The Intelligent Investor

10 January 2011

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

INSIDE THE REPORT MARKETS AT A GLANCE

 Stock recommendations and price targets from top  Miners were a major weight on Britain's top share index, with
brokerage firms worries over demand in China and floods in Australia damped
sentiment. The FTSE 100 index closed at 5956.30, down 28.03
 Analysis and views on Morrisons, Debenhams and Ocado points, or 0.47 percent.
sales
 Sterling hit its highest level against the euro in nearly four months
on Monday. The euro fell 82.85 pence. It pulled back to around
 Economic Indicator Watch 83.15 pence by late trade.

 Important Events Scheduled on January 11
Economic Events & Indicators
 BRC-KPMG Retail Sales Monitor (December)
 By 1506 GMT, the March gilt future was 15 ticks higher at 118.69
following a fall of around a third of a point earlier in the day. It
underperformed the equivalent Bund by around 6 ticks. British gilt
futures recovered from early losses as talk of European Central
Bank euro zone bond purchases mitigated selling pressure based
on concern about the UK inflation outlook.

 British Chamber of Commerce, Quarterly Economic  Gold held below $1,370 an ounce as the firmer dollar kept up
Survey pressure on the metal. Spot gold was bid at $1,366.85 an ounce at
1459 GMT, against $1,368.80 late in New York on Friday. U.S. gold
 Chinese Vice Premier Li Keqiang meets British Foreign futures for February delivery fell $2.10 an ounce to $1,366.70.
Secretary William Hague.
 Oil rose over 1 percent on Monday after a leak shut an Alaskan
pipeline that carries 12 percent of U.S. crude output, but gains
Corporate Events were capped by a stronger dollar due to worries about Portugal's
debt and prices eased to $89.29 at 1448 GMT.
 Idox final results

 Marks & Spencer, Interserve, Computacenter, Dunelm,

Signet Jewelers Ltd. trading announcements STOCK INDICES
INDEX LAST CHNG % CHNG
Breaking News
FTSE 100* 5956.30 -28.03 -0.47

 House prices decline more than expected in Dec FTSE Eurofirst 300* 1134.62 -9.77 -0.85
DAX* 6857.06 -90.78 -1.31
 Financial firms’ growth to slow in early 2011: CBI
CAC 40* 3802.03 -63.55 -1.64

 Cameron urges bosses to assure more jobs Stoxx Europe 600 278.48 -2.54 -0.90

* CLOSING VALUES
 State-owned banks to show sensitivity in payments
CURRENCIES
 Morrison cautious on 2011 outlook
INDEX LAST PRIOR
 Smith & Nephew shares rise on bid report
Euro (EUR/USD) 1.2949 1.2910
 Persimmon expects 2010 profits at top end U.K. Pound (GBP/USD) 1.5579 1.5547

Japanese Yen (USD/JPY) 82.72 83.04

 Emerging markets to overtake UK on growth: PwC
All prices are at 12:21 AM EST

FUTURES
LAST CHANGE

Crude Oil 89.44 1.41

Natural Gas (Mar) 4.332 -0.070

Gold, (Feb) 1371.70 2.80

Copper (Mar) 426.25 -2.00

All prices are at 12:07 AM EST

The Intelligent Investor - U.K.

