The Intelligent Investor

02 December 2010

U.K.
The Economic Monitor Series. Free Edition.

INSIDE THE REPORT MARKETS AT A GLANCE

 Stock recommendations and price targets from top
brokerage firms
 Analysis and views on U.K. Construction PMI and
Nationwide House Prices
 Economic Indicator Watch along with Graphs
 List of companies earnings which hit and miss the
analysts’ expectations
 Important Events Scheduled on December 03
Economic Events & Indicators
 Markit/CIPS Service PMI (November)
 Halifax House Price Index (November)
 U.K. Official Reserves (November)
 Banks and commodity stocks powered strong gains for Britain's
top share index on growing investor confidence that the euro
zone debt crisis would be contained. The FTSE 100 index was
125.06 points, or 2.22 percent, up at 5,767.56
 British gilt futures pared losses to stand down 25 ticks on the day.
In the cash market, the yield on ten-year gilts was 4 basis points
higher at 3.395 percent, widening the spread against Bunds to
around 61 basis points.
 Sterling slipped against euro, as traders cited the ECB buying
Portuguese and Irish debt. The euro traded at 84.70 pence, close
to a session high and up around 0.7 percent on the day.
 Oil prices inched down following an increase in new U.S. claims for
unemployment benefits and after the ECB kept its interest rate
unchanged, and made no commitments to ramp-up its bond
purchasing programme. ICE Brent futures rose 15 cents to $89.02.
 Gold bounced back above $1,390 an ounce, helped by gains in
the euro and safe-haven buying as investors continued to fret
about the outlook for the euro zone debt crisis. Spot gold was up
0.3 percent to $1,391.71 an ounce at 1551 GMT.

Corporate Events
STOCK INDICES
 Berkeley Group Holdings, Falkland Islands
Holdings, Greene King interim results INDEX LAST CHNG % CHNG

FTSE 100* 5767.56 125.06 2.22

 Pursuit Dynamics final results
FTSE Tech Mark 100* 1951.56 37.62 1.97
FTSE Eurofirst 300* 1106.39 17.32 1.58
Breaking News
DAX* 6957.61 90.98 1.32

 U.K. Construction PMI rises in Nov: Markit/CIPS CAC 40* 3747.04 77.75 2.12
Stoxx Europe 600 271.46 4.35 1.63
 Qantas drags Rolls-Royce to court * CLOSING VALUES

 TUI Travel profits at top end of estimates

CURRENCIES
 Cuts won't stop recovery: BoE's Dale INDEX LAST PRIOR

 Kingfisher CEO hopes recovery next year Euro (EUR/USD) 1.3221 1.3137
U.K. Pound (GBP/USD) 1.5595 1.562
 Britvic confident on outlook, predicts more growth Japanese Yen (USD/JPY) 83.61 84.17

 C&W Communications plans to buy BTC All prices are at 11:47 AM EST

 Marston's profits rise on strong sales FUTURES

LAST CHANGE

Crude Oil 87.12 0.37

Natural Gas (Jan) 4.26 -0.009

Gold, (Feb) 1397.9 9.6

Copper (Mar) 399.3 4.55

All prices are at 11:38 AM EST

The Intelligent Investor - U.K.

STOCK RECOMMENDATIONS BY BROKERAGE HOUSES

BROKERAGE/COMPANY ACTIONS RATING LAST CLOSING
Numis
Betfair Group Recommends price target of 1600p Buy 1200p
Sage Group Raises to add from hold Add 271p
Credit Suisse
Halma Raises price target to 370p from 350p Outperform 331.80p
Sage Group Raises price target to 200p from 180p Underperform 271p
Prudential Raises price target to 750p from 710p Outperform 599p
Goldman Sachs
Petrofac Raises to buy from neutral Buy 1450p
Wood Group Downgrades to neutral from buy Neutral 497.40p
BG Group Raises price target to 1,450p from 1370p Neutral 1191p
RBS
Aberdeen Asset Management Raises price target to 233p from 185p Buy 184.90p
Babcock International Recommends price target of 620p Buy 527p
John Wood Raises price target to 455p from 435p Hold 497.40p
Smith & Nephew Starts with hold rating Hold 593.50p
Citigroup
Aberdeen Asset Management Raises to buy from hold Buy 184.90p
Altium
Britvic Cuts to hold from buy Hold 490.60p
Investec
Caretech Holdings Raises price target to 467p from 443p Buy 355p
Evolution
Desire Petroleum Raises to add from neutral Add 106p
Seymour Pierce
Ocean Wilsons Recommends price target of 1900p Buy 1323p
Natixis
Sage Group Raises price target to 275p from 250p Neutral 271p
SocGen
Sage Group Raises price target to 290p from 239p Hold 271p
JP Morgan
Shanks Recommends price target of 138p Overweight 116.80p
HSBC
Rolls Royce Raises price target to 650p from 620p Neutral 618.50p
BG Group Raises price target to 1615p from 1560p Overweight 1191p

