĞĂƐŽŶƚŚĂƚŝŶǀĞƐƚŽƌƐǁŽƵůĚĐŽŶƐŝĚĞƌ ŽǁŶŝŶŐƐŚĂƌĞƐŝŶ^^͘dŚĞĐŽŵƉĂŶLJŚĂƐŝŶĐƌĞĂƐĞĚ ŝƚƐĚŝǀŝĚĞŶĚƉĂLJŵĞŶƚĞǀĞƌLJLJĞĂƌƐŝŶĐĞϮϬϬϭ͘/ƚ ĂŝŵƐƚŽůŝŌƚŚĞĚŝǀŝĚĞŶĚĞǀĞƌLJLJĞĂƌďLJĂƚůĞĂƐƚƚŚĞ ƌĞƚĂŝůƉƌŝĐĞŝŶĚĞdžŵĞĂƐƵƌĞŽĨŝŶŇĂƟŽŶ͘ /ŶƚŚĞLJĞĂƌƚŽϯϭDĂƌĐŚϮϬϭϳ^^ƉĂŝĚŽƌĚŝŶĂƌLJ ĚŝǀŝĚĞŶĚƐƚŽŝŶǀĞƐƚŽƌƐǁŽƌƚŚϵϭ͘ϯƉƉĞƌƐŚĂƌĞ͕ ĂϮ͘ϭйŝŶĐƌĞĂƐĞŽŶƚŚĞƉƌĞǀŝŽƵƐLJĞĂƌ͛Ɛϴϵ͘ϰƉ ƉĂLJŽƵƚ͘dŚĂƚĚŽĞƐŶŽƚŝŶĐůƵĚĞƐƉĞĐŝĂůĚŝǀŝĚĞŶĚƐ͘ &ŽƌĞĐĂƐƚƐƐƵŐŐĞƐƚĂϯ͘ϱйŝŶĐƌĞĂƐĞŝŶƚŚĞƉĂLJŽƵƚ ŝƐĚƵĞƚŚŝƐLJĞĂƌƚŽϯϭDĂƌĐŚϮϬϭϴĨŽƌĂϵϰ͘ϱƉƉĞƌ ƐŚĂƌĞĚŝǀŝĚĞŶĚ͕ƌŝƐŝŶŐĂŶŽƚŚĞƌϯйƚŽϵϳ͘ϰƉŝŶϮϬϭϵ͘ ƵƚƚŚŽƐĞĨŽƌĞĐĂƐƚƐǁŽƵůĚŚĂǀĞƚŽĐŚĂŶŐĞŝĨƚŚĞ ĚĞŵĞƌŐĞƌŐŽĞƐĂŚĞĂĚĂƐ^^ǁŽƵůĚďĞůĞŌǁŝƚŚĂ ƐŵĂůůĞƌďƵƐŝŶĞƐƐʹƉŽƚĞŶƟĂůůLJĂŐŽŽĚĐŚĂŶĐĞĨŽƌŝƚ ƚŽƌĞƚŚŝŶŬƚŚĞĚŝǀŝĚĞŶĚƉŽůŝĐLJ͘ tĞǁŽƵůĚďĞǀĞƌLJƐĐĞƉƟĐĂůƚŽǁĂƌĚƐŵĂƌŬĞƚ ĨŽƌĞĐĂƐƚƐĨŽƌ^^͛ƐĚŝǀŝĚĞŶĚďĞLJŽŶĚƚŚĞĐƵƌƌĞŶƚ ĮŶĂŶĐŝĂůLJĞĂƌ;ƚŽϯϭDĂƌĐŚϮϬϭϴͿĂƐƚŚĞLJĂƌĞ ƵŶůŝŬĞůLJƚŽĨĂĐƚŽƌŝŶƚŚĞƉůĂŶŶĞĚĚĞŵĞƌŐĞƌ͘ &ŽƌĞdžĂŵƉůĞ͕ŝŶǀĞƐƚŵĞŶƚďĂŶŬh^ĨŽƌĞĐĂƐƚƐ ϵϴ͘ϰƉĨŽƌƚŚĞLJĞĂƌƚŽDĂƌĐŚϮϬϭϵʹŝŵƉůLJŝŶŐĂϳ͘ϵй LJŝĞůĚďĂƐĞĚŽŶƚŚĞůĂƚĞƐƚƐŚĂƌĞƉƌŝĐĞŽĨάϭϮ͘ϰϮ͘ /ŶǀĞƐƚŽƌƐĐŽŶƐŝĚĞƌŝŶŐďƵLJŝŶŐ^^ƐŚĂƌĞƐƐŚŽƵůĚ ĂĐŬŶŽǁůĞĚŐĞĂƌŝƐŬƚŽĨƵƚƵƌĞĚŝǀŝĚĞŶĚƐŽƌŚŽůĚŽī ƵŶƟůŵŽƌĞŝŶĨŽƌŵĂƟŽŶŝƐƉƌŽǀŝĚĞĚŝŶƚŚĞƐƵŵŵĞƌ͘ BROKER SAYS: 11 4