STOCK RECOMMENDATIONS BY BROKERAGE HOUSES

BROKERAGE/COMPANY ACTIONS RATING PREV CLOSE

UBS
Barclays Raises to buy from neutral Buy 275.10p
Legal and General Cuts to neutral from buy Neutral 103.40p
SABMiller Cuts to neutral from buy Neutral 2260p
Admiral Raises price target to 1800p from 1752p Buy 1548p
ING
BG Group Raises price target to 1635p from 1535p Buy 1325p
J Sainsbury Starts with hold rating and price with a price target of 410p Hold 391.50p
Marks and Spencer Starts with sell rating and price target of 340p Sell 388.40p
Tesco Starts with buy rating and price target of 550p Buy 429.65
WM Morrison Starts with buy rating and price target of 350p Buy 270p
Panmure
Smith And Nephew Raises to buy from hold Buy 650p
Michael Page Raises price target to 544p from 435p and keeps buy rating Buy 540p
Numis
Smith And Nephew Cuts to reduce from hold Reduce 650p
Credit Suisse
Vodafone Group Raises to outperform rating Outperform 174.75p
WS Atkins Starts with underperform rating Underperform 669.50p
Intertek Raises price target to 2250p from 1880p -- 1766p
Deutsche Bank
Yell Group Cuts to hold from buy Hold 14.50p
Investec
XP Power Raises price target to 1450p from 1125p Buy 1146p
Trinity Mirror Raises to buy from hold Buy 73p
Seymour Pierce
Xaar Cuts to hold from buy Hold 245p

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.

ECONOMIC INDICATOR WATCH ON JAN 11, 2011

BRC-KPMG Retail Sales Monitor (December)

Forecast: n/a, Prior: 0.70%

BRC-KPMG will release its retail sales monitor same store data for the month of December at Local/GMT/ET 0001/0001/1901.

U.K retail sales values rose 0.7 percent on a like-for-like basis from November 2009. On a total basis, sales were up 2.8 percent against a 4.1 percent
increase in November 2009.

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.
The Intelligent Investor - U.K.

ANALYSIS AND VIEWS

Morrisons share price up on FTSE 100 as Christmas sales rise

By IBTimes

Shares in WM Morrisons were up on the FTSE 100 in morning trading after the supermarket chain reported a rise in sales in the six weeks to 2
January 2011. Total sales in the period were up 3.1 per cent, excluding fuel, but rose 4.7 per cent including fuel. Excluding fuel like for like sales
increased 1.0 per cent, while including fuel like for like sales rose 4.0 per cent. WM Morrisons’ shares closed at 271p up by 1 per cent on the London
Stock Exchange.

Morrisons said that the snow had not impacted it too severely thanks to what it called its professionalism and "can do" approach keeping its stores
and forecourts open for business throughout the period.

The group said that its full year expectations were unchanged, but added that 2011 would still be a difficult time now that VAT has gone up and that
public spending cuts are on the way.

Dalton Philips, Chief Executive Officer of Morrisons, said, "This has been another good performance in a tough market. At Christmas, when
customers are even more focused on great quality food at outstanding value, the Morrisons differences really stand out. I'm very pleased with the
way the whole business has risen to the twin challenges of a difficult consumer environment and a prolonged spell of adverse weather and really
want to thank all our 130,000 colleagues for going above and beyond the call of duty again this year, to ensure we served our customers well during
this critical time."

ANALYSIS AND VIEWS

Debenhams says bad weather hits LFL sales

By IBTimes

UK department store chain Debenhams Plc said bad weather in December impacted like-for-like sales by 2.5 percent to 3.0 percent for the 19 weeks
to January 8.

Group gross transaction value for the 19 weeks grew 4.2 percent. Like-for-like sales rose 0.3 percent including VAT and fell 1.3 percent excluding
VAT. Debenhams Direct and the instore ordering service recorded a sales increase of 88.5 percent during the period, the company said.

"The performance of our business year-to-date has been pleasing, especially given the widespread disruption in December caused by bad weather
which undoubtedly impacted group like-for-like sales by 2.5-3.0 percent over the 19 week period," said chief executive Rob Templeman.

Debenhams said it has continued to gain market share and added that its market share in women's clothing has begun to demonstrate growth.
Debenhams operates 167 stores in the UK, Republic of Ireland and Denmark, comprising 154 full departments stores and 13 Desire by Debenhams
stores, which is a small store concept featuring an edited product range. Debenhams also has 61 international franchise stores in 24 countries.

Shares of Debenhams closed at 74.20 pence on the London Stock Exchange, 8.67 percent on Friday, below its 52-week high of 81.25, set on April 12,

ANALYSIS AND VIEWS

Ocado share price down on FTSE 250 despite strong sales rise
By IBTimes

Shares in Ocado were down on the FTSE 250 in morning trading after the online grocery store reported a rise in sales of nearly a third in the year
ended 28 November 2010. Gross sales were reported as rising 29 per cent in the year to £551.1 million in the year long period. In the 16 weeks to 28
November gross sales were up 27.4 per cent to £178.9 million. The shares closed at 181p down by 2.69 per cent on the London Stock Exchange .

The average number of orders per week in the 16 weeks to 28 November increased 28 per cent to 99,741, while the average size of orders in the
period was flat at £112.12.Ocado said that in Christmas week gross sales increased 43.5 per cent to £12.3 million, whilst in the four weeks to 26
December gross sales rose 26.7 per cent to £50.9 million.

Tim Steiner, Chief Executive Officer of Ocado, said, "We are delighted to see the continued growth in demand for Ocado, a record number of
customers shopped with us in this period. This would not have been possible without the heroic efforts of our staff rising to the challenge of
delivering a record number of orders in sometimes challenging conditions. Our plan for dealing with extreme weather conditions enabled us to
make over 98% of deliveries in the affected period."
The Intelligent Investor - U.K.

TOP STORIES

House prices decline more than expected in Dec

Halifax stated that the British house prices fell at their fastest annual rate in more than a year in December at 1.3 percent last
month, after a 0.2 percent fall in November. The mortgage lender expected limited movement in prices in 2011, although
there were downside risks to that forecast. The house prices in the three months to December were down 1.6 percent
compared with a year ago which was the biggest fall since November 2009. The average price of a home stood at 162,435
pounds. Many economists forecast 2011 to show modest fall in house prices in the face of public spending cuts, tight
mortgage availability and limited wage growth. IHS Global Insight said that December figures suggest that the housing
market sector is bobbing around in the doldrums and prices will remain under modest downward pressure.

Financial firms’ growth to slow in early 2011: CBI

Confederation of British Industry stated that Britain's financial services industry forecast its growth to slow over the first three months of 2011. CBI
with reference to the survey of the sector conducted with PriceWaterhouseCoopers said that although financial services sector grew strongly over
the second half of 2010, profitability did not increase as fast as predicted. The survey which was conducted between Nov. 22 and Dec. 1 and covered
banks, building societies, insurers, trading houses and fund managers stated that the banks had experienced a sharp fall in profitability and a similar
decline for the banks was expected in the coming quarter. It added that financial services firms had become more concerned about their ability to
raise funds over the coming months.

Cameron urges bosses to assure more jobs

British private sector bosses will guarantee to create more jobs, helping Prime Minister David Cameron's hopes to see Britain growing again and
rebalance the economy away from the public sector where many jobs will be lost this year. In this regard Cameron will meet leaders of businesses
ranging from construction to retail, hotels, manufacturing, technology and oil. Critics fear the heavy cuts in the public sector will hamper the
country's recovery, sinking it back into recession.

State-owned banks to show sensitivity in payments

Britain's Deputy Prime Minister Nick Clegg stated today that state-owned banks should show extra sensitivity and transparency in the way in which
they reward themselves. Britain's banks are anticipated to pay 7 billion pounds in bonuses in the approaching weeks, igniting public anger at a time
of sharp cuts in public spending.

Morrison cautious on 2011 outlook

Wm Morrison Supermarkets reported a modest rise in Christmas sales, however remained cautioned on its 2011 outlook due to rising taxes and
public spending cuts. The company which runs over 430 stores said its expectations for its full financial year were unchanged. The company which
produces much of the food it sells said that its expectations for its full financial year were unchanged. However analysts forecast the company’s
margin to be hit by its greater exposure to the less affluent north of Britain, which has also been affected by the bad weather. The company could
not perform as expected in recent months as the boost from its purchases of the Safeway chain in 2004 and Co-op stores in 2009 has washed out.
The company is looking for expansion into faster-growing areas like convenience stores and internet shopping, although some analysts think it
needs to move faster.

