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Allenby Capital

Superior Returns

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Allenby Capital

Outperformance

AIMA

IM

Stock Market

mall C

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Small CapsSuperior R

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Dividends

Yield

Dividends on AIMMarch 2013

This document is a marketing communication which has been produced by Allenby Capital Limited. It is non-independent research and has not been prepared in

accordance with legal requirements designed to promote the independence of investment research. Accordingly Allenby Capital Limited is not subject to any

prohibition on dealing ahead of the dissemination of this document.

Camkids – Children’s outdoor

Footwear, Clothing & Equipment

Camkids Group plc - Children’s outdoor

footwear, clothing and accessories

Dividends on AIM

Page 2 of 74

Table of Contents

Page Overview 3

AIM’s dividend payers 4

Outperformance by dividend payers 5

Analysis of the Top 50 6

Methodology for selecting the ‘Super 12’ 8

Results – The Super 12 11

Appendix I – Company profiles

Abbey Protection Plc 16

ACM Shipping Group Plc 17

Albemarle & Bond Holdings Plc 18

Alternative Networks Plc 19

Amino Technologies Plc 20

Asian Citrus Holdings Ltd 21

Avesco Group Plc 22

Begbies Traynor Group Plc 23

Belvoir Lettings Plc 24

Camkids Group Plc 25

Catalyst Media Group Plc 26

Cello Group Plc 27

Cenkos Securities Plc 28

Central Asia Metals Ltd 29

Character Group Plc 30

Churchill China Plc 31

Densitron Technologies Plc 32

Dillistone Group Plc 33

Fairpoint Group Plc 34

First Property Group Plc 35

Fletcher King Plc 36

Goldplat Plc 37

Greenwich Loan Income Fund Ltd 38

Hasgrove Plc 39

Highland Hold Mining Ltd 40

Holders Technology Plc 41

Hydrogen Group Plc 42

Interior Services Group Plc 43

InterQuest Group Plc 44

James Cropper Plc 45

Japan Residential Investment Company Ltd 46

Jarvis Securities Plc 47

Juridica Investments Ltd 48

M Winkworth Plc 49

Maintel Holdings Plc 50

Matchtech Group Plc 51

May Gurney Integrated Services Plc 52

MCB Finance Group Plc 53

Motivcom Plc 54

MTI Wireless Edge Ltd 55

Murgitroyd Group Plc 56

Naibu Global International Plc 57

Nationwide Accident Repair Services Plc 58

New River Retail Ltd 59

Numis Securities Plc 60

Pennant International Group Plc 61

Powerflute Oyj 62

Printing.com Plc 63

Randall & Quilter Investment Holdings Plc 64

Slingsby (HC) Plc 65

Stadium Group Plc 66

Swallowfield Plc 67

Tristel Plc 68

Vianet Group Plc 69

William Sinclair Holdings Plc 70

Disclaimer 74

08 Fall

Dividends on AIM

Page 3 of 74

Overview

Whilst the AIM market is well known as a home to many early stage growth

companies, what is often missed is that many of AIM’s constituents have reached

a sufficient level of maturity to be able to distribute healthy dividends. We

estimate that around 250 of AIM’s 1,100 constituents will pay a dividend in 2013

and that around 50 of these offer a yield of over 4.2%.1 We profile this ‘Top 50’

and in particular we highlight a ‘Super 12’ which are those we believe offer the

most attractive investment opportunity – a healthy dividend yield and upside

share price potential.

Paying a dividend is generally a sign that a company has reached a level of maturity,

has its balance sheet in order and has confidence in its future trading performance to

be able to release excess cash to shareholders. A high yield can therefore indicate a

quality company which the market currently undervalues. However, a high yield can

also be a sign of distress with the yield inflated by a collapsing share price. Our

research aims to identify the undervalued high yielders offering both a secure dividend

yield and a chance for further dividend growth.

Our Top 50 portfolio of high yielders outperformed both AIM and the FTSE100 in

2012. Whilst AIM and the FTSE100 returned 2.0% and 5.8% respectively in 2012, the

average return on the Top 50 was 12.2%, increasing to 18.3% had the dividends been

reinvested. An increased appetite for risk may reverse this trend in 2013 but we see

this as unlikely and expect further outperformance from this portfolio of high dividend

payers.

Of the Top 50, our analysis has identified twelve companies (our Super 12) which we

feel offer the most interesting investment opportunity (see Exhibit 1 below). We

believe all twelve offer a secure and high dividend yield and the potential for upside to

the share price. We also highlight two lower yielding companies, Avesco Group Plc

and Murgitroyd Group Plc, which although not amongst the top dividend yielders on

AIM, are interesting dividend plays worth examining.

1 Unless otherwise stated, share prices in this document refer to close of business on 1 March 2013

Exhibit 1: AIM’s ‘Super 12’ dividend payers (listed alphabetically)

Source: London Stock Exchange, Allenby Capital, Thomson Reuters. * Denotes Allenby Capital corporate client

Company nameMarket Cap

(£m)

2013e

Dividend

2013e

Dividend yield2013e EPS

2013 PE Ratio

(Price/EPS)

Dividend Yield /

PE Ratio

2013 Dividend

Cover

(EPS/DPS)

2013e

EV/EBITDA

Cash/Mkt

Cap.

1 ACM Shipping Group Plc 33.3 10.2 5.9% 13.2 13.1 0.45 1.29 8.28 14.1%

2 Asian Citrus Holdings Ltd 396 1.88 5.8% 4.72 6.84 0.85 2.51 2.26 59.4%

3 Camkids Group Plc* 75.8 5.40 5.4% 30.0 3.35 1.60 5.56 1.89 24.0%

4 Catalyst Media Group Plc 27.9 7.00 6.9% 12.0 8.42 0.82 1.71 na 5.38%

5 Fairpoint Group Plc 43.8 5.50 5.3% 13.4 7.80 0.67 2.44 na 3.65%

6 Highland Gold Mining Ltd 333 5.00 4.9% 24.7 4.16 1.17 4.93 2.25 10.3%

7 Interior Services Group Plc 46.0 9.23 6.7% 20.1 6.84 0.98 2.18 1.72 55.2%

8 Juridica Investments Ltd 95.4 13.2 14.5% 19.1 4.77 3.04 1.45 na 16.4%

9 Mti Wireless Edge Ltd* 3.48 0.38 5.6% 0.30 22.5 0.25 0.79 0.35 94.8%

10 Naibu Global International Plc 57.6 6.00 5.7% 55.6 1.89 3.03 9.27 0.58 58.3%

11 Nationwide Accident Repair Services Plc 30.0 5.50 7.9% 10.1 6.88 1.15 1.84 2.9 26.7%

12 NewRiver Retail Ltd 67.2 16.2 8.2% 17.2 11.5 0.71 1.06 15.9 na

Dividends on AIM

Page 4 of 74

AIM’s dividend payers

Whilst 97 of the FTSE100 constituents pay a dividend, a much smaller

percentage of AIM companies return cash to shareholders on a regular basis.

This shouldn't be surprising given that AIM is a small cap growth market hence

its constituents are often at an early stage of their life cycle. Furthermore, AIM

companies are generally run by management teams that believe any excess cash

is better reinvested for growth. In fact, we were surprised that as many as c.250

AIM companies are forecast to pay a dividend in 2013. Our report aims to

identify and analyse the Top 50 dividend yielders on AIM, all of which we

calculate have a forecast 2013 dividend yield of over 4.2%. We also share some

views on some lower yielding AIM stocks which come up regularly in

conversations with investors and we feel have an interesting story.

AIM’s typical dividend payers

The average market capitalisation of the c.250 dividend payers on AIM is £86m

against £58m for the wider AIM market. This backs up the theory that it is the more

mature and well established companies that are in a position to distribute cash.

8 1015

52

59

49

38

107

1

0

10

20

30

40

50

60

70

Nu

mb

er o

f div

iden

d p

ayin

g c

om

pani

es

Market Cap (£m)

Despite around 37% of AIM’s 1,100 companies having a Natural Resource focus (Oil

& Gas, Mining, Basic Materials) this grouping accounts for less than 6% of the

dividend paying stocks on AIM. Instead, sectors such as Industrials (includes Support

Services, Engineering etc.) and Financials make a far larger contribution in terms of

dividend payers.

Source: London Stock Exchange

Exhibit 2: Distribution of market caps for AIM’s 250 dividend payers

Oil & Gas, 2% Basic Materials, 2%

Industrials, 33%

Consumer Goods, 9%Health Care,

4%

Consumer Services, 14%

Telecommunications, 1%

Utilities, 0%

Financials, 19%

Technology, 14%

Mining, 2%

Oil & Gas, 24%

Mining, 11%

Basic Materials, 2%

Industrials, 11%

Consumer Goods, 6%

Health Care, 5%

Consumer Services, 10%

Telecommunications, 2%

Utilities, 1%

Financials, 19%

Technology, 9%

Exhibit 4: High % of Natural Resource (“NR”) focused stocks on AIM Exhibit 5: But dividend payers predominantly from non NR sectors

Source: London Stock Exchange Source: London Stock Exchange, Allenby Capital, Thomson Reuters

118

169

148

211

178

134

96

279 6

0

50

100

150

200

250

Num

ber

of

com

pan

ies

Market Cap (£m)

Exhibit 3: Distribution of market caps for all of AIM’s 1,100 constituents

Source: London Stock Exchange

Dividends on AIM

Page 5 of 74

Outperformance by dividend payers

At the point where a company decides to pay a dividend it will most likely have

reached a certain level of maturity, have its balance sheet in order and

confidence in its future trading performance. As such, dividend yielding stocks

tend to outperform when markets are particularly risk averse. This was the case

in both 2011 and 2012 when, faced with global economic uncertainty, the average

return from our Top 50 outperformed both AIM and the FTSE100. We expect a

similar performance in 2013.

In 2011 the AIM market lost over 25% of its value, however, our Top 50 group only

fell marginally. When adjusting for the reinvestment of dividends the ‘Top 50’

outperformed the FTSE100.

In 2012 whilst AIM and the FTSE100 returned 2.0% and 5.8% respectively, the

average return on the ‘Top 50’ was 12.0%. With dividends reinvested, AIM and the

FTSE100 returned 2.9% and 10.0% respectively where as the average return from the

Top 50 was 18.1%.

Although markets have recently been showing signs of optimism and investors

showing an increased appetite for risk, we do not yet feel we are out of the woods.

With concerns still surrounding the health of the global economy we expect the

markets to continue to rally in 2013 but to maintain a degree of risk aversion. As such,

we would expect further outperformance in 2013 from our high dividend paying Top

50 portfolio.

Exhibit 6: 2011 market returns

Source: Allenby Capital, London Stock Exchange

-25.8%

-5.6% -5.8%

-25.2%

-2.2% -1.5%

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

FTSEAIM FTSE100 Top 50

Capital gain Capital gain with dividends re-invested

Exhibit 7: 2012 market returns

Source: Allenby Capital, London Stock Exchange

2.0%

5.8%

12.0%

2.9%

10.0%

18.1%

0.0%

5.0%

10.0%

15.0%

20.0%

FTSEAIM FTSE100 Top 50

Capital gain Capital gain with dividends re-invested

Dividends on AIM

Page 6 of 74

Analysis of the Top 50

Out of the c.250 dividend paying companies on AIM we selected the 50 highest

yielding stocks for further analysis and we provide an overview of each in the

appendix to this report. We then selected from this Top 50 our Super 12 which,

based on our analysis, we feel have potential to deliver superior returns (capital

gains and dividend yield) in 2013. Whilst the forecast 2013 yield was important in

our selection of the Super 12 it was not the sole criteria. Key to our selection was

the evaluation of the ability of the company to continue to pay such dividends

(earnings generation and balance sheet strength). Furthermore, we searched for

companies which we thought were undervalued and hence had upside potential

to the share price as the stock is re-rated by the market.

There are no doubt some companies that may well yield over 4.2% in 2013 (and thus

should be in the Top 50) that are not in our list due to consensus dividend forecasts

not being available. Such companies include: Prosperity Minerals Holdings Ltd

(PMHL.L), Personal Group Holdings Plc (PGH.L), Charlemagne Capital Ltd

(GCAP.L) and Argo Group Ltd (ARGO.L). Other prior year high yielders where

restructuring or pending acquisitions have placed uncertainty on the 2013 yield

include Quayle Munro Holdings Plc (QYM.L) and GVC Holdings Plc (GVC.L).

Finally we have omitted some 2012 high yielders where we feel the dividend is

unlikely to be as high in 2013 due to a recent change in fortunes for the company such

as CSF Group Plc (CSFG.L).

Exhibit 8 on the following page lists all constituents of the Top 50. In addition to

profiling the 50 highest yielders for 2013 we have also profiled, in the appendix to this

report, 5 dividend payers that failed to make the Top 50 but frequently come up in

discussions with clients and/or caught our eye during our analysis.

These additional companies are:

i) Avesco Group Plc (AVS.L)

ii) Cropper (James) Plc (CRPR.L)

iii) Murgitroyd Group Plc (MUR.L)

iv) Sinclair (William) Holdings Plc (SNLR.L)

v) Tristel Plc (TSTL.L)

Dividends on AIM

Page 7 of 74

Company name EPICMarket Cap

(£m)Price 2013e

Dividend

2013e

Dividend yield2013e EPS

2013 PE Ratio

(Price/EPS)

Dividend Yield /

PE Ratio

2013 Dividend

Cover

(EPS/DPS)

2013e

EV/EBITDA

Cash/Mkt

Cap.