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2018

08 February 2018 | SHARES |

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SMALLER COMPANIES

Why ScS may not suffer the same fate as rivals Resilient sofas and carpets seller is in a very interesting position

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ĞůůĞƌƐŽĨďŝŐͲƟĐŬĞƚŝƚĞŵƐĂƌĞĐŽŵŝŶŐƵŶĚĞƌ ƉƌĞƐƐƵƌĞ͕ĂƐĚĞŵŽŶƐƚƌĂƚĞĚďLJƉƌŽĮƚǁĂƌŶŝŶŐƐ ĨƌŽŵƚŚĞůŝŬĞƐŽĨCarpetright (CPR) ĂŶĚSafestyle UK (SFE:AIM) ĂƐǁĞůůĂƐ DFS Furniture (DFS)͘ /ƚŵĂLJƐĞĞŵĐŽƵŶƚĞƌŝŶƚƵŝƟǀĞďƵƚSharesƐĞĞƐƐƚƌŽŶŐ ƌĞĐŽǀĞƌLJƉŽƚĞŶƟĂůĂƚƐŽĨĂƐͲƚŽͲĐĂƌƉĞƚƐƐĞůůĞƌScS (SCS)͘ /ŶǀĞƐƚŽƌƐŶĞĞĚƚŽŐŽŝŶƚŽƚŚŝƐƚƌĂĚĞǁŝƚŚĞLJĞƐ ǁŝĚĞŽƉĞŶ͘dŚĞƵƉŚŽůƐƚĞƌĞĚĨƵƌŶŝƚƵƌĞͲƚŽͲŇŽŽƌŝŶŐƐ ƐĞůůĞƌƉůƵŶŐĞĚŝŶƚŽĂĚŵŝŶŝƐƚƌĂƟŽŶŝŶϮϬϬϴ͕ ĂŵŽŶŐƚŚĞĐĂƐƵĂůƟĞƐŽĨƚŚĞĮŶĂŶĐŝĂůĐƌŝƐŝƐ͘zĞƚŝƚ ƌĞůŝƐƚĞĚŽŶƚŚĞƐƚŽĐŬŵĂƌŬĞƚŝŶϮϬϭϱĂŶĚŚĂƐƐŝŶĐĞ ĚĞŵŽŶƐƚƌĂƚĞĚĂŵŽƌĞƌŽďƵƐƚďƵƐŝŶĞƐƐŵŽĚĞůǁŚŝůĞ ŐĂŝŶŝŶŐŵĂƌŬĞƚƐŚĂƌĞ͘ GREATER RESILIENCE hŶĚĞƌƚŚĞůĞĂĚĞƌƐŚŝƉŽĨKĂǀŝĚ<ŶŝŐŚƚ͕ ŵĂŶĂŐĞŵĞŶƚŚĂƐŵĂĚĞƉƌŽŐƌĞƐƐŝŶŝŵƉƌŽǀŝŶŐƚŚĞ ƌĞƐŝůŝĞŶĐĞŽĨƚŚĞďƵƐŝŶĞƐƐ͘dŚŝƐŚĂƐďĞĞŶĂĐŚŝĞǀĞĚ ŝŶƚŚƌĞĞǁĂLJƐ͗^ƚƌĞŶŐƚŚĞŶŝŶŐŝƚƐǀĂůƵĞͲĨŽĐƵƐĞĚ ĐƵƐƚŽŵĞƌƉƌŽƉŽƐŝƟŽŶ͖ďƌŽĂĚĞŶŝŶŐƚŚĞĐƵƐƚŽŵĞƌ ďĂƐĞƚŽŝŶĐůƵĚĞŵŽƌĞĂŋƵĞŶƚƐŚŽƉƉĞƌƐǀŝĂ,ŽƵƐĞ ŽĨ&ƌĂƐĞƌĐŽŶĐĞƐƐŝŽŶƐĂƐǁĞůůĂƐƚŚĞĂĚĚŝƟŽŶŽĨ ŵŽƌĞƉƌĞŵŝƵŵďƌĂŶĚƐ͖ĂŶĚŝŶĐƌĞĂƐŝŶŐŽǀĞƌĂůů ĐŽƐƚĞĸĐŝĞŶĐLJ͘ dŚĞƐĞůĨͲƐƚLJůĞĚ͚^ŽĨĂĂƌƉĞƚ^ƉĞĐŝĂůŝƐƚ͛ŽīĞƌƐƚŚŝƌĚ ƉĂƌƚLJďƌĂŶĚƐƐƵĐŚĂƐLa-Z-Boy͕G PlanĂŶĚƵƉŵĂƌŬĞƚ ŶĂŵĞParker Knoll͕ĂƐǁĞůůĂƐŽǁŶďƌĂŶĚƐSiSi Italia ĂŶĚEndurance͕ǁŚŝůĞŽīĞƌŝŶŐĨŽƵƌLJĞĂƌƐ͛ŝŶƚĞƌĞƐƚͲ ĨƌĞĞĐƌĞĚŝƚŽŶĂůƌĞĂĚLJƵůƚƌĂͲĐŽŵƉĞƟƟǀĞƉƌŝĐĞƐ͘ LOW STOCK RISK ^Đ^ŝƐĐĂƐŚŐĞŶĞƌĂƟǀĞ͕ŚĂƐĂƐƚƌŽŶŐďĂůĂŶĐĞƐŚĞĞƚ ĂŶĚĂǁĞďƐŝƚĞƚŚĂƚĐŽŵƉůĞŵĞŶƚƐŝƚƐůĂƌŐĞŽƵƚͲŽĨͲ ƚŽǁŶƌĞƚĂŝůŽƵƚůĞƚƐ͘ŶĚĂƐďƌŽŬĞƌ^ŚŽƌĞĂƉŝƚĂů ĞdžƉůĂŝŶƐ͕ƌŽƵŐŚůLJϵϱйŽĨ^Đ^͛ƐƚŽĐŬŝƐƉƵƌĐŚĂƐĞĚŽŶ ƚŚĞďĂĐŬŽĨĂĐƵƐƚŽŵĞƌŽƌĚĞƌ͕ŵĞĂŶŝŶŐƚŚĞƌĞƚĂŝůĞƌ ďĞĂƌƐǀĞƌLJůŝƩůĞƐƚŽĐŬƌŝƐŬ͕ĂƐƚŚĞŽŶůLJŝŶǀĞŶƚŽƌLJ ĐĂƌƌŝĞĚŝƐĚŝƐƉůĂLJƐƚŽĐŬŽƌƌĞƚƵƌŶƐ͘ ^ŚŽƌĞƵƉŐƌĂĚĞĚƐĂůĞƐ͕ƉƌŽĮƚĂŶĚĞĂƌŶŝŶŐƐƉĞƌ ƐŚĂƌĞĞƐƟŵĂƚĞƐĨŽƌƚŚĞLJĞĂƌƚŽ:ƵůLJϮϬϭϴĂŶĚ ďĞLJŽŶĚĨŽůůŽǁŝŶŐ^Đ^͛ƚƌĂĚŝŶŐƵƉĚĂƚĞ;ϯϭ:ĂŶͿ ĨŽƌƚŚĞƐŝdžŵŽŶƚŚƐƚŽϮϳ:ĂŶƵĂƌLJϮϬϭϴ͘dŚŝƐ