Smith & Nephew shares rise on bid report

The news that Smith & Nephew, Europe's largest maker of replacement knees and hips received a bid report last month led its share rise by 10
percent. The company did not informed its shareholders about the fact. The company however declined any immediate comment on the report. The
company may now come under pressure to issue a statement. The company has been frequently tipped as a bid target for U.S. rivals, such as
privately-owned Biomet and J&J. Its shares were 10 percent higher at 717 pence by 0825 GMT, after hitting a high of 726p.

Persimmon expects 2010 profits at top end

UK's largest homebuilder Persimmon stated that it sees it underlying pretax profits for 2010 at the top end of market views, in spite of bad weather
knocking sales before Christmas. Analysts forecast the company’s underlying pretax profit of 85 million pounds for 2010. The company also stated in
a separate statement that its chairman and former chief executive John White will step down in April, with Nicholas Wrigley to replace him.

Emerging markets to overtake UK on growth: PwC

PriceWaterhouseCoopers (PwC) projections as per its recent report stated that the E7 group of emerging counties - China, India, Brazil, Russia,
Indonesia, Mexico and Turkey – is likely to overtake the current G7 by 2020 in terms of economic dominance. It stated that UK which has only a small
share of exports going towards the emerging markets and relies heavily on trade to US and EU will see decline in its share of world GDP over the
next 40 years, from over 3% to under 2%. PwC chief economist John Hawksworth said that if increased trade and investment between the UK and
the E7 economies can be achieved, the UK economy and consumers can benefit from the high growth of the emerging economies and might do
somewhat better than their projections suggest, although the UK will still not be able to grow as quickly as the emerging economies themselves.
The Intelligent Investor - U.K.

THE NEXT TRADING DAY

Economic Events
 EU Commission Conference: Towards integrated economic governance in the EU - Speakers EU Commissioner for
Economic/Monetary Affairs Olli Rehn and European Commission President Jose Manuel Barroso.

 British Chamber of Commerce (BCC), Quarterly Economic Survey at 0001 GMT.

 WikiLeaks founder Julian Assange due to appear in court.

 Chinese Vice Premier Li Keqiang meets British Foreign Secretary William Hague.

 British parliament to discuss proposed EU "referendum lock" bill.

Company Events
Idox, a leading independent supplier of software and services to the UK public sector, is expected to release it final results. Idox
recently acquired McLaren Software Group for £1.0 million in cash. McLaren is a leading supplier of engineering document
management and control applications serving many leading international companies. The acquisition of McLaren extends IDOX's core
skills in planning and building documents management into the related area of engineering drawings. The company is estimated to
report full year profit of 1.70 pence per share for the year ended October 2010. Full year revenue for FY 2010 is expected at £31.40
million with a pre-tax profit (pre amortisation) of £7.70 million. Analysts have forecasted a full year dividend of 0.20 pence per share.

Marks and Spencer, U.K’s leading retailer which sells clothing and home products and food, will release its third quarter trading
update. Last week the Financial Times newspaper in London said, citing analysts at Deutsche Bank that U.K. retailer Marks & Spencer
Group could have lost up to around GBP 70 million of sales due to the snow that fell across the country ahead of Christmas.

Commenting on the Half Year Results, posted in November, Marc Bolland, Chief Executive, said: "Marks & Spencer has had a strong
first half. Profit before tax was up 17%, earnings per share up 21%, and the Board has approved a half year dividend of 6.2p per share,
an increase of 12.7%. "In Clothing, we grew market share in all areas as we gave our customers better fashions, more choices and
great value. In Food, more customers chose to shop with us recognising our quality, innovation, and improved values." The company
is estimated to report full year profit of 32.958 pence per share for FY 2011. Full year revenue for FY 2011 is expected at £9,750.53
million with a pre-tax profit of £721.98 million. Analysts have forecasted a full year dividend of 15.926 pence per share.