1 Juridica Investments Ltd JIL 95.4 91.10 13.20 14.5% 19.10 4.77 3.04 1.45 na 16.4%

2 Densitron Technologies Plc DENS 5.10 7.38 0.80 10.8% 1.70 4.34 2.50 2.13 2.75 na

3 Printing.com Plc PDC 12.6 26.50 2.55 9.6% 1.60 16.56 0.58 0.63 3.83 8.7%

4 Greenwich Loan Income Fund Ltd GLIF 71.4 54.50 4.70 8.6% 6.60 8.26 1.04 1.40 18.27 na

5 NewRiver Retail Ltd NRR 67.2 197.5 16.17 8.2% 17.20 11.48 0.71 1.06 15.9 na

6 Nationwide Accident Repair Services Plc NARS 30.0 69.50 5.50 7.9% 10.10 6.88 1.15 1.84 2.9 26.7%

7 Swallowfield Plc SWL 10.0 88.50 6.30 7.1% 5.30 16.70 0.43 0.84 7.06 na

8 Japan Residential Investment Company Ltd JRIC 102.7 54.80 3.80 6.9% 4.54 12.06 0.57 1.19 16.97 na

9 Catalyst Media Group Plc CMX 27.9 101.0 7.00 6.9% 12.00 8.42 0.82 1.71 na 5.4%

10 Randall & Quilter Investment Holdings Plc RQIH 65.9 131.5 8.90 6.8% 20.40 6.45 1.05 2.29 3.54 34.0%

11 Stadium Group Plc SDM 13.5 46.00 3.10 6.7% 7.70 5.97 1.13 2.48 2.97 11.1%

12 Interior Services Group Plc ISG 46.0 137.5 9.23 6.7% 20.10 6.84 0.98 2.18 1.72 55.2%

13 Cenkos Securities Plc CNKS 50.9 80.0 5.00 6.3% 5.58 14.34 0.44 1.12 4.71 45.0%

14 Central Asia Metals Plc CAML 98.6 116.3 7.09 6.1% 19.13 6.08 1.00 2.70 2.97 24.8%

15 Hasgrove Plc HGV 13.5 57.50 3.50 6.1% 5.80 9.91 0.61 1.66 4.69 na

16 ACM Shipping Group Plc ACMG 33.3 173.5 10.20 5.9% 13.20 13.14 0.45 1.29 8.28 14.1%

17 M Winkworth Plc WINK 11.2 88.50 5.20 5.9% 8.70 10.17 0.58 1.67 6.15 12.5%

18 Vianet Group Plc VNET 27.1 97.50 5.70 5.8% 11.90 8.19 0.71 2.09 8.19 na

19 Asian Citrus Holdings Ltd ACHL 395.9 32.30 1.88 5.8% 4.72 6.84 0.85 2.51 2.26 59.4%

20 Begbies Traynor Group Plc BEG 34.2 38.00 2.20 5.8% 5.65 6.73 0.86 2.57 5.25 na

21 Naibu Global International Plc NBU 57.6 105.0 6.00 5.7% 55.60 1.89 3.03 9.27 0.58 58.3%

22 MTI Wireless Edge Ltd MWE 3.48 6.75 0.38 5.6% 0.30 22.50 0.25 0.79 0.35 94.8%

23 Matchtech Group Plc MTEC 65.46 279.8 15.60 5.6% 27.52 10.17 0.55 1.76 6.64 na

24 Albemarle & Bond Holdings Plc ABM 127.7 230.0 12.66 5.5% 21.55 10.67 0.52 1.70 8.28 na

25 First Property Group Plc FPO 22.4 20.10 1.10 5.5% 2.30 8.74 0.63 2.09 8.66 na

26 Powerflute Oyj POWR 64.3 22.60 1.23 5.4% 3.00 7.53 0.72 2.44 3.07 20.7%

27 Camkids Group Plc CAMK 75.8 100.5 5.40 5.4% 30.00 3.35 1.60 5.56 1.89 24.0%

28 InterQuest Group Plc ITQ 17.1 51.50 2.75 5.3% 6.05 8.51 0.63 2.20 7.18 na

29 Goldplat Plc GDP 18.9 11.25 0.60 5.3% 2.05 5.49 0.97 3.42 2.56 10.6%

30 Fairpoint Group Plc FRP 43.8 104.5 5.50 5.3% 13.40 7.80 0.67 2.44 na 3.7%

31 Numis Corporation Plc NUM 175.5 153.0 8.00 5.2% 6.60 23.18 0.23 0.83 16.16 20.4%

32 Hydrogen Group Plc HYDG 20.8 88.50 4.50 5.1% 10.43 8.49 0.60 2.32 5.75 na

33 Fletcher King Plc FLK 2.80 30.00 1.50 5.0% 3.10 9.68 0.52 2.07 10.73 na

34 Jarvis Securities Plc JIM 26.5 250.0 12.50 5.0% 18.10 13.81 0.36 1.45 8.18 13.6%

35 Character Group (The) Plc CCT 30.2 134.0 6.60 4.9% -0.34 -394.12 -0.01 -0.05 15.68 na

36 Belvoir Lettings Plc BLV 28.7 139.0 6.80 4.9% 8.90 15.62 0.31 1.31 10.8 5.9%

37 Highland Gold Mining Ltd HGM 333.4 102.5 5.00 4.9% 24.65 4.16 1.17 4.93 2.25 10.3%

38 Slingsby (H C) Plc SLNG 5.00 500.0 24.00 4.8% 25.90 19.31 0.25 1.08 2.89 60.0%

39 Cello Group Plc CLL 35.4 43.00 2.05 4.8% 6.45 6.67 0.72 3.15 na na

40 Abbey Protection Plc ABB 114.0 114.0 5.38 4.7% 8.60 13.26 0.36 1.60 11.51 17.9%

41 May Gurney Integrated Services Plc MAYG 125 178.0 8.40 4.7% 24.22 7.35 0.64 2.88 2.56 -2.4%

42 MCB Finance Group Plc MCRB 14.1 80.00 3.73 4.7% 16.60 4.82 0.97 4.45 4.32 na

43 Dill istone Group Plc DSG 14.6 80.0 3.70 4.6% 7.27 11.00 0.42 1.96 6.32 11.0%

44 Motivcom Plc MCM 32.7 108.5 5.00 4.6% 11.80 9.19 0.50 2.36 na 15.9%

45 Holders Technology Plc HDT 2.36 60.0 2.70 4.5% 3.20 18.75 0.24 1.19 5.48 30.5%

46 Pennant International Group Plc PEN 11.8 44.80 2.00 4.5% 4.96 9.03 0.49 2.48 na 17.8%

47 Churchill China Plc CHH 36.6 335.0 14.60 4.4% 20.60 16.26 0.27 1.41 8.07 11.7%

48 Amino Technologies Plc AMO 45.4 82.50 3.50 4.2% 6.13 13.46 0.32 1.75 4.03 37.7%

49 Alternative Networks Plc AN. 140.9 303.3 12.70 4.2% 20.45 14.83 0.28 1.61 7.68 14.6%

50 Maintel Holdings Plc MAI 36.8 345.0 14.40 4.2% 36.80 9.38 0.45 2.56 6.42 5.7%

Exhibit 8: AIM’s ‘Top 50’ 2013 forecast dividend yielders (ranked by yield)

Source: Allenby Capital, Thomson Reuters. Prices as of 1 March 2013.

Dividends on AIM

Page 8 of 74

Methodology for selecting the ‘Super 12’

Essentially we set out to uncover high yielding stocks that we thought were

capable of continuing to pay high dividends and that also had an attractive

valuation angle. In assessing the ability of the company to continue to pay

dividends we examined the company’s earnings potential and its general balance

sheet strength. With regards to valuation we used simple Price Earnings Ratios

(“PER”) backed up by EV/EBITDA ratios and compared these relative to the

dividend yields.

Ability to continue to pay dividends

We used two relatively straight forward calculations to gauge a company’s ability to

continue to pay dividends. Primarily we focused on the dividend cover calculation

(Earnings per Share / Dividend per Share) - the higher the resulting figure the greater

the ability of the company to service its dividend. As a sense check we also looked at

the last reported cash position of the company and divided this by the anticipated 2013

dividend cash requirement. Between these two calculations we feel we were able to

determine a company’s ability to pay its dividend.

Potential for upside to the share price

Whilst a healthy dividend yield is attractive, the ideal scenario is to find a high

yielding stock which is also undervalued and hence has the chance for a re-rating to

give further upside through capital appreciation. For this, we used a simple Price

Earnings Ratio as part of our filtering process. Clearly a company can have a low PER

because the ‘E’ is expected to decline over time. As such, we took a view on the

individual company’s business model to assure ourselves there were no ‘value traps’.

We found that many of the dividend payers on AIM also had substantial cash balances

which, given low interest rates, were sitting on balance sheets earning minimal

returns. We therefore found it of interest to look at EV/EBITDA multiples and also to

compare the cash balances to the market caps of the companies.

Exhibits 9 through to 14 rank the Top 50 companies based on the various screening

criteria mentioned above such as: Yield, 2013 PE Ratio, net cash as a % of Market

Capitalisation etc.

In Exhibit 15 we have plotted each of the Top 50 with PE Ratio (reversed) on the X-

axis and Dividend Cover on the Y-axis. The size of circles relates to dividend yield of

the stock. The ideal scenario is for a company to be represented by a large circle and

located towards the top right hand corner of the chart.

Exhibit 16 is another variation of this analysis. The Y-axis remains the same

(Dividend Cover) but on the X-axis we have plotted Dividend Yield/PE Ratio. We

take the higher the figure returned for the Yield/PE Ratio, the greater the

undervaluation of the stock – again assuming that both the yield and the company’s

earnings are sustainable.

Dividends on AIM

Page 9 of 74

Exhibit 9: AIM’s Top 2013 dividend yielders

Source: Allenby Capital, Thomson Reuters

Exhibit 10: High yielders ranked by Dividend Cover


Exhibit 12: High yielders ranked by 2013 EV/EBITDA multiple Exhibit 11: High yielders ranked by 2013 PE Ratio

Source: Allenby Capital, Thomson Reuters Source: Allenby Capital, Thomson Reuters

Exhibit 14: High yielders ranked by net cash as a % of Mkt. Cap. Exhibit 13: High yielders ranked by Yield/PE Ratio

Source: Allenby Capital, Thomson Reuters Source: Allenby Capital, Thomson Reuters


(£m)

2013e

Dividend yield

1 Juridica Investments Ltd 95.4 14.5%

2 Densitron Technologies Plc 5.10 10.8%

3 Printing.com Plc 12.6 9.6%

4 Greenwich Loan Income Fund Ltd 71.4 8.6%

5 NewRiver Retail Ltd 67.2 8.2%

6 Nationwide Accident Repair Services Plc 30.0 7.9%

7 Swallowfield Plc 10.0 7.1%

8 Japan Residential Investment Company Ltd 102.7 6.9%

9 Catalyst Media Group Plc 27.9 6.9%

10 Randall & Quilter Investment Holdings Plc 65.9 6.8%


(£m)

2013e

EV/EBITDA

2013e

Dividend yield

1 MTI Wireless Edge Ltd 3.48 0.35 5.6%

2 Naibu Global International Plc 57.6 0.58 5.7%

3 Interior Services Group Plc 46.0 1.72 6.7%

4 Camkids Group Plc 75.8 1.89 5.4%

5 Highland Gold Mining Ltd 113.9 2.25 4.9%

6 Asian Citrus Holdings Ltd 395.9 2.26 5.8%

7 Goldplat Plc 18.9 2.56 5.3%

8 May Gurney Integrated Services Plc 125 2.56 4.7%

9 Densitron Technologies Plc 5.10 2.75 10.8%

10 Slingsby (H C) Plc 5.00 2.89 4.8%


(£m)

2013 Dividend

Cover

(EPS/DPS)

2013e

Dividend yield



3 Highland Gold Mining Ltd 333 4.93 4.9%

4 MCB Finance Group Plc 14.1 4.45 4.7%

5 Goldplat Plc 18.9 3.42 5.3%

6 Cello Group Plc 35.4 3.15 4.8%

7 May Gurney Integrated Services Plc 125 2.88 4.7%

8 Central Asia Metals Plc 98.6 2.70 6.1%

9 Begbies Traynor Group Plc 34.2 2.57 5.8%

10 Maintel Holdings Plc 36.8 2.56 4.2%


(£m)

2013 PE Ratio

(Price/EPS)

2013e

Dividend yield





5 Juridica Investments Ltd 95.4 4.77 14.5%

6 MCB Finance Group Plc 14.1 4.82 4.7%

7 Goldplat Plc 18.9 5.49 5.3%

8 Stadium Group Plc 13.5 5.97 6.7%


10 Randall & Quilter Investment Holdings Plc 65.9 6.45 6.8%


(£m)

Dividend Yield /

PE Ratio

2013e

Dividend yield

1 Juridica Investments Ltd 95.4 3.04 14.5%





6 Nationwide Accident Repair Services Plc 30.0 1.15 7.9%

7 Stadium Group Plc 13.5 1.13 6.7%

8 Randall & Quilter Investment Holdings Plc 65.9 1.05 6.8%

9 Greenwich Loan Income Fund Ltd 71.4 1.04 8.6%



(£m)

Cash/Mkt

Cap.

2013e

Dividend yield

1 MTI Wireless Edge Ltd 3.48 94.8% 5.6%

2 Slingsby (H C) Plc 5.00 60.0% 4.8%

3 Asian Citrus Holdings Ltd 395.9 59.4% 5.8%

4 Naibu Global International Plc 57.6 58.3% 5.7%

5 Interior Services Group Plc 46.0 55.2% 6.7%

6 Cenkos Securities Plc 50.9 45.0% 6.3%

7 Amino Technologies Plc 45.4 37.7% 4.2%

8 Randall & Quilter Investment Holdings Plc 65.9 34.0% 6.8%

9 Holders Technology Plc 2.36 30.5% 4.5%

10 Nationwide Accident Repair Services Plc 30.0 26.7% 7.9%

Dividends on AIM

Page 10 of 74

Exhibit 15: Top right quartile highlights undervalued companies with a balance sheet capable of continued dividend payments


Exhibit 16: Top right quartile highlights companies with a high yield relative to its PE Ratio backed by an ability to continue to pay dividends

ABB

ACMG

ABMAN.

AMO

ACHL

BEG

BLV

CAMK

CMX

CLL

CNKS

CAML

CHH

DENS

DSG

FRP

FPOFLK

GDP

GLIF

HGV

HGM

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MTEC

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Dividends on AIM

Page 11 of 74

RESULTS – The Super 12

Our analysis has identified twelve companies (our Super 12) which we feel offer a

secure and high dividend yield and the potential for upside to the share price. We

also identify two companies that although are paying a lower yield we still think

offer an interesting investment opportunity. We summarise each company below

and in further detail in appendix I.