Disclaimer: The views and investment tips expressed by investment experts are their own, and not that of IBTimes or its management. We advise users to check with certified experts before
taking any investment decisions.
The Intelligent Investor - U.K.

ANALYSIS AND VIEWS

U.K. Construction PMI rises in Nov: Markit/CIPS

The Markit/Chartered Institute of Purchasing and Supply Construction PMI rose to 51.8 in November from 51.6 in
October, beating analysts’ forecast which was at 51.0. Activity growth in construction sector surprisingly accelerated in
November as firms were optimistic about future prospects regardless of slowdown in new orders growth.

The activity in commercial and civil engineering increased, while house building activity fell for the third month in a row.
The optimism for the coming year was at its highest in five months, in spite of slow orders growth at its weakest in nine months. Employment in the
sector fell for the fifth month running.

"Whilst mild growth of the UK construction sector was reported in November, PMI data signalled that operating
conditions remained challenging.”

"New contract wins were restricted by lengthy negotiation periods and deferred spending by clients. Furthermore,
Markit economist Sarah
jobs were cut again, indicating that constructors see little need to maintain current capacity."
Ledger
“Many constructors indicated that conditions in the sector remained challenging, with new contract wins limited.
Subsequently, employment fell again, although optimism over future business prospects improved to the strongest
in five months."
Howard Archer, chief UK
and European economist at "Construction activity will be hit appreciably by the coalition government's extended pruning of public spending as
the analyst group IHS this is clearly going to hit expenditure on public buildings, schools, hospitals and infrastructure,"
Global Insight
"The PMI numbers have moderated, but maybe stabilising now.”
Ross Walker, economist at
RBS "Based on these numbers you would say the unusual strength in Q2 and Q3 won't be repeated in the final
quarter and expects overall GDP growth of 0.4 percent in Q4.”

ANALYSIS AND VIEWS

House prices decline slows in November: Nationwide

House prices fell for the second month in a row in November, however at a slower rate than in the previous month.

According to the Nationwide House Price Index house prices fell by 0.3 per cent in November, compared with a drop of 0.7 per cent in October.
Since May of this year house prices have fallen by 2.4 per cent, leaving the average house price in November at 163,398 pounds. The annual change
in house prices was a rise of 0.4 per cent, down from an increase of 1.4 per cent reported last month.

Martin Gahbauer, Chief Economist at Nationwide, said, "The recent trend of modestly falling house prices continued during November, with the
price of a typical U.K. property declining by 0.3% on a seasonally adjusted basis between October and November. The three month on three month
rate of change - a smoother measure of the recent price trend - rose from -1.5% to -1.3%. This remains well above the deeply negative rates of -5%
to -6% that prevailed during the most severe phase of the downturn in 2008. The annual rate of change - which compares house prices to their level
12 months ago - fell from 1.4% to 0.4% and suggests that house prices are essentially unchanged from a year earlier.

Martin Gahbauer, Chief
Economist at Nationwide
"There is little evidence to suggest that house price declines are likely to accelerate in the months ahead. Much of
the weakness in property values since the Spring has been driven by a return of sellers to the market, following
unusually low levels of property for sale in 2009 and early 2010. However, there is little to indicate that these sellers
need to achieve a sale urgently for financial or economic reasons, which means that the downward pressure on
house prices is only modest.”
“In addition, there are early signs that the flow of new property onto the market may be slowing down again as
potential sellers observe the recent weakness in prices and decide against marketing their properties at the current
juncture. Similar seller behaviour was observed in late 2008 and early 2009, eventually leading to a decline in the
amount of property on the market."