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| SHARES | 08 February 2018

ƌĞǀĞĂůĞĚďĞƩĞƌͲƚŚĂŶͲĞdžƉĞĐƚĞĚϮ͘ϮйůŝŬĞͲĨŽƌͲůŝŬĞ ŽƌĚĞƌŝŶƚĂŬĞŐƌŽǁƚŚ͘ <ŶŝŐŚƚŝŶƐŝƐƚĞĚŚŝƐĐŚĂƌŐĞƉĞƌĨŽƌŵĞĚŝŶůŝŶĞ ǁŝƚŚĞdžƉĞĐƚĂƟŽŶƐŽǀĞƌƚŚĞŬĞLJǁŝŶƚĞƌƐĂůĞƐƉĞƌŝŽĚ ĂŶĚďĞůŝĞǀĞƐ^Đ^͚͛ŝŶĐƌĞĂƐŝŶŐƌĞƐŝůŝĞŶĐĞĂŶĚǀĂůƵĞ ƉƌŽƉŽƐŝƟŽŶǁŝůůĞŶĂďůĞƵƐƚŽŵĂŶĂŐĞƚŚĞĐŽŶƟŶƵĞĚ ĞĐŽŶŽŵŝĐƵŶĐĞƌƚĂŝŶƚLJĂŶĚƚĂŬĞĂĚǀĂŶƚĂŐĞŽĨ ŽƉƉŽƌƚƵŶŝƟĞƐ͛͘ &ŽƌƚŚĞLJĞĂƌƚŽ:ƵůLJϮϬϭϴ͕^ŚŽƌĞĨŽƌĞĐĂƐƚƐ ĂĚũƵƐƚĞĚƉƌĞͲƚĂdžƉƌŽĮƚŽĨάϭϮ͘ϱŵ;ϮϬϭϳ͗άϭϮŵͿĨŽƌ ĞĂƌŶŝŶŐƐƉĞƌƐŚĂƌĞŽĨϮϰƉĂŶĚĂϭϱƉĚŝǀŝĚĞŶĚ͘ dŚĞƐĞĞƐƟŵĂƚĞƐƉůĂĐĞ^Đ^ŽŶĂĐŚĞĂƉͲůŽŽŬŝŶŐ ƉƌŽƐƉĞĐƟǀĞƉƌŝĐĞͲƚŽͲĞĂƌŶŝŶŐƐŵƵůƟƉůĞŽĨϴ͘ϴ ƟŵĞƐǁŝƚŚĂŶĂƩƌĂĐƟǀĞϳ͘ϭйLJŝĞůĚ͘&ŽƌĮŶĂŶĐŝĂů LJĞĂƌϮϬϭϵ͕ƚŚĞďƌŽŬĞƌĨŽƌĞĐĂƐƚƐŝŶĐƌĞĂƐĞĚƉƌĞͲƚĂdž ƉƌŽĮƚŽĨάϭϮ͘ϳŵ͕ĞĂƌŶŝŶŐƐƉĞƌƐŚĂƌĞŽĨϮϰ͘ϱƉĂŶĚ Ăϭϱ͘ϯƉĚŝǀŝĚĞŶĚ͘ SHARES SAYS: È ScS is showing surprising resilience and at 212.2p, the shares look attractive. (JC) BROKER SAYS: 2