1) ACM Shipping Group Plc – Profitable even at the cycle trough

ACM is a London based international shipbroker predominantly focused on broking

wet cargos (crude oil). The shipping industry is highly cyclical and freight rates are

currently at a low. ACM’s management has seen all this before and in addition to

currently trading profitably, ACM has been profitable on an underlying basis every

year since its inception in 1982 - a period in which it has experienced many industry

downturns. The company is diversifying its revenue streams, growing the number of

fixtures it books, has a healthy balance sheet and we forecast a c.6% dividend yield in

2013. Despite the recent share price rally we still view ACM as undervalued given

where we are in the cycle. We see huge upside potential to earnings when once again

the industry recovers and we consider ACM as perfectly placed to take advantage of

this.

2) Asian Citrus Holdings Ltd –Making oranges while the sun shines

Asian Citrus is one of three Chinese companies that have made the Super 12. Many

investors have shunned Chinese stocks given some very high profile frauds associated

with NASDAQ listed Chinese companies and general concerns surrounding corporate

governance. Whilst these points cannot be ignored we think it has driven down

valuations of many Chinese stocks to levels which warrant attention.

Asian Citrus is a Chinese orange plantation owner with 3 plantations (4.1m trees)

which are located at similar latitudes to that of Florida. The company is cash rich and

in addition to paying a healthy dividend is currently executing a share buy back

programme. Only two of the company’s plantations are operating at full maturity or

approaching full maturity. The third plantation only commenced in 2007 with the first

harvest expected in 2014. As this third plantation matures, yields should increase

accordingly. 2012 was also negatively impacted by freak levels of heavy rainfall

(heavy rain washes away fertiliser and pesticides requiring further applications) which

should hopefully not reoccur. At end December 2012, the company had a net cash

position of RMB2.4bn (c.£240m or c.60% of its mkt. cap.).

3) Camkids Group Plc – Beneficiary of China’s generation of little emperors

Camkids is the second of our Super 12 from China. The company manufactures and

distributes Camkids branded outdoor clothing, footwear and equipment (think

Timberland/Blacks Leisure type products). The products are sold in around 1,100

Camkids branded outlets across China. The products target the mid to high end

consumers and are western branded (all writing etc. in English) to take advantage of

Chinese consumers desire for western brands. Targeting only the children’s market,

the company is a beneficiary of China’s one child policy which has led to 4-2-1 family

structures where increasing amounts of money are lavished on the only child. We

appreciate the ‘China factor’ but we feel this is more than compensated by Camkids’

valuation (3.4x 2013 EPS), profitable track record and strong balance sheet (forecast

net cash position of c.£17.4m at end 2012). The company is highly cash generative

and intends to pay c.20% of net earnings as a dividend which should lead to a high

and rising dividend stream.

Dividends on AIM

Page 12 of 74

4) Catalyst Media Group Plc – Benefits from London 2012 still to come

Catalyst Media Group (“CMX”) is a holding group with one asset – a 20.54% stake in

Satellite Information Services (Holdings) Ltd (“SIS”), a frontrunner in sports

television broadcasting. Other shareholders of SIS include bookmaker customers

William Hill, Ladbroke and the Tote. Since CMX acquired the stake, the revenues of

SIS have increased 103.6%, from £117.7m for the financial year ended 2005, to

£239.6m in 2012. The dividend policy of SIS is to distribute at least 50% of net

profits, subject to cash flow considerations. SIS pays a dividend to CMX which in turn

(with a lagged effect) distributes this to its own shareholders. CMX paid a 7p dividend

in the year to 30 June 2012 and has already announced an interim dividend of 7p in

the current year (6.9% yield). A final dividend is more than a possibility and the year

to 30 June 2014 should be boosted by the lagged benefit of the London 2012

Olympics.

5) Fairpoint Group Plc – 5.3% yield and turnaround story benefitting earnings

Fairpoint Group Plc (“FRP”) is a consumer financial services business providing

services to financially stressed customers. Despite the downturn, the number of

personal insolvencies and Individual Voluntary Arrangements (“IVAs”) is actually

declining. The average value of new IVAs has also dropped, as creditors are accepting

proposals from less indebted customers. As such FRP has been adapting its strategy,

diversifying its revenue stream and adjusting its cost base. This was borne out in solid

H1 2012 figures showing a strong turnaround from a weak 2011. Management is

confident of being able to sustain the good progress made in H1 2012. With a net cash

position, an enlarged £13.0m banking facility and the results on an upward trend we

are confident that FRP will be able to maintain its progressive dividend policy, whilst

also preserving its historically robust dividend cover.

6) Highland Gold Mining Ltd – Recent large seller created buying opportunity

Highland Gold Mining (“HGM”) was established in 2002, and has since developed a

valuable portfolio of gold mining projects in Russia and Central Asia. The company

currently has two operating mines and with numerous development and exploration

projects being actively progressed, HGM looks set to increase production output in the

coming years. The share price has almost halved in value over the last year on the

back of a retracement in the gold price but also as a 20% shareholder sold its entire

holding. We think this has presented a buying opportunity. The company’s balance

sheet remains strong with a net cash position at 31 December 2012 of $52.6m.

Furthermore, in 2012 there was a 20.4% increase yoy in total JORC compliant

resources to 13.0m oz., as a result of exploration and acquisitions. Barring a collapse

in the gold price we expect the company to continue to pay healthy dividends for the

foreseeable future.

7) Interior Services Group Plc – 6.7% yield and half the mkt cap in cash

ISG is an international construction group catering to a diverse range of clients. ISG

listed on AIM in June 1998, and in the 14 full financial years to date, has increased its

revenues 542.3%, to £1.28bn. It has posted a loss only once in that period, and that

was due to a write down of goodwill and exceptional costs. For the first time in the

company’s history, total dividends in FY 2012 were down on the previous period as a

result of the fall in group net profits. The company has, however, indicated that its

performance in FY 2013 will see modest growth, in line with expectations. With an

estimated net cash position of £23m as at December 2012, which currently equates to

c.50% of its market capitalisation, the company can easily afford to increase its

dividend. However, the Board intends to resume its policy of preserving a dividend

cover of at least 2.0. An increase in dividends will therefore only likely come to pass

once operating margins have been improved. Nevertheless, given its cash reserves,

low valuation and stellar track record we think ISG looks extremely attractive.

Dividends on AIM

Page 13 of 74

8) Juridica Investments Ltd – Highest forecast yield on AIM

At 14.5% Juridica has the highest forecast 2013 dividend yield of all AIM

constituents. The company invests in a diversified portfolio of corporate claims in

litigation and arbitration. The group has a stringent vetting process in place, only

taking on claims that possess significant potential economic value, a large chance of

gaining a successful outcome in court, and that have already been undertaken by

world class lawyers. The group currently has a total of 18 investments representing 23

separate legal cases, with a combined $157.1m committed to them. The majority of

these are now reaching their concluding phases. With the seven investments that have

reached completion so far providing a gross IRR of c.85%, further substantial

potential returns should be expected over the next 18 months. The Board is unwilling

to determine dividend pay outs without income being confirmed first, which of course

may well result in future yield inconsistency. However, in light of the maturing

portfolio and the outstanding historic IRR, we are confident that superlative yields

will be maintained in the mid term.

9) MTI Wireless Edge Ltd – Sitting on a large cash pile

MTI develops and manufactures complex antennas and antenna systems used

predominantly for the transmission and reception of wireless broadband. Recently

reported FY 2012 results were, on the face of it, disappointing given the reported pre

tax loss of $268k. However, the results were obscured by a $300k one off charge. On

an underlying basis, after a tough couple of years, the company is now profitable. We

estimate the NAV of MTI to be around 13p (against a current share price of 6.75p).

Furthermore, the majority of this NAV (8.9p) comprises of cash or liquid securities.

The company appreciates the importance of dividends to shareholders and the 0.58c

(0.3p) that will be payable in April represents a yield of 5.6%. Earnings are currently

depressed but given the strong balance sheet we remain confident that a similar

dividend will be declared in 2013 and the 50% discount to NAV provides upside for

the share price.

10) Naibu Global International Plc – undervalued on every measure

Naibu is the third of our Chinese members of the Super 12. Like Camkids, the

company is a retailer focused on the Chinese domestic market. Unlike Camkids,

Naibu targets the mass market and its products are sports orientated such as running

shoes, general (basketball, football) sports clothing and sporting accessories. Naibu is

China's 10th largest sportswear brand and has a distribution network of around 3,000

branded outlets. Whilst we are cautious on the Chinese sportswear market given the

recent profit warnings from the likes of Li Ning (2331.HK) and 361Degrees

(1361.HK) we feel Naibu warrants inclusion in the Super 12 given that it looks

exceptionally undervalued on every measure (1.9x 2013 PER, 0.6x 2013

EV/EBITDA) and is forecast to pay a c.5.7% dividend yield in 2013. At 30th June

2012 the company had c.£33m of cash on the balance sheet, equivalent 58% of its

market cap. Liquidity has historically been poor but this has improved since the

December 2012 Camkids (CAMK.L) IPO which brought the sector into focus.

Dividends on AIM

Page 14 of 74

11) Nationwide Accident Repair Services Plc – Successful restructuring

Nationwide is a UK provider of automotive repair and support services. The group’s

largest business, Nationwide Crash Repair Centres (“NCRC”), operates a network of

63 repair centres across the UK, servicing over 175,000 vehicles each year. In 2011

the business was hit by the uncertain economic conditions - specifically, drivers were

making fewer claims for smaller repairs. A cost cutting programme and a revised

strategy appear to be paying off and in H1 2012 the interim dividend of 1.9p was

maintained. Given the healthy net cash position and the Board’s confidence in

continued growth in non insurance markets, we conclude that the current dividend

level will be maintained which equates to a yield of c.7.9%. On just 6.9x 2013 EPS we

also see upside from a re-rating of the stock.

12) NewRiver Retail Ltd – Paying out the majority of recurring profits

NewRiver is a Retail Estate Investment Trust focused on the UK food and value retail

sector. The company has AUM of c.£400 million, totalling 2.8 million square feet of

property. NewRiver’s investment philosophy comprises strict criteria that create a

high income producing business model. Its chosen niche, the food and value sectors,

are traditionally resilient in economic downturns. As a result, the group has managed

to maintain a high occupancy rate of c.96%. The interim dividend for H1 2013 was

maintained at 6p. The recent JV portfolio acquisition will be significantly earnings

accretive in the short term, and we envision EPS to build steadily for the foreseeable

future. With a preferred policy of paying out the majority of recurring profits to

shareholders we are therefore confident that the strong dividend pay out will continue.

Moreover, we also feel that there is a potential upside to the share price at present,

owing to the c.20% discount to NAV.

The following two companies were not amongst the highest dividend yielders on

AIM, however, we feel both are of interest – one as a steady grower and one offering

a bit more excitement.

Murgitroyd (MURG.L, £45m) – Nice steady performer with a rising dividend

Murgitroyd is an International Patent and Trade Mark Attorney with offices

throughout the UK, Europe and the US. Although at 2.5% its dividend yield is

relatively low compared to others in our analysis, the company has a successful track

record of organic and acquisitive growth which has led to steadily increasing

dividends (the dividend has increased by over 250% since 2005). Murgitroyd operates

in a very stable industry thus we see minimal volatility in earnings. At a c.35%

discount to its closest peer we feel there also remains the opportunity for further share

price upside.

Avesco (AVS.L, £52m) – Potential for large bonus dividend

Avesco operates in the broadcasting and entertainment space and had a strong 2012 on

the back of the London Olympics. It currently yields c.2.4%. Of particular interest the

company has a financial interest in the outcome of a long standing court case between

Walt Disney and Celador, which owns the global rights to Who Wants To Be A

Millionaire? The case concerns Disney not fairly sharing profits from hosting the

show on its television network. AVS formerly part owned Celador, and with the court

awarding a total sum of $320m, the company’s share is c.$60m net. That would

equate to c.154p per share against the current share price of 202p. Disney’s

application for a rehearing has been declined, and there is now a substantial

probability that shareholders will receive a significant pay out.

Dividends on AIM

Page 15 of 74

Appendix I – Company profiles

Dividends on AIM

Page 16 of 74

Abbey Protection Plc

Summary Data

Sector Property & Casualty Insurance

Share price (p) 114.0

Shares in issue (m) 99.99

Reporting currency GBP

Ticker ABB.L

Market cap (£m) 114.0

Last reported net debt/(cash) (£m) -20.4

Enterprise value (£m) 93.6

Share price performance

Source: Thomson Reuters

Key data (Y/E Dec) - (£m)

2011A 2012E 2013E 2014E

Revenue 36.3 38.1 40.5 na

EBITDA 10.68 7.50 8.13 na

EBIT 10.05 10.70 11.50 na

Pre Tax Profit 10.05 10.30 11.30 na

Net Profit 7.56 7.80 8.50 na

EPS (p) 7.5 7.9 8.6 na

DPS (p) 4.4 4.9 5.4 na

Net Debt/(Cash) -17.6 na na na

Margins/Ratios

2011 2012 2013 2014

Dividend Yield 3.9% 4.3% 4.7% na Key Shareholders

P/E Ratio 15.14 14.43 13.26 na Colin Davison (CEO) 15.73%

Dividend Cover (EPS/DPS) 1.71 1.62 1.60 na Christopher Ward (MD) 15.73%

Net Cash/Dividend 4.00 na na na Elizabeth Grace (Dir.) 10.61%

EV/EBITDA 8.76 12.48 11.51 na Mawer Investment Management Ltd 9.99%

EBIT Margin 27.7% 28.1% 28.4% na Murray Fairclough (Dir.) 6.73%

Net Profit Margin 20.8% 20.5% 21.0% na Henderson Global Investors Ltd 4.94%

Revenue Growth 4.1% 4.9% 6.3% na Liontrust Asset Management Plc 3.95%

EPS Growth 9.6% 4.9% 8.9% na Richard Candy (Dir.) 3.51%

Sources: Thomson Reuters, Allenby Capital

Share price as of 01/03/2013

Abbey Protection is an integrated specialist insurance and

consulting group that caters to a core client base of UK SMEs.