Howard Archer, chief UK
economist at IHS Global
Insight
“The latest decline “is fully consistent with our view that house prices will trend down gradually to lose around 10%
of their value from their peak 2010 levels by the end of 2011”.
“The “housing market really does not seem to have got much going for it at the moment”. And recent data suggests
he’s right.”
The Intelligent Investor - U.K.

THE NEXT TRADING DAY

Economic Events

 European Central Bank President Jean-Claude Trichet to give on record briefing at European American Press Club at 0745 GMT.

Company Events
The Berkeley Group Holdings will announce its half year results for the six months ended 31 October 2010 on Friday, 3 December 2010. Analysts
expect the company to report a profit of 31 pence per share, higher than 26.7 pence per share a year ago. Pre tax profit for first half is also expected
to increase to £57 million as compared to £51.96 million a year ago. Net debt is expected to fall to £300 million in its first half. Britain's blue-chip
companies boosted their pay packets by 55 percent this year and executives from house builder Berkeley were among the other top earners taking
home between £38 million pounds and £18 million pounds each. Berkeley set the goal at the beginning of the year of improving the profit margins
on its current land bank by 10 per cent, and there will be interest in the progress the company has made on achieving this. There is also bound to be
interest in any statement Tony Pidgely, its founder and chairman, makes about the health of the U.K. housing market. John Messenger at RBS
forecasts revenues for the year ended April 30 at £615.3 million and a pre-tax profits of £110.3 million.

Falkland Islands Holdings, the international services Group, which owns essential services businesses focused on transport and logistics and which
has a major shareholding in Falkland Oil and Gas Limited, announced that its results for the six month period ended 30 September 2010 will be
announced on 3 December 2010. Company’s full year profit is forecasted to fall to 18.70 pence per share from 19.50 pence per share a year ago.
Capital expenditure for full year is forecasted at £1.1 million with a dividend of 9 pence per share.

Greene King will release its interim results for the 24 weeks to 17 October 2010 at 7am on Friday, 3 December 2010. Analysts expect the company to
report a profit of 23.90 pence per share in its first half as compared to 22.60 pence per share a year ago. Pre tax profits for first half is forecasted at
£66 million, up from £62.4 million in the previous year. Company is expected to announce a dividend of 6 pence per share, slightly higher than 5.9
pence per share a year ago.

Pursuit Dynamics will be announcing its preliminary results for the year to 30 September 2010 at 7.00am on Friday 3rd December 2010. Analysts
expect the company to report a full year loss of 5.6 pence per share, lower than the previous loss of 8.9 pence per share a year ago. Revenue is also
forecasted to fall slightly to £0.36 million as compared to £0.4 million in the previous year. Capital expenditure for full year is estimated at £0.3
million. The company recently said that its new Ethanol Reactor System ("ERS") has demonstrated seamless integration into existing plant processes
without disruption and with full reliability. It further added that the full update will be announced with its interim results. The company recently
announces agreement with the Procter and Gamble Company. The agreement will enable P&G to develop specific applications using the pdx
reactor technology.
The Intelligent Investor - U.K.

TOP STORIES

U.K. Construction PMI rises in Nov: Markit/CIPS

The Markit/Chartered Institute of Purchasing and Supply Construction PMI rose to 51.8 in November from 51.6 in October, beating analysts’ forecast
which was at 51.0. Activity growth in construction sector surprisingly accelerated in November as firms were optimistic about future prospects
regardless of slowdown in new orders growth. (Please refer Analysis and Views Section)

Qantas drags Rolls-Royce to court

Qantas has put pressure on Rolls-Royce to settle damages related to an engine failure on one of its giant Airbus A380 aircraft. But said it would keep
the door open for an out-of-court settlement. Qantas had filed a claim in the Federal Court of Australia over the financial and commercial impact of
the mid-air failure of a Roll-Royce engine on November 4. Qantas said it has filed a statement of claim to ensure that the company can pursue legal
action against Rolls-Royce, if a commercial settlement is not possible.