0

0

SMALLER COMPANIES

Why Hostelworld could shell out up to €22m in special dividends The hostel booking platform has a history of rewarding shareholders

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ŶǀĞƐƚŽƌƐĐŽƵůĚďĞŝŶĨŽƌĂůĂƚĞĂƐƚĞƌƚƌĞĂƚǁŚĞŶ Hostelworld (HSW)ƌĞƉŽƌƚƐŝƚƐĨƵůůLJĞĂƌƌĞƐƵůƚƐ ŽŶϭϬƉƌŝůĂƐĂƐƉĞĐŝĂůĚŝǀŝĚĞŶĚĐŽƵůĚďĞŽŶƚŚĞ ĐĂƌĚƐ͕ĂĐĐŽƌĚŝŶŐƚŽƐƚŽĐŬďƌŽŬĞƌĞƌĞŶďĞƌŐ͘ ,ŽƐƚĞůǁŽƌůĚŝƐƚŚĞůĂƌŐĞƐƚŽŶůŝŶĞŚŽƐƚĞůͲŬŝŶŐ ƉůĂƞŽƌŵĂůůŽǁŝŶŐďƵĚŐĞƚͲĐŽŶƐĐŝŽƵƐƚƌĂǀĞůůĞƌƐƚŽ ŬĂĐĐŽŵŵŽĚĂƟŽŶĂƚƚŚĞĐůŝĐŬŽĨĂďƵƩŽŶ͘EĞĂƌůLJ ŚĂůĨŽĨ,ŽƐƚĞůǁŽƌůĚƚƌĂǀĞůůĞƌƐƵƐĞƚŚĞĐŽŵƉĂŶLJ͛ƐĂƉƉ ĚƵƌŝŶŐƚŚĞŝƌƚƌŝƉƐ͕ĂĐĐŽƌĚŝŶŐƚŽƚŚĞĐŽŵƉĂŶLJ͘ ĞƌĞŶďĞƌŐĂŶĂůLJƐƚKǁĞŶ^ŚŝƌůĞLJƐĂLJƐŝĨ ,ŽƐƚĞůǁŽƌůĚǁĞƌĞƚŽƉĂLJŽƵƚĂůůŽĨŝƚƐŶĞƚĐĂƐŚ͕ŝƚ ĐŽƵůĚƌĞƚƵƌŶƵƉƚŽΦϮϮŵƚŽƐŚĂƌĞŚŽůĚĞƌƐŽŶƚŽƉ ŽĨŝƚƐŶŽƌŵĂůĚŝǀŝĚĞŶĚ͘ KŶĞŽĨ,ŽƐƚĞůǁŽƌůĚ͛ƐĐŽŵƉĞƟƟǀĞĂĚǀĂŶƚĂŐĞƐŝƐ ŝƚƐĂƐƐĞƚͲůŝŐŚƚŵŽĚĞůĂƐŝƚĚŽĞƐŶŽƚŽǁŶŽƌŵĂŝŶƚĂŝŶ ĂŶLJŚŽƐƚĞůƐ͕ƵŶĚĞƌƉŝŶŶŝŶŐŐĞŶĞƌŽƵƐƉĂLJͲŽƵƚƐ͘ /ŶƚŚĞLJĞĂƌƚŽϯϭĞĐĞŵďĞƌϮϬϭϲ͕ƚŚĞĐŽŵƉĂŶLJ ƉĂŝĚŽƵƚΦϭϬŵŝŶƐƉĞĐŝĂůĚŝǀŝĚĞŶĚƐĂůŽŶĞ͘ >ŽŽŬŝŶŐĂŚĞĂĚ͕^ŚŝƌůĞLJĂƌŐƵĞƐƚŚĞŐůŽďĂůŚŽƐƚĞů ŵĂƌŬĞƚŝƐĂŶƟĐŝƉĂƚĞĚƚŽŐƌŽǁϳйĂŶŶƵĂůůLJ͕ĚƌŝǀĞŶ