Listing on AIM in 2007, the company operates through four

subsidiaries. The core businesses, Abbey Protection Group

Ltd and Abbey Tax & Consultancy Services Ltd, offer a

broad range of insurance services including the provision of

commercial legal expenses insurance, commercial After The

Event insurance, and tax consultancy services. IBEX

Reinsurance Company Ltd (“IBEX”) is the company’s

reinsurer. The fourth and newest subsidiary, Abbey Property

Facilities Ltd, is 60% owned by ABB and provides services to

owners of vacant commercial properties.

Since listing in 2007, the company has consistently increased

revenues and net profits yoy, with EPS growth averaging 6.7%

over the 4 fully reported periods. Market difficulties were

anticipated in 2012, owing to the wider economic downturn,

and more specifically to the threat of reduced revenue streams

from clients having less taxable income, facing employment

cuts, and in some cases the risk of administration.

Nevertheless, H1 2012 proved to be a robust period for the

company. Group revenues were up 4.9% yoy to £19.2m, with

PBT increasing 3.2% to £5.2m. 62.3% of PBT was

attributable to the group’s two core subsidiaries. IBEX posted

a PBT figure of £2.0m, down 4.8% as a result of low

investment yields and a hike in the aggregate claims ratio. The

new property subsidiary recorded a loss of £0.1m.

The Board anticipates continued growth both in revenues and

in EPS for the group, and to stress this recommended an

interim dividend of 2.1p, an increase of 10.5% yoy. We are

confident that the group’s reliable income stream, soon to be

augmented by Abbey Protection Group (through its recent

acquisition of an Alternative Business Structure Licence which

will enable it to offer more services to clients) and profits from

Abbey Property Facilities, will continue to drive earnings

growth and secure an increasing dividend stream.

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Page 17 of 74

ACM Shipping Group Plc

Summary Data

Sector Transportation




Ticker ACMG.L






Key data (Y/E Mar) - (£m)

2011A 2012A 2013E 2014E

Revenue 29.3 26.6 24.0 26.0

EBITDA 6.20 4.40 3.46 3.86

EBIT 5.16 4.04 3.08 3.48

Pre Tax Profit 6.10 4.30 3.30 3.70

Net Profit 4.31 3.04 2.28 2.58

EPS (p) 24.7 17.3 13.2 14.3

DPS (p) 10.0 10.2 10.2 10.2

Net Debt/(Cash) -5.0 -3.1 -3.2 -3.5

Margins/Ratios

2011 2012 2013 2014

Dividend Yield 5.8% 5.9% 5.9% 5.9% Key Shareholders

P/E Ratio 7.02 10.03 13.14 12.13 GFI Holdings Ltd 7.26%

Dividend Cover (EPS/DPS) 2.47 1.70 1.30 1.41 James Gundy (CEO) 6.27%

Net Cash/Dividend 2.58 1.59 1.62 1.79 William Middleton 6.27%

EV/EBITDA 4.62 6.51 8.28 7.42 Michael Rudd (COO) 6.27%

EBIT Margin 17.6% 15.2% 12.8% 13.4% Axa Investment Managers UK Ltd 5.59%

Net Profit Margin 14.7% 11.4% 9.5% 9.9% Benjamin Peck 5.09%

Revenue Growth 13.3% -9.2% -9.8% 8.3% Johnny Plumbe (Chairman) 4.91%

EPS Growth -5.4% -30.0% -23.7% 8.3% Andrew Wakely 3.18%

Sources: Thomson Reuters, Edison Investment Research, Allenby Capital

Share price as of 01/03/2013. Earnings are on an underlying basis.

ACM is an international shipbroker which predominantly

generates revenues by matching ship owners/ship operators

with the owners of cargos requiring shipment. The business

was built on an expertise in wet cargos (mainly crude oil) which

now accounts for 75% of revenues. ACM also generates 15%

of revenues from the broking of dry cargos (e.g. iron ore,

coal). Additionally, ACM is expanding into the shipping of

LPG product, and is involved in the Sale & Purchase of

second hand ships and in new ship builds and demolitions.

Impressively, the company has been profitable (excluding one-

offs) every year since its inception in 1982 and is trading

profitably in this current industry trough. Despite the recent

share price rally the dividend yield is still c.6% and we expect

strong earnings upside when the industry recovers.

Key revenue drivers include the quantum of contracts (fixtures)

and the value of these contracts. Whilst the quantum has been

increasing (+7.7% yoy in H1 2013), values have been in

decline as freight rates have hit a cyclical low. However, the

shipping industry is cyclical. With freight rates and ship values

low there is a corresponding reduction in new ship builds and

we expect the market to rebalance. Furthermore, demand for

shipments will eventually rebound with the wider economy.

For the 6m period ending 30 September 2012 the company

reported revenues of £12.2m and underlying pre tax profits of

£1.8m, down 8% and 16% respectively yoy. ACM ended the

period with net cash of £4.7m but we note the pension liability

of £2.6m. The interim dividend of 3.15p was maintained and

we expect the same for the final 7p dividend.

The current cyclical low is nothing new to ACM which has

traded profitably through several cycles. In challenging markets

the company continues to grow the number of fixtures,

diversify its revenue base and expand geographically. We see

ACM as perfectly positioned to capitalise on the cyclical

recovery in the shipping sector when it occurs.

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Page 18 of 74

Albemarle & Bond Holdings Plc

Summary Data

Sector Consumer Finance




Ticker ABM.L


Last reported net debt/(cash) (£m) 50.3




Key data (Y/E Jun) - (£m)

2011A 2012A 2013E 2014E

Revenue 101.9 117.7 115.6 118.8

EBITDA 24.35 26.42 21.48 23.12

EBIT 21.66 22.60 18.02 19.49

Pre Tax Profit 21.01 21.37 16.00 17.10

Net Profit 15.29 15.68 11.98 12.81

EPS (p) 30.9 28.2 21.6 23.0

DPS (p) 12.5 12.8 12.7 12.6

Net Debt/(Cash) 32.2 38.4 48.1 48.6

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 7.45 8.16 10.67 10.00 Ezcorp International Inc 29.97%

Dividend Cover (EPS/DPS) 2.47 2.21 1.70 1.82 Schroder Investment Management Ltd 7.82%

Net Cash/Dividend -4.64 -5.43 -6.84 -6.94 Fidelity Management & Research Company 3.33%

EV/EBITDA 7.31 6.74 8.28 7.70 Montanaro Asset Management Ltd 3.13%

EBIT Margin 21.3% 19.2% 15.6% 16.4% Norges Bank Investment Management 3.03%

Net Profit Margin 15.0% 13.3% 10.4% 10.8% Octopus Investments Ltd 2.05%

Revenue Growth 24.2% 15.6% -1.8% 2.8%

EPS Growth 19.3% -8.7% -23.6% 6.7%



Albemarle & Bond is one of the UK’s leading pawnbrokers,

operating out of 233 stores and providing a wide range of

financial services to cash and credit constrained consumers. In

recent years, the combination of the economic downturn and

rising gold prices enabled it to make exceptional gains from a

gold buying service. However, greater competition and a

decline in the price of gold has seen profitability from these

operations fall since last April, leading management to put

greater emphasis on the company’s more traditional services.

Recent first half results to 31 December reflected the

challenges ahead, with the 33% decline in pre tax profit to

£8.1m almost entirely attributable to the gold buying

operations. At the gross profit level, pawnbroking profits, at

£17.6m, were marginally up on the corresponding period last

year on a virtually unchanged pledge book of some £38.1m,

whilst retail sales grew an impressive 16.7% to £10.5m. Other

services offered by the group include third party cheque

cashing and, following its acquisition last September, a small

but profitable payday loans operation. Management believes

that the company is well placed to benefit from the tighter

regulation anticipated within this industry in the year ahead.

The strategy is now to develop the offering provided by its

pawnbroking stores, enabling customers to lend on a much

broader range of items whilst extending the retail operation.

Investment into ex-pledge jewellery stocks meant that net debt

rose to a little more than £50m at end December, yet some

£16m of headroom remains within facilities that remain in place

until 2017.

Albemarle & Bond has an impressive record of increasing

dividends over the past decade and will be keen to achieve

another year of growth in the year to end June. However,

earnings are expected to decline some 23%, implying cover of

1.7x if it is assumed that last year’s payment is maintained.

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Page 19 of 74

Alternative Networks Plc

Summary Data

Sector Telecommunications




Ticker AN..L






Key data (Y/E Sept) - (£m)

2011A 2012A 2013E 2014E

Revenue 117.3 114.9 115.4 118.4

EBITDA 15.38 16.10 15.67 16.65

EBIT 14.55 15.28 13.25 14.35

Pre Tax Profit 9.36 12.69 12.80 14.50

Net Profit 6.61 9.79 9.30 10.80

EPS (p) 13.3 19.5 20.5 22.6

DPS (p) 10.0 11.5 12.7 13.9

Net Debt/(Cash) -10.9 -20.6 -18.2 -24.3

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 22.80 15.55 14.83 13.42 James Murray (Chairman) 31.33%

Dividend Cover (EPS/DPS) 1.33 1.70 1.61 1.63 Christopher Wilson 9.49%

Net Cash/Dividend 2.35 3.85 3.08 3.76 BlackRock Investment Management (UK) Ltd 8.76%

EV/EBITDA 7.82 7.47 7.68 7.23 Alternative Networks Employee Benefit Trust 8.43%

EBIT Margin 12.4% 13.3% 11.5% 12.1% F&C Asset Management Plc 5.51%

Net Profit Margin 5.6% 8.5% 8.1% 9.1% Edward Spurrier (CEO) 5.36%

Revenue Growth 21.9% -2.1% 0.5% 2.5% Herald Investment Management Ltd 4.59%

EPS Growth -8.3% 46.6% 4.9% 10.5%



Founded in 1994 and listed on AIM in 2005, the company is

today a UK leading independent telecommunications service

provider, catering to over 5,000 businesses, predominantly

SMEs. Its range of service offerings includes mobility, IT,

systems & applications, and networks solutions. Bar one year,

the company has managed to increase both gross profits and

PBT year on year since 2002, with group revenues having

increased 147.5% in the period.

Alternative’s principle product and a key revenue driver is its

unique customer portal, recently rebranded as “Synapse”. The

portal combines all of the group’s service offerings, with further

development plans scheduled in, including linking clients

directly to suppliers’ systems and launching a “Live Chat”

programme. Customer usage of Synapse doubled in 2012. The

group does however employ a twin strategy of organic and

acquisitive growth, and with £20m cash, management has

stated that bolt-on acquisitions that would prove immediately

earnings enhancing are being considered.

Although revenues decreased by 2.1% in FY 2012, margins

improved substantially, with PBT and net profits up 35.6% and

48.2% respectively. The group has purposefully targeted

further improving on these figures, as revenues are already

under pressure (specifically in the Fixed Line division) due to

the migration to internet protocol telephony.

In October 2012, the company returned cash to shareholders

by announcing a £5.0m tender offer. Since then, the share

price has risen by more than 30%. A total dividend of 11.5p

was also paid out in FY 2012, an increase of 15% yoy. It is

the Board’s intention to maintain a progressive dividend policy,

and it has stipulated a minimum increase of 10% in 2013 and

2014. With a reassuring track record, a highly cash generative

model, and a robust net cash balance, we are confident that the

stated policy will be met. At the current share price, a 10%

dividend increase in 2013 would yield a solid 4.2%.

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Page 20 of 74

Amino Technologies Plc

Summary Data

Sector Telecommincations Equipment




Ticker AMO.L






Key data (Y/E Nov) - (£m)

2011A 2012A 2013E 2014E

Revenue 51.8 41.7 43.7 45.0

EBITDA 2.09 6.25 7.03 7.00

EBIT -0.61 2.83 3.13 3.73

Pre Tax Profit -0.62 2.89 3.17 3.77

Net Profit -0.21 2.84 3.15 3.77

EPS (p) 3.8 5.5 6.1 9.9

DPS (p) 2.0 3.0 3.5 4.0

Net Debt/(Cash) -14.1 -17.1 -17.2 -18.8

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 21.48 15.14 13.46 8.31 Azini Capital Partners LLP 14.33%

Dividend Cover (EPS/DPS) 1.92 1.82 1.75 2.48 Schroder Investment Management Ltd 9.23%

Net Cash/Dividend 12.83 10.35 8.93 8.54 Kestrel Partners LLP 9.12%

EV/EBITDA 13.55 4.53 4.03 4.05 BlackRock Investment Management (UK) Ltd 7.95%

EBIT Margin -1.2% 6.8% 7.2% 8.3% AMO Employee Benefit Trust 5.29%

Net Profit Margin -0.4% 6.8% 7.2% 8.4% Ari Charles Zaphiriou-Zarifi 5.22%

Revenue Growth 17.8% -19.5% 4.7% 3.0% Herald Investment Management Ltd 4.42%

EPS Growth 51.2% 41.9% 12.5% 62.0% Henderson Global Investors Ltd 3.61%



Amino Technologies is an international provider of digital

entertainment solutions, specifically for Internet Protocol

Television (“IPTV”), Over The Top services (“OTT”), and in-

home media distribution. The company was founded in 1994

and listed on AIM in 2004. Based in Cambridge, its products

are sold to a base of customers spanning 85 countries,

including global corporations such as Ericsson and Intel. At the

end of FY 2011 Amino was in a position to pay a maiden

dividend.

The company’s recent shift in focus to operational

improvements and taking on only higher margin business has

paid off handsomely. Although revenues declined by 19.5%

yoy in FY 2012, gross profits increased by 20.6% to £17.5m,

with gross margins significantly higher at 42.0% (2011:

32.7%). The decline in sales was almost wholly due to the

dearth of orders in Italy, subsequent to the initial two roll out

orders placed by Telecom Italia. Although revenues elsewhere

declined in general as large volume, low margin business was

axed, the Netherlands’ expanding customer base did drive

sales up by 47.8% yoy to £11.5m, making it the group’s

largest market after the US. In a bid to further improve

efficiency came the closure of the Swedish office in early 2013.