TUI Travel profits at top end of estimates

Travel firm TUI Travel today posted its full-year operating profit at the top end of expectations. The company made an underlying operating profit of
447 million pounds ($697 million) in the year to the end of September, up 11 percent from the previous year, it was at the top end of market
forecasts which ranged between 428 million and 447 million pounds, with the average at 439 million. Chief Executive Peter Long said the group had
seen a sustained improvement in demand since July and trading for winter 2010/11 and summer 2011 was positive but he remained cautious about
the outlook for next year. He said that current booking activity is good, driven by demand for our differentiated products, we remain cautious about
2011 given the continued economic uncertainty and the relatively early stage of the booking cycle. TUI Travel would continue to review areas of its
cost base in order to maintain competitiveness.

Cuts won't stop recovery: BoE's Dale

Government spending cuts won’t derail the economic recovery as any negative impact should be offset by stimulus measures and the weak pound,
said policymaker Spencer Dale. “The direct impact of this reduced spending, via the impact of lower government procurement and smaller transfer
payments, is unlikely to derail the recovery,” he said last night at Kent Business School. Dale admitted that cutbacks would “certainly dampen
growth”.

Kingfisher CEO hopes recovery next year

Home improvements retailer, Kingfisher, said a drive to raise profit margins and growth in France and eastern Europe will aid it to survive in tough
trading conditions in Britain next year. Chief Executive Ian Cheshire is hopeful of a recovery towards the end of the year. He also saw better
conditions in France, where Kingfisher runs the Castorama and Brico Depot chains, and continued economic recovery in Poland, Russia and Turkey.
The company’s retail profits rose 8 percent to 240 million pounds ($374 million) in the 13 weeks to Oct. 30, its fiscal third-quarter and the group's net
cash position of 203 million pounds was better than analysts had expected.

Britvic confident on outlook, predicts more growth

Soft drinks maker Britvic reported a 22 percent rise in its yearly profit, which reflected growth in revenue and tight management of costs. The
company predicted more growth in 2011. Chief Executive Paul Moody said extensive brand and innovation plans, combined with satisfactory trading
in the first few weeks of the new financial year show company’s good shape to deliver another robust set of results for the year ahead. He cautioned
that he expected the consumer and cost environment to remain challenging. The company made a yearly pretax profits of 109.1 million pounds
while its revenue rose 14.6 percent to 1.14 billion pounds. The firm raised its full-year dividend by 11.3 percent to 16.7 pence.

C&W Communications plans to buy BTC

Cable & Wireless Communications has planned to buy a majority stake in the state-owned mobile operator, Bahamas Telecommunications
Company (BTC), for $210 million to boost its Caribbean operations. The British telecoms company will buy 51 percent of BTC and the deal is
expected to complete in the first quarter of 2011. BTC will retain a monopoly on mobile operations in the islands for at least three years after
privatisation. BTC has around 392,000 mobile customers, 123,000 fixed-line and 19,000 broadband subscribers, generating revenue of $361 million
in 2009.

Marston's profits rise on strong sales

Pubs and brewing group had made a strong start to its new year, with managed like-for-like sales up 3 percent in the eight weeks to November 27.
The company made a pretax profits of 73.5 million pounds ($115 million) in the 52 weeks to October 2, on sales up 0.9 percent to 651 million.
Marston's said its underlying full-year profits rose 4.6 percent, helped by strong premium sales such as Ringwood and Hobgoblin and a focus on
food, families and females. Volumes of Marston's premium sales rose 3 percent, while revenue in its tenanted pubs, owned by the company but
managed by landlords, fell 2.8 percent to 171 million pounds. Net debt fell 17 million pounds to 1.08 billion.
The Intelligent Investor - U.K.

ECONOMIC INDICATOR WATCH ON DEC 03, 2010

Markit/CIPS Service PMI (November)

Forecast: 53.00, Prior: 53.20
The Markit/Chartered Institute of Purchasing and Supply service PMI
figures will be released on Dec 3, 2010 at 1458 LST. Growth in British
service sector activity rose in October to 53.2 from 52.8 in September,
the highest reading since June. Markit said its composite PMI index rose
to 53.6 in October from 53.2, below its pre-recession average, but
nonetheless indicating that the risk of a double-dip recession had
receded. In October, the hotel and restaurant sector in particular had
been hit hard by a 2.2 percent rise in the minimum wage and higher
food prices. Markit said that firms had been cutting staff in anticipation
of tougher times to come, particularly in the 'personal services' sector,
which includes firms such as beauty salons.

Vicky Redwood, Capital Economics says that the previous trend shows
that while the recovery has slowed, the economy is in no imminent
danger of a double-dip.