The small cap oil firm with big North Sea ambitions IN RECENT WEEKS BP (BP.) announced two substantial discoveries in the North Sea and Royal Dutch Shell (RDSB) revealed its first investment in the region for nearly six years. A small cap looking to play this renaissance in the UK oil industry is I3 Energy (I3E:AIM).

Berenberg argues the global hostel market is anticipated to grow by

7% annually,

driven by supply growth and higher-quality and higher-priced hostels ďLJƐƵƉƉůLJŐƌŽǁƚŚĂŶĚŚŝŐŚĞƌͲƋƵĂůŝƚLJĂŶĚŚŝŐŚĞƌͲ ƉƌŝĐĞĚŚŽƐƚĞůƐ͘ ,ŽƐƚĞůǁŽƌůĚĐĂŶƌŝĚĞƚŚŝƐŵĂƌŬĞƚŐƌŽǁƚŚĂŶĚĂůƐŽ ƚĂƌŐĞƚƐŵĂůů͕ĨĂŵŝůLJͲŽǁŶĞĚůŽĐĂůŚŽƐƚĞůƐƚŚĂƚŵĂLJďĞ ŽǀĞƌůŽŽŬĞĚďLJŝƚƐƌŝǀĂůƐŝŶĂĐŽŵƉĞƟƟǀĞƐƉĂĐĞ͘;>D:Ϳ

The AIM-quoted business has two major catalysts on the horizon which could help drive the market valuation upwards from the current £13m. The first concerns the 100%-owned Liberator project where the company is in discussions with multiple partners over a joint venture agreement. This could help meet the $50m costs of getting Liberator to first oil. It could also provide investment to help unlock the potential in several licences on which I3 is

currently bidding. Chief executive officer Neill Carson says a decision on the award of licences is expected around the end of the first quarter or early in the second quarter although he admits the timing is somewhat unpredictable. Carson is effusive about the potential of Liberator which is a low-cost project (it was bought when Brent crude was half the price it is today) and is close to existing infrastructure. (TS)

08 February 2018 | SHARES |

39

NOW IS THE TIME TO FOCUS ON YOUR INVESTMENT PORTFOLIO Are you looking for new investment ideas for your ISA? Come to the Shares and AJ Bell Investor Evening in London on Wednesday 7 March 2018. Directors from Allergy Therapeutics (AGY), Bluejay Mining (JAY), Healthperm (HPR) and Mercia Technologies (MERC) will present their plans for 2018 and you will also have the opportunity to talk directly to these directors and put forward your questions. Sponsored by

London – Wednesday 7 March 2018 Companies presenting Allergy Therapeutics (AGY) Allergy Therapeutics is a Europe-based specialty pharmaceutical company focused upon the diagnosis and treatment of allergy. Allergy Therapeutics has an existing sales base of approximately £40 million per year, an MHRA-approved manufacturing capability as well as an established sales and marketing infrastructure in several major European markets.

Bluejay Mining (JAY) Rod McIllree, MD Bluejay Mining is primarily focused on advancing the Dundas ilmenite project in Greenland into production in 2018. Dundas is the highest-grade mineral sand ilmenite project globally, and with just 17% of the raised beach area having been assessed the true scale of this deposit is only just emerging.

Healthperm (HPR) Steve Howson, CEO Healthperm is a healthcare recruitment business, which has been established to address the significant shortfalls in healthcare professionals in the UK and the UAE. The objective is to become a trusted provider of permanent experienced nurses and other healthcare professionals initially from the Philippines into the UK and the UAE.