The company continues to focus on innovation, as

demonstrated at the 2012 Consumer Electronics Show, where

it unveiled its latest product – the Freedom Live media

gateway, an original concept in the world of OTT services. The

company secured a major contract for the product in

December with a leading European telecoms operator.

A final dividend of 3p was announced for FY 2012, an

increase of 50% yoy. Even so, this allowed for a dividend

cover of 1.82x, owing to a record EPS of 5.45. With a healthy

cash balance of over £17m, we are confident that the updated

policy going forward, of beginning interim dividends in FY

2013 and furthermore of increasing the total dividend by at

least 15% for the next two years, will comfortably be met.

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Page 21 of 74

Asian Citrus Holdings Ltd

Summary Data

Sector Food Producers



Reporting currency RMB

Ticker ACHL.L






Key data (Y/E June) - (RMBm)

2011A 2012A 2013E 2014E

Revenue 1,413 1,776 1,998 1,989

EBITDA 675 756 720 733

EBIT 590 645 614 625

Pre Tax Profit 590 645 614 630

Net Profit 579 629 580 590

EPS (p) 5.45 5.15 4.72 4.81

DPS (p) 1.49 1.78 1.88 1.98

Net Debt/(Cash) -2,232 -2,388 -2,351 -2,500

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 5.92 6.26 6.83 6.71 Market Ahead Investments Ltd 18.92%

Dividend Cover (EPS/DPS) 3.67 2.89 2.51 2.43 Xuefeng Xu 9.50%

Net Cash/Dividend 12.12 10.81 10.08 10.18 Wellington Management Company LLP 5.95%

EV/EBITDA 2.41 2.15 2.26 2.22 Value Partners Ltd 5.92%

EBIT Margin 41.8% 36.3% 30.7% 31.4% Chaoda Modern Agriculture (Holdings) Ltd 5.36%

Net Profit Margin 41.0% 35.4% 29.0% 29.7% Royce & Associates LLC 4.46%

Revenue Growth 73.9% 25.7% 12.5% -0.5% Henderson Global Investors Ltd 2.25%

EPS Growth -25.2% -5.5% -8.2% 1.7% Investec Asset Management Ltd 2.02%



Asian Citrus, the Chinese orange plantation owner, is listed on

both AIM and the HKSE. It owns 3 plantations (4.1m trees)

which are located at similar latitudes to that of Florida. The

Group sells its oranges to supermarket chains, corporate

customers, wholesalers and sole proprietors in the PRC. The

company is cash rich and in addition to paying a healthy

dividend is currently executing a share buy back programme.

Plantations take time to mature. In year 4 an orange tree yields

only 8 kgs of oranges which increases to an average of 130

kgs at maturity in year 10 and for the next 15 years. The yield

then declines slightly for the remainder of its 35-year lifespan.

Two of the company’s plantations (Hepu & Xinfeng) are in

operation. Hepu, with approximately 1.3m orange trees, is

operating at full maturity and the Xinfeng Plantation, with 1.6m

orange trees, is approaching full maturity. In 2007, the Group

commenced the Hunan Plantation where approx. 1.2m trees

have been planted so far with the first harvest expected in

2014. Planting of an additional 600,000 trees is scheduled for

completion pre end 2013. In 2010, the company diversified its

interest by acquiring BPG, a producer and wholesaler of

tropical fruit juice concentrates.

Results for the half year ending December 2012 showed a year

on year decrease in production of 6%, a revenue fall of 14.5%

and core net profit fall of 22.7%. Results have been hit by

wage inflation and poor weather (heavy rain washed away

fertiliser and pesticides). More normal weather is expected in

2013 and juice prices have started to increase.

The company is cash rich and at end December 2012 had a

net cash position of RMB2.4bn (c.£240m or c.60% of its mkt.

cap.). As such, the Board is committed to maintaining a

dividend pay out ratio of at least 30% of core net profit and

has instigated a share buy back programme with authority to

purchase 10% of the issued share capital. We see scope for

both programmes to be increased and expect the dip in 2012

earnings to be temporary.

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Page 22 of 74

Avesco Group Plc

Summary Data

Sector Broadcasting & Entertainment




Ticker AVS.L







2011A 2012A 2013E 2014E

Revenue 125.5 143.5 138.7 145.0

EBITDA 19.46 27.15 26.00 27.17

EBIT 1.52 7.38 5.85 7.00

Pre Tax Profit 0.10 2.96 3.75 5.30

Net Profit -0.13 1.86 2.79 4.00

EPS (p) 2.6 21.7 10.3 14.3

DPS (p) 3.0 4.0 4.8 5.7

Net Debt/(Cash) 12.1 24.8 23.5 18.6

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 77.69 9.31 19.55 14.18 Taya Investment Conmpany Ltd 29.32%

Dividend Cover (EPS/DPS) 0.87 5.43 2.14 2.51 Richard Alan Murray (Chairman) 20.40%

Net Cash/Dividend -15.59 -23.86 -18.73 -12.64 Herald Investment Management Ltd 8.22%

EV/EBITDA 3.97 2.84 2.97 2.84 Charles Stanley & Co Ltd 3.25%

EBIT Margin 1.2% 5.1% 4.2% 4.8% Gerald Vivian Libert Oury 3.18%

Net Profit Margin -0.1% 1.3% 2.0% 2.8%

Revenue Growth 7.1% 14.3% -3.3% 4.6%

EPS Growth -316.7% 734.6% -52.4% 37.9%



Avesco is an international provider of services to the corporate

presentation, entertainment and broadcast markets. The group

operates in three divisions, Creative Technology (“CT”), Full

Service and Broadcast Services. Between them, they offer

audio visual (“AV”) rental services, television studio facilities,

and technical support and expertise for a wide range of

broadcast shows and live events.

2012 was a bumper year for the company, predominantly due

to the London Olympics. For the CT division alone, the Games

generated revenues of £6.5m. That aside, underlying growth

excluding the exceptional events increased considerably with

total group sales up by 14.3%. The nature of the market is

however cyclical, with global spectacles providing AVS with

important custom. With margins historically tight, an economic

downturn and resultant cuts in corporate spending can damage

the company’s figures significantly, as witnessed in FY 2009

(net loss of £13.2m). Nevertheless, the company invested

heavily in 2012 (£30.3m net). Although net debt has thus

doubled yoy, AVS is already reaping the rewards, with

adjusted EPS up 734.6% in the same period and the total

dividend, up 33% to 4p. The Board intends to continue to pay

out biannually. We are confident that given the recent

investment, and the showcasing AVS received at globally

watched events during 2012, management will have little

trouble exercising this policy.

On a final note, the company has a financial interest in the

outcome of a long standing court case between Walt Disney

and Celador, which owns the global rights to Who Wants To

Be A Millionaire? The case concerns Disney not fairly sharing

profits from hosting the show on its television network. AVS

formerly part owned Celador, and with the court awarding a

total sum of $320m, the company’s share is c.$60m net. That

would equate to c.154p per share. Disney’s application for a

rehearing has been declined, and there is now a substantial

probability that shareholders will receive a substantial pay out.

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Page 23 of 74

Begbies Traynor Group Plc

Summary Data

Sector Business Support Services




Ticker BEG.L






Key data (Y/E Apr) - (£m)

2011A 2012A 2013E 2014E

Revenue 61.5 57.7 53.8 56.4

EBITDA 8.07 8.92 10.00 10.40

EBIT 6.12 6.59 8.15 8.46

Pre Tax Profit 5.17 5.45 7.25 7.55

Net Profit 0.20 -5.72 na na

EPS (p) 6.4 6.0 5.7 5.9

DPS (p) 2.2 2.2 2.2 2.2

Net Debt/(Cash) 22.5 20.1 20.8 17.6

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 5.94 6.33 6.73 6.50 Richard William Traynor (Chairman) 28.52%

Dividend Cover (EPS/DPS) 2.91 2.73 2.57 2.66 Fortelus Capital Management LLP 8.13%

Net Cash/Dividend -11.37 -10.16 -10.51 -8.89 Theodoor Gilissen Bankiers N.V. 5.31%

EV/EBITDA 6.50 5.88 5.25 5.05 Royal Bank of Canada Investment Management (UK) Ltd 3.87%

EBIT Margin 10.0% 11.4% 15.1% 15.0% Heronbridge Investment Management LLP 3.82%

Net Profit Margin 0.3% -9.9% na na ISIS Equity Partners LLP 3.51%

Revenue Growth -2.1% -6.1% -6.8% 4.7% Royce & Associates LLP 3.25%

EPS Growth -24.7% -6.3% -5.8% 3.5% Baillie Gifford & Co. 3.06%



Begbies (“BEG”) is a provider of financial solutions and advice

primarily to commercial businesses. Services range from

corporate finance to risk management, insolvency,

investigations and recovery. Founded in 1989, BEG listed on

AIM in October 2004 and has established itself as a market

leader in the UK. Apart from FY 2012, the company has

remained profitable each year.

A strategic review in FY 2012 resulted in management

determining to focus on its core businesses of UK insolvency

and restructuring, and its complementary BTG Global Risk

Partners business. BEG thus disposed of its underperforming,

non core subsidiaries, including its tax division for an initial cash

consideration of £2.9m, its overseas businesses, and its

controlling interest in the Red Flag Alert business.

Since Q2 2010, corporate insolvencies have decreased

considerably, despite the economic downturn. We believe this

is due to the government coalition’s attempts at reducing the

nation’s deficit while simultaneously stimulating economic

recovery, through utilising strategies such as quantitative easing

and suppressing interest rates. As a key revenue driver for the

company (the insolvency division accounts for c.85% of group

revenues), turnover and net profits from continuing operations

in the two years to 30 April 2012 have consequently dropped

8.0% and 41.1%, respectively.

However, we are of the opinion that the ‘zombie’ firms – weak

SMEs that are only surviving due to the government initiatives

– will inevitably fold under bad debts, exceptional costs, or

simply when the support measures come to an end. Having

maintained its industry leading position in the slump, BEG is

well positioned to capitalise on that inevitability when it does

arrive. In the near term, however, earnings are under pressure,

with EPS from continuing operations in H1 2012 down 40%

yoy. As such there is a genuine possibility of the final dividend

being cut.

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Page 24 of 74

Belvoir Lettings Plc

Summary Data

Sector Real Estate Services




Ticker BLV.L







2011A 2012E 2013E 2014E

Revenue na 4.1 5.1 6.2

EBITDA na 2.20 2.50 3.30

EBIT na 2.10 2.40 3.10

Pre Tax Profit na 1.60 2.40 3.20

Net Profit na 1.20 1.80 2.40

EPS (p) na 6.3 8.9 11.8

DPS (p) na 5.8 6.8 7.7

Net Debt/(Cash) na na na na

Margins/Ratios

2011 2012 2013 2014

Dividend Yield na 4.2% 4.9% 5.5% Key Shareholders

P/E Ratio na 22.06 15.62 11.78 Michael John Stephen Goddard (Chairman) 44.54%

Dividend Cover (EPS/DPS) na 1.09 1.31 1.53 L&G Investment Management (UK) Ltd 7.06%

Net Cash/Dividend na na na na Amati Global Investors Ltd 5.81%

EV/EBITDA na 12.27 10.80 8.18 Investec Wealth & Investment Ltd 4.46%

EBIT Margin na 51.2% 47.1% 50.0% Milton Capital Partners Ltd 3.90%

Net Profit Margin na 29.3% 35.3% 38.7% Artemis Investment Management LLP 3.87%

Revenue Growth na na 24.4% 21.6% Octopus Investments Ltd 3.56%

EPS Growth na na 41.3% 32.6%



Belvoir is a leading UK letting franchise, having been awarded

the Best Lettings Agency Franchise Gold Award by the Times

and Sunday Times in two of the past three years. Founded in

1995, the group listed on AIM in February 2012, raising

£6.3m net. As at 30 June 2012, Belvoir possessed 144

franchise outlets, with plans to have reached 150 by the end of

2012. Being in a position to pay an interim dividend in 2012

(equating to 3.9% of the February flotation price), the group’s

share price has already gained 86% since listing.

Belvoir’s business model is focused specifically on servicing

tenants and private landlords owning small portfolios. Over

23,000 privately rent properties are now managed by the

franchise network. There is a national trend towards renting

rather than buying at present, with the total nationwide annual

rental bill expected to rise c.46% to £70 billion by 2016. As

such, Belvoir intends to continue on its acquisition path, having

highlighted the significant expansion opportunities available at

present. Net cash of £1.7m will help enable this.

Trading in H1 2012 proved successful, with revenues up

16.7% yoy to £1.83m. However PAT was 28.2% lower than

in H1 2011, at £0.44m, largely owing to an exceptional charge

relating to listing costs. Adjusted operating profit increased

marginally yoy.

The interim dividend of 2.9p was surprising, considering the

EPS from continuing operations of 2.4p, and a resultant

dividend cover of 0.83x. However, the business has proved

immediately profitable on AIM, despite the flotation costs, and

intends to pursue a progressive dividend policy, paying out

biannually. Its highly cash generative model and history of

paying out significant dividends (prior to listing) leads us to

conclude that both dividends and earnings will increase in the

mid term. However, on 16x 2013 earnings we feel this is

currently factored into the share price.

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Page 25 of 74

Camkids Group Plc*

Summary Data

Sector Retail (China)




Ticker CAMK.L






Key data (Y/E Dec) - (RMBm)

2011A 2012E 2013E 2014E

Revenue 742 895 1,055 1,242

EBITDA 218 265 308 355

EBIT 214 261 299 347


Net Profit 160 196 224 260

EPS (p) 21.5 26.3 30.0 34.7

DPS (p) 0.0 0.0 5.4 6.7

Net Debt/(Cash) -74 -174 -307 -379

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 4.67 3.83 3.35 2.89 Zhang Congming (Chairman) 66.29%

Dividend Cover (EPS/DPS) na na 5.60 5.21 Universe Glory Enterprises Ltd 4.99%

Net Cash/Dividend na na 7.50 7.42 Fortune United Capital Ltd 4.90%

EV/EBITDA 2.67 2.19 1.89 1.64 Kang Yu Investments Ltd 4.80%

EBIT Margin 28.9% 29.2% 28.4% 27.9% Charalane Ltd 4.31%

Net Profit Margin 21.6% 21.9% 21.3% 20.9% Kai Xing Ltd 4.00%

Revenue Growth 37.8% 20.7% 17.8% 17.8% Speedy Achieve Global Industrial Ltd 3.01%

EPS Growth 46.9% 22.1% 14.2% 15.8%


Share price as of 01/03/2013 *Allenby Capital corporate client

Camkids joined AIM in December 2012 raising £6.4m. The

company manufactures and distributes outdoor clothing,

footwear and equipment targeting Chinese children. Originally

established in 1994 as an OEM and ODM shoe manufacturer

for the export market, in 2008 the company refocused its

growth towards the domestic market and began producing

Camkids branded products. At 30 June 2012, the company

had 15 distributors supplying a total of 1,054 Camkids

branded outlets across China. Camkids came to market with a

track record of profitability, low valuation, healthy balance

sheet and an intention to pay an attractive dividend.