Interserve, the international services, maintenance and building group, will release full year trading update. The company said in
November that its overall, trading is in line with the Board’s expectations and the firm continues to anticipate a stronger performance
in the second half of the year as compared to the first half.

Despite the near-term public sector spending environment the Group is benefitting from good progress achieved in the Support
Services margin enhancement programme and continued excellent results in Project Services. The Board remains confident that
margin improvement in Support Services and growth from international markets will generate a stronger performance in the second
half as compared to the first half.

The Board considers the Group’s significant exposure to international markets to be a major strength, and expects further growth to
be generated by expanding both our overseas service offering and geographical footprint, as exemplified by our recent investments
in a construction business in India and a services company in Oman. The company is estimated to report full year EPS (GAAP) of
36.289 pence per share for FY 2011. Full year revenue is expected at £1,905.05 million with a pre-tax profit (pre amortisation) of £67.61
million. Analysts have forecasted a full year dividend of 17.66 pence per share.

Computacenter, Europe’s leading independent provider of IT infrastructure services, will provide pre-close trading updates. The
company said in October that its trading in the third quarter has strengthened from an already positive position in the first half.
Revenue growth for the quarter, on a reported basis, rose 13 percent to £621 million from £548 million, a year earlier. This bought
company's year to date reported revenue growth to 7 percent, or 10 percent at constant currency. The company saw an improved
rate of growth in the third quarter in both products and services, in all countries in which it operates compared to the first half of 2010.

The firm has been encouraged by its performance in the third quarter and growth rates exhibited year to date. It is unlikely that we
will achieve the same levels of growth in Q4, as experienced in Q3, due to the more difficult comparisons in the fourth quarter, as our
performance in Q4 last year had been particularly strong. The company expects services growth rate to continue at similar levels as
experienced in the year to date and our product business growth rates to remain positive in all countries and is confident to deliver
performance as per the expectations for 2010. Analysts expect the company to report full year profit of 14.847 pence per share while
full year EBIT is estimated at £70.13 million. Pre-tax profit for FY 2010 is expected at £73.40 million with full year revenue at £812.33
million, up from £716.72 million reported a year ago.
The Intelligent Investor - U.K.

THE NEXT TRADING DAY (Continued)

Dunelm, a fast growing specialist out-of-town homewares retailer, will release its first half trading update. The company said in
October that its gross margin continued to increase year on year although, as anticipated, the rate of growth has slowed to 100 basis
points for the quarter. Three new superstores were opened during the first quarter, including the relocation of an existing under-sized
superstore in Hereford. Dunelm now trades from 96 superstore locations in the UK. Will Adderley, Chief Executive, commented: "We
remain cautious about the UK consumer environment, but are encouraged by the strength of trading over the first quarter and we are
pleased with our pipeline of new store openings."

Analysts expect the company to report full year profit of 30.887 pence per share while full year dividend is estimated at 10.04 pence
per share for FY 2011. Pre-tax profit for FY 2010 is expected at £87.24 million with full year revenue at £556.40 million, up from
£492.84 million reported a year ago.

Signet, the world’s largest specialty retail jeweler will provide its Q4 trading updates. The company reported its third quarter same
store sales rose 7.2 percent while for US division it was up by 9.7 percent. Its income before income taxes was at $12.0 million with
basic and diluted earnings per share at $0.07. Terry Burman, Chief Executive of Signet, commented: “We are delighted with our third
quarter results, reflecting the ongoing success of our competitive advantages and strong balance sheet. In particular, the 9.7% US
same store sales increase was a very good performance, which drove strong operating leverage and a return to third quarter
profitability. The economic environment remains challenging for the very important fourth quarter but the company remains
confident and is well prepared to compete in both the US and the UK markets.

This report is produced by

International Business Times
For questions or comments
reach us at
researchanalysis@ibtimes.com

For more information about

our products visit
www.ibtimes.com