Mercia Technologies (MERC) Dr. Mark Payton, CEO Mercia is a national investment group focused on the funding and scaling of innovative technology businesses with high growth potential from the UK regions. Mercia benefits from 19 university partnerships and offices across the Midlands, the North of England and Scotland providing it with access to high quality, regional deal flow.

Follow this link www.sharesmagazine.co.uk/events for full details.

REGISTER FOR YOUR COMPLIMENTARY TICKET TODAY During the event and afterwards over drinks, investors will have the chance to:

Discover new investment opportunities

Event details Location: Novotel Tower Bridge, London EC3N 2NR Registrations 18:00 Presentations start at 18:30 Complimentary drinks and buffet available after the presentations

Get to know the companies better

Contact Talk with the company directors

Chris Williams, Spotlight Manager [email protected] 020 7378 4402

Register free now www.sharesmagazine.co.uk/events

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The value of investments can go down as well as up and you may get back less than you originally invested. We don’t offer advice about the suitability of our products or any investments held within them, if you require financial advice you should consult a suitably qualified financial adviser. Tax treatment depends on your individual circumstances and rules may change. AJ Bell includes AJ Bell Holdings Limited and its wholly owned subsidiaries. AJ Bell Management Limited and AJ Bell Securities Limited are authorised and regulated by the Financial Conduct Authority. All companies are registered in England and Wales at 4 Exchange Quay, Salford Quays, Manchester M5 3EE

KEY

Empresaria (EMR:AIM)  21, 23

IWG (IWG)

• • • • •

Franchise Brands (FRAN:AIM)

24

31

Galliford Try (GFRD) 

16

John Laing Infrastructure Fund (JLIF) 

Gattaca (GATC:AIM)

22

Jupiter European (GB00B5STJW84)

35

Laird (LRD)

14

Main Market AIM Fund Investment Trust Exchange-Traded Fund

Go-Ahead (GOG) Greencoat UK Wind (UKW) 

7 31

7

Royal Mail (RMG)

9

3i Infrastructure (3IN) 

31 12

Safestyle UK (SFE:AIM) 

38

A.G. Barr (BAG)  AA (AA.) 

25

ScS (SCS)

38

Source MSCI World UCITS ETF (MXWO)

35

SSE (SSE)

37

Staffline (STAF:AIM)

23

Ashtead (AHT) AVEVA (AVV) 

7 16

Man Group (EMR)

7

BP (BP.) 

10, 39

28

BT (BT.A)

8

Mid Wynd International Investment Trust (MWY)  Ocado (OCDO)

10

Pagegroup (PAGE) 

Capita (CPI) Carillion (CLLN) Carpetright (CPR) Cobham (COB)

8, 30 16, 30 38 7

ConvaTec (CTEC) 

16

CPL Resources (CPL:AIM)

19

Cranswick (CWK)

15

DFS Furniture (DFS) 

38

Domino’s Pizza (DOM)

24

Halma (HLMA) Harvey Nash (HVN:AIM) Hays (HAS)

7 21 19, 23

HICL Infrastructure Company (HICL)

30

Parity (PTY:AIM)

Hostelworld (HSW) 

39

Purplebricks (PURP:AIM)

I3 Energy (I3E:AIM)

39

International Public Partnership (INPP) 

31

iShares Core FTSE 100 UCITS ETF (ISF)

35

Robert Walters (RWA) 

Stagecoach (SGC)

7

SThree (STHR)

21

T Bailey Dynamic Fund (GB00B1LB2Z79) 

27

19 22

Tesco (TSCO)

10

8

21

Royal Dutch Shell (RDSB)

10, 39

Royal London UK Equity Income (GB00B8Y4ZB91)

35

Ultra Electronics (ULE)

7

Vanguard UK Gilt ETF (VGOV)

35

Vodafone (VOD)

7, 8

08 February 2018 | SHARES |

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