The company does not compete in the crowded general

sportswear market (football, athletics etc.) but instead targets

the children’s outdoor sportswear market and sells products

such as hiking boots, backpacks and all-weather jackets.

Targeting children, the company is a beneficiary of China’s one

child policy which has led to 4-2-1 family structures where

increasing amounts of money are lavished on the only child.

Since the launch of Camkids in 2008 the Group has

experienced rapid growth in revenues. In 2011 the company

sold more teenage outdoor footwear than any other brand in

the PRC domestic market including Nike Kids and Adidas

Kids. In 2011, in the wider Children’s outdoor and sportswear

market (footwear and apparel), the company had an 11.1%

market share in China, second only to Nike Kids.

Scepticism remains around Chinese stocks but we feel this is

more than compensated by Camkids’ valuation (3.4x 2013

EPS against a sector on > 6x), profitable track record and

strong balance sheet (forecast net cash position of c.£17.4m at

end 2012). The company is highly cash generative and intends

to pay c.20% of net earnings as a dividend which should lead

to a high and rising dividend stream.

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Page 26 of 74

Catalyst Media Group Plc

Summary Data

Sector Broadcasting & Entertainment




Ticker CMX.L







2011A 2012A 2013E 2014E

Revenue 0.0 0.0 na na

EBITDA -0.18 -0.14 na na

EBIT -0.18 -0.14 na na

Pre Tax Profit -0.22 -0.17 na na

Net Profit 1.91 4.34 na na

EPS (p) 6.8 15.4 12.0 na

DPS (p) 0.0 7.0 7.0 na

Net Debt/(Cash) 0.6 -1.5 na na

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 14.90 6.55 8.42 na Henderson Global Investors Ltd 26.06%

Dividend Cover (EPS/DPS) na 2.20 1.71 na Melvin Anthony Lawson (NED) 13.08%

Net Cash/Dividend na 0.76 na na Harwood Private Equity 12.66%

EV/EBITDA na na na na Clive Richard Mishon 8.67%

EBIT Margin na na na na Universities Superannuation Scheme Ltd 8.44%

Net Profit Margin na na na na Mark Barrie Hawtin (NED) 7.27%

Revenue Growth -37.5% 0.0% na na Investec Wealth & Investment Ltd 5.29%

EPS Growth -52.6% 127.6% -22.2% na



Catalyst Media Group (“CMX”) is a holding group with one

asset – a 20.54% stake in Satellite Information Services

(Holdings) Ltd (“SIS”), a frontrunner in sports television

broadcasting. The company obtained its shareholding in SIS in

2005 when it acquired the entire issued share capital of

Alternateport Ltd for a cash consideration of £23m. Other

shareholders of SIS include bookmaker customers William

Hill, Ladbroke and the Tote.

Through its market leading division, SIS LIVE, SIS primarily

provides satellite news-gathering and associated transmission

services. It also provides outside broadcast television

production units and television production services. SIS caters

to bookmakers based in the UK, offering its services –

predominantly visual and audio coverage and betting

information on horseracing and greyhound racing – both to

shop interiors and online platforms.

Since CMX acquired the stake, the revenues of SIS have

increased 103.6%, from £117.7m for the financial year ending

2005, to £239.6m in 2012. Apart from 2012 (a bumper year

due to the 2010 Commonwealth Games), the eight years have

witnessed a smooth, continual increase in turnover for the

group. The same period has also witnessed net profits for the

group increasing 57.6%, to £18.6m.

The dividend policy of SIS is to distribute at least 50% of net

profits, subject to cash flow considerations. To date, CMX has

received c.£15.8m in dividends, and by FY 2011 had paid off

all its debt. In its final results to 30 June 2012, Catalyst was

therefore able to pay a maiden dividend to shareholders, at 7p

a share. On 1 March 2013, a further SIS dividend receipt

resulted in CMX announcing its own interim dividend of 7p.

Taking into account the strong historic growth of SIS and its

market leading position, we are confident that the company will

at the very minimum be able to maintain this dividend going

forward. FY 2014 should prove especially lucrative for CMX,

with dividends from SIS’ FY 2013 due (in which the Olympic

Games will have boosted performance significantly).

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Page 27 of 74

Cello Group Plc

Summary Data

Sector Media Agencies




Ticker CLL.L







2011A 2012E 2013E 2014E

Revenue 133.5 na na na

EBITDA 4.48 na na na

EBIT 2.25 na na na

Pre Tax Profit 1.36 na na na

Net Profit -0.59 na na na

EPS (p) 6.7 6.0 6.5 na

DPS (p) 1.7 1.8 2.1 na

Net Debt/(Cash) 7.7 9.0 na na

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 6.41 7.17 6.67 na Octopus Investments Ltd 8.08%

Dividend Cover (EPS/DPS) 3.90 3.33 3.15 na Ennismore Fund Management Ltd 6.82%

Net Cash/Dividend -5.44 -6.07 na na DVC Worldwide LLC 6.34%

EV/EBITDA 9.91 na na na Henderson Global Investors Ltd 6.30%

EBIT Margin 1.7% na na na Vincent Hugh Nolan 4.95%

Net Profit Margin -0.4% na na na Universities Superannuation Scheme Ltd 4.60%

Revenue Growth 6.2% na na na Richard Gilmore 3.69%

EPS Growth -15.1% -10.6% 7.5% na



Cello is a global insight and strategic marketing group. It

specialises in bringing products to market and maximising

brand exposure and performance. The group operates in two

divisions. The core business, Cello Health, is fast becoming a

market leader in the pharmaceutical and health sector. Its

principal activities include strategy consulting, market research

and medical communications. The second business, Cello

Consumer, provides three primary services, namely

communications execution, communications logistics support,

and insight delivery.

After posting a net loss in FY 2011, the group has bounced

back strongly in 2012, with net profits in H1 of £0.8m. Group

revenues were £63.3m, marginally up yoy. While Cello

Consumer could only break even as a result of a significant

industry wide decline in clients participating in market research,

Cello Health’s performance improved substantially. Gross

profits for the division increased 24.2% yoy to £16.4m.

Impressively, its operating margin for the period was 25.0%

(2011: 20.7%), resulting in a headline operating profit for the

division of £4.1m.

The company’s revised strategy is to focus on driving growth

through Cello Health. Organically, it is expanding its

geographic footprint and broadening its range of client

offerings, investing a sum of £0.8m in FY 2012 in doing so.

The division is also developing through bolt-on acquisitions, as

demonstrated by the purchase in January of Mash Health, a

specialist consultant to pharmaceutical and health clients, for

c.£1.5m.

The interim dividend increase of 5.5% to 0.58p was highly

encouraging. With Cello Consumer also on course to profit

recovery, we feel that the group is in a strong position to

continue with its progressive dividend policy. Furthermore, the

forecast moderate decline in EPS for FY 2012 will place no

undue strain on the balance sheet, considering the group's

historically strong dividend cover (average of 7.65x to adjusted

EPS over the last 5 years).

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Page 28 of 74

Cenkos Securities Plc

Summary Data

Sector Financial Services

Share Price (p) 80.0



Ticker CNKS

Market Cap (£m) 50.9

Last reported Net debt/(cash) (£m) -22.9





2011A 2012E 2013E 2014E

Revenue 43.7 40.0 44.0 48.4

EBITDA 6.00 5.40 5.94 6.53

EBIT 5.70 5.13 5.64 6.21

Pre Tax Profit 6.00 5.40 5.94 6.53

Net Profit 4.68 4.21 4.63 5.10

EPS (p) 5.6 5.1 5.6 6.1

DPS (p) 5.0 4.5 5.0 6.0

Net Debt/(Cash) -14.0 -18.0 -20.0 -22.0

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 14.18 15.76 14.33 13.03 Invesco Asset Management Ltd 17.45%

Dividend Cover (EPS/DPS) 1.13 1.13 1.12 1.02 Paul Hodges 9.20%

Net Cash/Dividend 4.40 6.29 6.29 5.76 James Durkin 8.99%

EV/EBITDA 4.67 5.19 4.71 4.29 Cenkos Securities (Trustees) Ltd 7.37%

EBIT Margin 13.0% 12.8% 12.8% 12.8% JP Morgan Asset Management (UK) Ltd 7.33%

Net Profit Margin 10.7% 10.5% 10.5% 10.5% Hargreave Hale Ltd 5.29%

Revenue Growth -25.3% -8.5% 10.0% 10.0% Andrew Stewart 4.71%

EPS Growth 13.7% -10.0% 10.0% 10.0% Cenkos Securities Employee Benefit Trust 4.32%



Cenkos was founded in 2005 and has been profitable in each

year since. The company has delivered a strong dividend

stream to investors and in total has so far, since its IPO,

returned a total of 65p. The company is one of the largest

broking and advisory firms serving small to mid cap companies

listed on London’s AIM and Main Market. As at 30 June

2012 Cenkos was Nomad or Corporate Broker/Financial

Adviser to 118 clients, up from 106 in June 2011.

The company has two main divisions: Corporate Broking and

Advisory and secondly Institutional Equities. Following a

strategic review, the company sold its controlling interest in an

offshore fund and wealth management business, Cenkos

Channel Islands Limited (“CCIL”), in April 2012 and in

February 2012 sold its onshore fund management business,

Cenkos Fund Managers Limited.

The Corporate Broking and Advisory business, which includes

the results of Cenkos’ market making capability, generates

revenues from placing commission on fund raisings, corporate

finance fees and retainer income, and commissions on

secondary market transactions. In H1 2012 the division

recorded a yoy drop in revenue of 20% to £19.0m. The

Institutional Equities business (research driven investment

recommendations to institutional clients) had a more stable H1

2012 with revenues falling just 1% yoy to £1.3m.

In a similar vein to Numis Corporation, Cenkos has a good

reputation, solid client base and a flexible remuneration policy

that is allowing it to come through what is proving to be an

extremely tough period for small cap brokers. Whilst there are

no consensus forecasts available in the market, based on our

own numbers, which allow for a small improvement going into

2013, we feel comfortable that Cenkos will be able to continue

to pay a healthy dividend stream. With cash on the balance

sheet accounting for close to half of the company’s mkt. cap.,

Cenkos is our preferred pick amongst the listed brokers.

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Page 29 of 74

Central Asia Metals Plc

Summary Data

Sector Base & Precious Metals



Reporting currency USD

Ticker CAML.L






Key data (Y/E Dec) - ($m)

2011A 2012E 2013E 2014E

Revenue 1.1 29.6 47.5 60.0

EBITDA -5.89 15.85 31.47 40.00

EBIT -6.13 15.26 30.11 35.80

Pre Tax Profit -5.94 15.60 30.48 36.10

Net Profit -11.19 12.52 24.45 28.05

EPS (p) -8.6 9.9 19.1 22.4

DPS (p) 0.0 9.1 7.1 7.3

Net Debt/(Cash) -16.0 -37.5 -16.5 -26.0

Margins/Ratios

2011 2012 2013 2014


P/E Ratio -13.55 11.74 6.08 5.18 Lansdowne Partners Ltd 13.43%

Dividend Cover (EPS/DPS) na 1.09 2.70 3.09 Alexander Abraham Capelson 8.88%

Net Cash/Dividend na 3.18 1.79 2.76 Morgan Stanley Investment Management (UK) Ltd 8.80%

EV/EBITDA -19.26 7.16 3.60 2.84 Montoya Investments Ltd 6.03%

EBIT Margin -547.3% 51.5% 63.4% 59.7% L&G Investment Management (UK) Ltd 5.14%

Net Profit Margin -999.1% 42.3% 51.5% 46.8% Capital World Investors 4.70%

Revenue Growth -22.2% 2545.5% 60.2% 26.4% Robert Maitland Cathery (NED) 4.28%

EPS Growth -22.0% -215.4% 93.2% 17.3% Majedie Asset Management Ltd 4.25%



Central Asia Metals is a copper producer and explorer in

Central Asia. In April 2012, nineteen months after the

company’s IPO on AIM that raised US$60m, the Kounrad

open pit copper mine in Kazakhstan became operational,

creating an immediate revenue stream. As a result, the Board

was able to announce both a maiden and a special dividend

totalling 7p in December 2012, with an expectation of

announcing a final dividend in the 2012 annual results.

Revenue in H1 2012 was $6.8m, generated in an operational

period of a little over two months. Profit from continued

operations was $0.53m. At year end, total copper produced

was 6,586 tonnes, an impressive 31.7% ahead of the initial

2012 target. In the period, the Board also determined to

dispose of its non core assets, namely the molybdenum and

gold exploration projects in Mongolia.

The copper price is clearly key to the company’s revenue

stream. Due to the much reported Chinese economic

slowdown, coupled with the recent upsurge in the global

supply – and consequently surplus – of the commodity, 2013

may well witness a significant decrease in the copper price. It is

therefore vital that CAML expands operations to increase

volume as quickly as possible. In H1 2013, it will likely acquire

the remaining 40% of the Kounrad mine from its state owned

Kazakh partner, Saryarka. It should subsequently come to a

decision on whether to construct a second solvent

extraction–electrowinning (“SX-EW”) plant at the site, with

both resource estimate and plant layout studies being finalised.