Philip Shaw, Investec commented on the outlook of the sector saying

that the clear indication from the survey base is that the buoyant rates of
growth implied during the first half of the year are unlikely to materialise over at least the next six months. The outlook for the service sector is one of
moderate rather than strong growth. There has been a reasonable start to the fourth quarter but what the construction PMI has suggested is that
the economy is not going to get the scale of support that the construction sector has GDP in Q2 and Q3. Therefore, the fourth quarter is likely to
show growth below the 0.8 percent in Q3 -- but it's still modestly encouraging.

Paul Smith, Senior Economist, Markit also added on the outlook of the sector saying that October's survey suggests a modest improvement in
service sector growth, supported by a slightly stronger expansion from new business. However, on both output and new orders measures, rates of
expansion remain soft compared to long-run averages, as companies continue to digest the true effects on the economy of the coalition
government's Comprehensive Spending Review. With the survey providing an advance indication of the slowdown in official private services
growth between July to September, the latest data therefore suggest that the sector is set to make a below par contribution to GDP in the coming
months.

Halifax House Price Index (MoM)

Forecast: n/a, Prior: 1.8%

Halifax House Price Index (QoQ)

Forecast: n/a, Prior: 1.2%

Mortgage lender Halifax will release its house price index performance
for the month of November at 0930 GMT. Halifax, in its monthly figures
for the month of October, said house prices posted a surprise rebound in
October but the longer-term trend remains downwards. Prices rose 1.8
percent in October to an average of average of £164,919, following a 3.7
percent decline in September. The three-month average showed a 1.2
percent fall to October compared with a 2.6 percent fall in September
and average property prices in the U.K. remain 1.2 percent up than a year
ago.

Halifax economist Martin Ellis said increase in the number of properties

available for sale in recent months, together with a decline in demand,
has put some downward pressure on prices in recent months.

Howard Archer, an economist at Global; Insight, added, “Latest housing

market data and surveys have been consistently weak, and the housing market really does not seem to have got much going for it at the moment.
This is reflected in the weakness of housing market activity. Latest data from the Bank of England show that mortgage approvals for house purchases
edged down further to a seven-month low of 47,474 in September.”
The Intelligent Investor - U.K.

Official Reserves (November)

Bank of England will release its monthly statistical figures on official reserves for the month of November at 0930/0830/0430 Local/GMT/ET. The UK
Government’s net reserves rose by $657 million in October 2010, bringing the end-October total to $38,117 million (£23,841 million2) compared to
$37,461 million (£23,775 million3) at end-September 2010. The Bank of England’s net holdings of foreign currency and gold rose by $2 million in
October 2010, bringing the end-October total to $0.40 million (£0.25 million2) compared to -$2 million (-£1million3) at end-September 2010.

The monthly press notice by the central bank will show details of movements in November in the U.K.‟s official holdings of international reserves,
which consist of gold, foreign currency assets and International Monetary Fund assets.

DAILY EARNINGS HITS & MISSES AS ON 02 DEC, 2010

DIFFERENCE REV EST REV ACT DIFFERENCE
COMPANY PERIOD CURRENCY EPS EST EPS ACT
EPS (mln) (mln) REV (mln)

Britvic A GBP 34.90 38.60 3.70 1121.47 1138.60 17.13

Character Group A GBP 19.24 18.94 -0.29 85.00 85.23 0.23
Consort Medical H1 GBP 17.98 63.10 69.58 6.48
Dewhurst A GBP 29.80 40.97 11.17 34.00 36.98 2.98
GEONG International H1 GBP 4.90 4.71 -0.19
Marston's A GBP 9.95 8.30 -1.65 653.66 650.70 -2.96
OMG A GBP 1.80 0.45 -1.35 27.50 31.18 3.68
Redhall Group A GBP 16.83 17.02 0.19 138.38 144.72 6.35
The Local Shopping REIT A GBP 3.45 3.56 0.11 13.50 12.89 -0.61

Disclaimer - All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do
not guarantee the accuracy or completeness of this report. This is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. This
document is provided for information purposes only and should not be construed as an offer or solicitation for investment. This document has not been prepared in
accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the
dissemination of investment research. It may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report.
Past performance is not necessarily a guide to future performance.

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