The Board’s stated dividend policy going forward is to pay out

a minimum 20% of revenues generated by the Kounrad mine,

provided that a dividend cover of at least 3 exists. In light of its

performance to date, and notwithstanding the downside risk to

the copper price, we are confident that the company will be in

a position to execute this policy accordingly, offering an

attractive yield to the current share price.

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Page 30 of 74

Character Group Plc

Summary Data

Sector Leisure Goods (Toys)




Ticker CCT.L






Key data (Y/E Aug) - (£m)

2011A 2012A 2013E 2014E

Revenue 95.0 75.0 66.9 72.0

EBITDA 12.43 11.03 2.43 6.34

EBIT 9.21 7.28 0.33 4.13

Pre Tax Profit 9.05 7.08 -0.08 3.76

Net Profit 6.84 5.75 -0.08 2.91

EPS (p) 28.5 25.6 -0.3 21.6

DPS (p) 6.0 6.6 6.6 6.6

Net Debt/(Cash) 4.9 7.9 8.0 7.0

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 4.71 5.24 -394.12 6.21 Kirankumar Premchand Shah (FD / MD) 24.48%

Dividend Cover (EPS/DPS) 4.75 3.88 -0.05 3.27 Richard Ashton King (Chairman) 16.54%

Net Cash/Dividend -3.60 -5.31 -5.34 -4.72 Sweet Briar Investments Ltd 5.65%

EV/EBITDA 3.07 3.45 15.68 6.01 Vanshap Capital LLC 5.16%

EBIT Margin 9.7% 9.7% 0.5% 5.7% Jonathan James Diver (MD) 4.55%

Net Profit Margin 7.2% 7.7% -0.1% 4.0% Tops Pension Scheme 3.87%

Revenue Growth 11.4% -21.1% -10.8% 7.6%

EPS Growth 41.5% -10.2% -101.3% -6450.0%



The Character Group is a designer, developer and distributor

of games and toys. Founded in 1991, the company moved to

AIM in 2005. Of its marketed product range, over 75% is

designed in-house. Products include brands such as Bob the

Builder, Peppa Pig and Spiderman, which are sold in over 35

countries worldwide.

Trading in FY 2012 underperformed market expectations, an

almost universal situation for retail traders in the economic

downturn. Performance was further adversely affected by

several major events including the Olympics and the Jubilee

celebrations. However, sales in overseas markets were

significantly stronger than domestically, owing to both

improved international television coverage for the company’s

products, and to the development of new products not focused

solely on the UK consumer.

Despite the 15.9% decline in net profits yoy, underlying

margins improved as a result of a total saving in sales,

distribution and administration costs of c.£5.87m. To

emphasise the temporary nature of the decline in trading, the

Board declared a final dividend of 3.3p, resulting in a total

dividend of 6.6p, a 10% increase yoy and the highest dividend

to date.

Investors should take comfort in the executive management

team (including the three founding members) holding just under

half of the issued share capital between them. Shareholders will

also continue to see attempted enhancement of value through

the share buyback programme (as at 11 January 2013, the

Board had bought back for cancellation 17.8% of the share

issue). In the long term, the company will benefit from the

group’s increased range of products, expanding client base and

experienced management. However, in the near term we

envisage limited upside to the dividend, in light of the gloomy

outlook for the retail sector and the resultant pressure on

earnings.

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Page 31 of 74

Churchill China Plc

Summary Data

Sector Durable Household Products




Ticker CHH.L







2011A 2012E 2013E 2014E

Revenue 42.3 40.2 41.6 43.0

EBITDA 4.69 4.00 4.00 4.00

EBIT 2.74 2.90 3.10 3.00

Pre Tax Profit 2.74 2.90 3.10 3.00

Net Profit 2.10 2.00 2.00 2.00

EPS (p) 19.2 20.4 20.6 22.3

DPS (p) 14.0 14.2 14.6 15.1

Net Debt/(Cash) -6.9 -7.0 -6.0 -7.0

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 17.45 16.42 16.26 15.02 Landfinance Ltd 22.06%

Dividend Cover (EPS/DPS) 1.37 1.44 1.41 1.48 James Andrew Roper 10.09%

Net Cash/Dividend 4.51 4.51 3.76 4.25 Seán Baker 10.07%

EV/EBITDA 6.88 8.07 8.07 8.07 Edward Stephen Roper 7.66%

EBIT Margin 6.5% 7.2% 7.5% 7.0% Andrew David Roper (CEO) 6.06%

Net Profit Margin 5.0% 5.0% 4.8% 4.7% Michael John Roper 5.13%

Revenue Growth -3.3% -5.0% 3.5% 3.4% Investec Wealth & Investment Ltd 5.01%

EPS Growth 21.5% 6.3% 1.0% 8.3% Henderson Global Investors Ltd 4.03%



Churchill manufactures and distributes ceramic, glass, wood

and cutlery products to the hospitality and retail industry.

Founded in 1795, the company listed on AIM in 2003 and

now employs over 400 staff. Its clients include pubs, hotels,

cruise lines, restaurants and other hospitality establishments, as

well as independent retailers, in over 70 countries worldwide.

Impressively, Churchill has remained profitable every year

since listing, and has furthermore maintained or increased its

dividend year on year in that period.

Churchill operates in two divisions. The core Hospitality

business is the key revenue driver for the group, accounting for

72.4% of total sales in the 6 months to 30 June 2012.

Although UK sales for the division were flat in the period,

management believes that this was caused somewhat by

adverse weather conditions (rain having impacted on pubs’

performances). Revenues generated by the division in overseas

markets rose by c.25%, as a result of significant investment in

product development and sales and marketing. Churchill has

been scaling down its second division, Retail, over the past 3

years by cutting low margin and higher risk business.

Despite continued global economic uncertainty, Churchill

booked improved underlying figures in H1 2012. PBT was up

22.1% yoy to £0.8m, despite revenue remaining unchanged at

£19.2m. Specifically, Hospitality posted revenues of £13.9m

and an operating profit of £1.8m; and Retail, £5.2m and

£168k.

A maintained interim dividend of 4.8p was paid out for H1

2012. In light of the continually improving operating margins in

the Retail business and the increasing revenues in the core

Hospitality business, coupled with a robust cash balance, we

are confident that Churchill will have little trouble in sustaining

its progressive dividend policy. At the current price, the 4.4%

yield is attractive but on 16x earnings we think the valuation is

on the high side.

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Page 32 of 74

Densitron Technologies Plc

Summary Data

Sector Electrical Components




Ticker DSN.L







2011A 2012E 2013E 2014E

Revenue 23.1 21.0 26.3 na

EBITDA 1.15 0.15 1.80 na

EBIT 1.09 0.12 1.70 na


Net Profit 0.82 -0.05 1.18 na

EPS (p) 1.18 -0.07 1.70 na

DPS (p) 0.60 0.60 0.80 na

Net Debt/(Cash) -1.8 -1.8 na na

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 6.25 -105.36 4.34 na Mr Peter Gyllenhammar 29.78%

Dividend Cover (EPS/DPS) 1.97 -0.12 2.13 na Sterling Property Trust Ltd 16.52%

Net Cash/Dividend 4.27 4.31 na na Nordea Bank S.A. 6.32%

EV/EBITDA 4.31 33.06 2.76 na T W Campbell 4.02%

EBIT Margin 4.7% 0.6% 6.5% na Close Brothers Asset Management 3.36%

Net Profit Margin 3.5% -0.2% 4.5% na D M Ingram 3.22%

Revenue Growth 11.4% -9.2% 25.2% na

EPS Growth 63.9% -105.9% -2528.6% na



Densitron Technologies is a designer and developer of

electronic displays. It operates in 32 countries worldwide,

catering to major organizations in need of display solutions.

The company’s products include thin film transistor displays,

liquid crystal displays (“LCDs”), graphic displays, LCD

backlights, and touchscreens.

Due to lower bookings in H2 2011 and several significant

orders delayed to H2 2012, revenue for the 6m period to 30

June 2012 decreased 6.2% to £10.6m. Coupled with an

increase in overheads, this reduction resulted in a fall in

operating profit from £0.54m achieved in HY 2011 to £0.06m

in HY 2012. The company has admitted that, owing to further

delays in orders, it expects its results for the year to 31

December 2012 to be behind market expectations.

Despite challenging economic conditions in the past two years,

exacerbated by the Tsunami that hit Japan in March 2011,

adversely affecting the company’s operations in the region, the

company believes that it is in a strong position to continue with

its strategy of organic growth. Further specified business

objectives have also been highlighted including geographical

expansion, and introduction of new products, which should

prove to be earnings accretive for FY 2013 and beyond. As a

result of this revised strategy, kicked into action by the opening

of an office in India in early 2012 and an optical binding facility

in Taiwan in November, management is optimistic for the

medium and long term future of the business.

In the nearer term however, despite a maintained interim

dividend of 0.2p and a reassuring order book (as at 30 June

2012 being over 10% higher yoy), we fear that the

aforementioned significant pressure on earnings may result in a

cut to the final dividend. Nevertheless, we would consider this

to be no more than a blip, and that the progressive dividend

policy would swiftly be readopted.

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Page 33 of 74

Dillistone Group Plc

Summary Data

Sector Software




Ticker DSG.L







2011A 2012E 2013E 2014E

Revenue 5.5 7.5 7.9 na

EBITDA 1.70 1.92 2.05 na

EBIT 1.39 1.62 1.77 na


Net Profit 0.93 1.13 1.33 na

EPS (p) 6.2 6.7 7.3 na

DPS (p) 3.5 3.6 3.7 na

Net Debt/(Cash) -1.6 -1.6 -1.7 na

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 12.84 12.03 11.00 na Jason Starr (CEO) 19.52%

Dividend Cover (EPS/DPS) 1.78 1.85 1.96 na Rory Howard (Dir.) 18.13%

Net Cash/Dividend 2.54 2.39 2.49 na J McLaughlin 14.13%

EV/EBITDA 7.62 6.75 6.32 na Herald Investment Management Ltd 9.71%

EBIT Margin 25.5% 21.6% 22.5% na Giles Fearnley (NED) 5.46%

Net Profit Margin 17.1% 15.1% 16.9% na Unicorn Asset Management Ltd 4.94%

Revenue Growth 28.2% 37.6% 4.7% na CFS Independent Ltd 4.78%

EPS Growth 25.4% 6.7% 9.3% na Robert Howells 4.12%



Dillistone Systems (“DS”) offers software specifically designed

for the executive search market and the in-house recruitment

departments of large corporates, while recent acquisition

Voyager Software provides recruitment software for

permanent and temporary staffing agencies. Together, these

businesses serve over 1,800 active global clients. For the six

months to June 2012, in a soft UK recruitment market, DS

reported modest growth and probably market share gains

while Voyager, in for a full six months, contributed to group

growth in revenue, EBITDA and EPS of 58%, 63% and 43%,

respectively. The group has strong management, is cautiously

ambitious and enjoys a strong balance sheet with no debt and

net cash of £1.6m as at June 2012.

One KPI worthy of note is the continuing improvement in

recurring revenue as a percentage of total revenue. In H1 2012

recurring revenue represented 63% (H1 2011: 61%) of the

total and was equivalent to 100% of administration expenses

(excluding the amortisation of development costs). This

provides a degree of comfort in revenue visibility and is also

indicative of management’s tight control of costs.

In the second half of 2012, DS’ revenue and earnings should

benefit from the implementation of the large contracts referred

to above, together with continuing growth in its overseas sales

which in the first half improved by c.23%. In addition, Voyager

will be included for a full six months, against just three in 2011,

and will be marketing the first phase of its new “Infinity”

platform to permanent and longer term contract agencies.

Phase 2, targeted at the short term temp market will be

released at a date still to be determined. Assuming an adjusted

PBT of £1.6m (FY 2011: £1.4m) and EPS of 6.65p the

shares are selling on a 2012 PER of 12.0x and offering a

prospective safe yield of 4.5%.

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Page 34 of 74

Fairpoint Group Plc

Summary Data

Sector Speciality Finance




Ticker FRP.L







2011A 2012E 2013E 2014E

Revenue 25.9 29.7 31.8 na


EBIT -0.81 na na na

Pre Tax Profit -1.04 6.82 7.61 na

Net Profit -0.96 5.05 5.63 na

EPS (p) -2.2 11.8 13.4 na

DPS (p) 4.5 5.0 5.5 na

Net Debt/(Cash) 6.4 -1.6 na na

Margins/Ratios

2011 2012 2013 2014


P/E Ratio -47.50 8.86 7.80 na Hanover Investors Inc 23.80%

Dividend Cover (EPS/DPS) -0.49 2.36 2.44 na Henderson Global Investors Ltd 15.93%

Net Cash/Dividend -3.39 0.76 na na BSI Generali UK Ltd 6.79%

EV/EBITDA 47.45 na na na Fortelus Capital Management LLP 6.76%

EBIT Margin -3.1% na na na Andrew Redmond 6.67%

Net Profit Margin -3.7% 17.0% 17.7% na John Anthony Reynard 6.49%

Revenue Growth -11.9% 14.7% 6.9% na Paul Alan Latham 6.32%

EPS Growth -124.0% -636.4% 13.6% na Midas Capital Partners Ltd 5.31%



Fairpoint (“FRP”) is a consumer financial services business

providing services to financially stressed customers. It currently

has three principle operations: Individual Voluntary

Arrangements (“IVA”), Debt Management Plans (“DMP”),

and Financial Services (“FS”) – specifically, Claims

Management and short-term Lending. The company aims to

become the UK market leader in money management

solutions.

In May 2011, the Office of National Statistics stated that

unemployment was on a downward trend. A consequence of

this trend was that FRP’s target market was thrown into

upheaval, with the number of personal insolvencies and IVAs

declining markedly. The average value of new IVAs also

dropped, as creditors accepted proposals from less indebted

customers. FRP swiftly adapted its strategy, diversifying its

revenue stream by driving growth in its DMP and FS divisions.

Simultaneously, it reduced its cost base and streamlined its

core IVA business.

The H1 2012 interim results serve as evidence of the success

of the measures. PBT stood at £2.1m, (2011: £2.1m loss).

Group revenues increased by 19.5% to £14.1m, with IVA

revenues contributing £8.7m, or 61.7% (2011: 73.7%). The

nascent DMP business improved its revenues by 11.5%, while

the FS division impressively grew its revenues 338.1% yoy, to

£2.6m. At the same time, group gross profit margins for the

period were 47.9% (2011: 28.0%), and administrative costs

were likewise decreased by 14.2%.

Despite the adverse market conditions, FRP is confident of

being able to sustain the good progress made in H1 2012. An

exceptional income of £3.0m from a VAT refund has largely

contributed to a net cash position of £1.6m, even after an

interim dividend pay out of 1.95p (up 11.4% yoy). With the

enlarged £13.0m banking facility, we are confident that FRP

will be able to maintain its progressive dividend policy, whilst

also preserving its historically robust dividend cover.

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Page 35 of 74

First Property Group Plc

Summary Data





Ticker FPO.L







2011A 2012A 2013E 2014E

Revenue 7.1 9.3 12.0 9.0

EBITDA 3.36 4.67 4.00 4.00

EBIT 3.33 4.62 4.00 4.00

Pre Tax Profit 2.73 3.79 4.00 4.00

Net Profit 2.16 3.20 na na

EPS (p) 1.9 2.7 2.3 2.3

DPS (p) 1.1 1.1 1.1 1.1

Net Debt/(Cash) 16.7 14.3 10.0 9.0

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 10.82 7.37 8.75 8.75 Benyamin Naeem Habib (CEO) 15.02%

Dividend Cover (EPS/DPS) 1.75 2.53 2.09 2.09 John Charles Kottler 13.50%

Net Cash/Dividend -14.21 -11.95 -8.18 -7.36 Universities Superannuation Scheme Ltd 8.59%

EV/EBITDA 10.32 7.42 8.66 8.66 Alasdair James Dougall Locke (Chairman) 7.71%

EBIT Margin 46.8% 49.5% 33.3% 44.4% Whitehall Consolidated Ltd 4.36%

Net Profit Margin 30.4% 34.3% na na

Revenue Growth 10.1% 31.4% 28.5% -25.0%

EPS Growth -5.6% 46.8% -15.8% 0.0%



First Property is a commercial property fund management

group with operations in the UK and Central Europe that listed

on AIM in 2000. As well as its core First Property Asset

Management (“FPAM”) division, the company also performs

fund raising exercises and share dealing on behalf of FPAM,

through its subsidiary FJB Capital Advisers. As at 30

September 2012, assets under management were valued at

£347m. FPAM currently manages six funds, with the

establishment of additional funds underway.

The group’s investment approach is to primarily seek return on

equity through income, with capital growth not a dominant

focus. In executing this, the company engages in a strategy of

active management from identifying properties that fall within its

exacting specifications, all the way through to management of

the properties and forming strong relationships with landlords

and tenants.

Growth continued in H1 2013, with group revenue up 42.9%

yoy, to £6.6m. Although PBT decreased by 13.1%, this was

due to both a weaker Euro in the period, and furthermore from

the H1 2012 accounts benefitting from a one-off foreign

exchange gain. Adjusted for currency fluctuations, PBT would

have increased 7.6% yoy. FPAM contributed 30.6% to group

revenues (£2.0m), with the remainder being generated through

the group’s properties – an office block located in Warsaw,

and shareholdings in four of its six managed funds.

Management is confident of continued earnings growth, as it

carries on expanding its property portfolio. Although the

economic outlook for the Eurozone is far from certain,

mechanisms such as Quantitative Easing and Outright

Monetary Transactions have assisted in stabilising the markets

in which the group operates. The interim dividend in H1 2013

was maintained at 0.33p, and with a continually reducing net

debt position and furthermore a strong historical dividend

cover (averaging 2.82x over 5 years), we expect the final

dividend to be at least sustained.

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Page 36 of 74

Fletcher King Plc

Summary Data





Ticker FLK.L






Key data (Y/E Apr) - (£m)

2011A 2012A 2013E 2014E

Revenue 3.18 3.11 3.15 na

EBITDA 0.47 0.44 0.45 na

EBIT 0.41 0.40 0.40 na


Net Profit 0.33 0.28 0.29 na

EPS (p) 3.59 3.04 3.12 na

DPS (p) 1.50 1.50 1.50 na

Net Debt/(Cash) -2.1 -2.2 -1.8 na

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 8.36 9.87 9.62 na District & Urban Group Plc 20.50%

Dividend Cover (EPS/DPS) 2.39 2.03 2.08 na David Fletcher (Chairman) 14.60%

Net Cash/Dividend 15.46 16.19 13.03 na Lowerland Ltd 9.04%

EV/EBITDA 10.27 10.97 10.73 na Duncan Investment Pension Fund 4.34%

EBIT Margin 12.9% 12.9% 12.7% na Simon Miles De'Zoete 3.97%

Net Profit Margin 10.4% 9.0% 9.2% na


EPS Growth 36.5% -15.3% 2.6% na



Based in the UK, Fletcher King is a property service provider

operating across the country. It deals in asset management,

fund and investment management, broking, valuation and

ratings, and acquisitions and disposals. The group moved from

the Official List to AIM in 2008.

In recent years, FLK has quite predictably struggled to

maintain the performance that it reached in the 2000s. In the

period 2002 – 2007, the group improved PAT and total

dividends every year. From the financial crisis onwards,

however, revenues have not once exceeded even half of the

2007 figure. The property market continues to struggle, with

lack of economic growth, and in tandem lack of debt finance,

weighing especially heavily on areas outside London and the

South East. Investors are now focusing on relatively ‘risk free’

properties, notably Central London. As a result, values

elsewhere are in decline whilst yields are rising. Volume in both

sales and lettings is likewise down, although the group has

witnessed an unexpected pick up in the valuation business.

Notwithstanding these difficulties, FLK did well to maintain

performance for H1 2013. Turnover and PBT both remained

flat at £1.43m and £0.14m respectively. EPS increased

marginally to 1.15p. The Management business is performing

well, bringing in steady income streams, yet the significant

transaction fees are far below the 2006 – 2007 levels.

Although a small firm in terms of market capitalisation, history

demonstrates that FLK has proved consistently well operated

and resilient. Only twice in the past 24 years has the group

failed to turn a profit; in that same period it has impressively

paid out a dividend every year. The interim dividend for H1

2013 was 0.75p, equal to H1 2012. With a reduced net debt

position and an interim dividend cover up on the previous year,

we are confident that the final dividend will be at the least

maintained. Because of its wealth of experience and reliable

past performance, we feel that FLK is in a position to

capitalise on the eventual market upturn.

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Page 37 of 74

Goldplat Plc

Summary Data

Sector Gold Mining




Ticker GDP.L







2011A 2012A 2013E 2014E

Revenue 19.6 26.2 33.6 38.3

EBITDA 3.74 5.78 5.47 7.15

EBIT 3.45 5.27 4.42 5.70

Pre Tax Profit 3.43 5.24 4.65 6.21

Net Profit 2.96 4.47 3.90 3.36

EPS (p) 1.85 2.53 2.05 1.60

DPS (p) 0.00 0.60 0.60 0.60

Net Debt/(Cash) -3.1 -4.6 -5.2 -9.0

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 6.08 4.45 5.49 7.03 Perseus Settlement 18.71%

Dividend Cover (EPS/DPS) na 4.22 3.42 2.67 Kilo Trust 7.11%

Net Cash/Dividend na 4.52 5.14 8.89 Slater Investments Ltd 2.97%

EV/EBITDA 4.54 2.94 3.11 2.38 Hargreave Hale Ltd 1.39%

EBIT Margin 17.6% 20.1% 13.1% 14.9% Brian Michael Moritz (Chairman) 1.07%

Net Profit Margin 15.1% 17.0% 11.6% 8.8%

Revenue Growth 84.1% 33.7% 28.2% 13.9%

EPS Growth 92.7% 36.8% -19.0% -22.0%



Goldplat (“GDP”) is an African gold producer and explorer

with five operations spanning four countries: a producing mine

in Kenya; two profitably operating gold recovery businesses in

South Africa and Ghana; and two exploration and

development programmes, in Burkina Faso and Ghana. Having

listed on AIM in 2006, the recovery businesses have ensured a

steady cash flow that has assisted in developing other assets.

The Kilimapesa mine in Kenya commenced production in

January 2012, and by June 2012, GDP was in a position to

pay out a maiden dividend.

It has recently come to light that the Kenyan government is

mandated to possess equity stakes of at least 35% in the

country’s mining licences. This has caused a delay in the

expansion plans at the Kilimapesa mine, as GDP clarifies its

position with the government. Compounded by separate

operational issues, this resulted in the mine posting a loss of

£415k in H1 2013. Further to this, exploration results in

Burkina Faso and Ghana have proved disappointing.

In the 6m to December 2012, GDP posted revenues of

£15.5m, up 38.4% yoy. However, PBT decreased 34.2%, to

£1.6m. This was due to a c.£0.7m negative swing in finance

costs (owing to FX movements) and increased administrative

costs. Following the decision to scale down the production rate

by 50% to 5,000 oz p.a., an impairment charge was made

against Kilimapesa for £2.38m. Consequently group net losses

were £1.63m for the period.

Fortunately, GDP’s core recovery businesses have improved

yoy, and it is the Board’s plan to primarily develop this model,

only targeting new recovery projects that would yield 30,000+

oz p.a. We are of the opinion that this refocus on the higher

volume and margin part of the business, in which management

has expertise, is of great benefit to shareholders, and will be

reflected in improved earnings and dividends in the near term.

The Board has also just announced a share buyback

programme. This should further help to improve EPS and

ultimately DPS.

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Page 38 of 74

Greenwich Loan Income Fund Ltd

Summary Data

Sector Equity Investment Instruments




Ticker GLIF.L







2011A 2012E 2013E 2014E

Revenue 11.4 14.6 16.1 na

EBITDA 4.70 8.90 10.50 na

EBIT na na na na


Net Profit 3.22 6.37 8.02 na

EPS (p) 2.4 6.5 6.6 na

DPS (p) 4.0 4.8 4.7 na

Net Debt/(Cash) 111.6 na na na

Margins/Ratios `

2011 2012 2013 2014


P/E Ratio 23.09 8.38 8.26 na Artemis Investment Management LLP 13.51%

Dividend Cover (EPS/DPS) 0.59 1.35 1.40 na AXA Investment Managers (UK) Ltd 11.68%

Net Cash/Dividend -21.29 na na na Henderson Global Investors Ltd 10.98%

EV/EBITDA 40.82 21.56 18.27 na JO Hambro Investment Management Ltd 9.41%

EBIT Margin na na na na Philip J Milton & Company Plc 6.72%

Net Profit Margin 28.2% 43.6% 49.8% na Reliance Mutual Insurance Society Ltd 3.33%

Revenue Growth 17.0% 27.8% 10.3% na

EPS Growth 15.1% 175.4% 1.5% na



GLIF is a closed-end investment company that seeks to

provide a predictable and sustainable high dividend yield, while

maintaining its capital value. The company invests in, originates,

and provides, corporate loans to US and UK based SMEs.

Having listed on AIM in 2005, total investments as at 30 June

2012 were valued at £190.1m, with a cash balance of £17.4m.

The majority of GLIF’s portfolio is held through a

collateralised loan obligation vehicle, whose management is

based in Greenwich, Connecticut. The vehicle offers cheap

funding, as well as limited covenants through to 2019. GLIF

acquired BMS, a UK Special Debt Fund, in November 2012

to diversify both geographically and in its asset holdings. In

January 2013, it raised a further £6m. This is expected to fund

the establishment of new vehicles in the US.

The company delivered a sound performance during H1 2012.

While NAV remained stable at 47.9p (48.3p as at 31

December 2011), revenues increased 23.3% to £7.4m. At the

same time both operating expenses and financing costs

decreased 29.6% and 7.7% respectively, to a combined total

of £4.4m. Owing to movements in FX and in the unrealised

value of its assets and liabilities, the group posted a net loss for

the period of £2.2m (equating to an EPS loss of 11.29p).

Nevertheless, we feel that as GLIF holds its financial assets

predominantly for receipt of yields, and therefore often to

maturity, and furthermore will not be looking to trade its debt,

this underlying figure is thus meaningless. The net profit of

c.£3.0m from existing operations should be focused upon by

investors.

GLIF has maintained an impressive yield almost continually

since listing. In FY 2012, it paid out 4.8p over four quarterly

instalments. With a sustainable model that does not rely upon

capital appreciation, we are confident that both the yield and

GLIF’s NAV will be preserved going forward. We do

however note the primary threat to this existing model: that of

governments ceasing support initiatives, such as QE, that have

been propping up weak SMEs, or ‘zombie firms’.

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Page 39 of 74

Hasgrove Plc

Summary Data





Ticker HGV.L







2011A 2012E 2013E 2014E

Revenue 22.8 24.1 25.4 26.9

EBITDA 1.80 2.40 2.90 3.40

EBIT 0.93 1.50 2.10 2.60

Pre Tax Profit -3.00 1.40 2.00 2.70

Net Profit -9.76 0.90 1.40 1.90

EPS (p) -40.9 3.90 5.80 7.90

DPS (p) 1.00 2.50 3.50 3.90

Net Debt/(Cash) 1.4 0.1 -0.5 -1.8

Margins/Ratios

2011 2012 2013 2014


P/E Ratio -1.41 14.74 9.91 7.28 Octopus Investment Ltd 13.41%

Dividend Cover (EPS/DPS) -40.90 1.56 1.66 2.03 Godfrey Lionel Fozard Taylor (Chairman) 11.21%

Net Cash/Dividend -5.75 -0.17 0.61 1.97 Robert Bernard Casey 6.62%

EV/EBITDA 7.55 5.66 4.69 4.00 Stephen Rodgers 6.39%

EBIT Margin 4.1% 6.2% 8.3% 9.7% Vikki Suzanne Ashton 5.68%

Net Profit Margin -42.9% 3.7% 5.5% 7.1% Unicorn Asset Management Ltd 5.33%

Revenue Growth -35.6% 5.9% 5.4% 5.9% Interel Holdings SA 4.96%

EPS Growth -781.7% -109.5% 48.7% 36.2% Jean Baptiste Marie Leopold Schuybroek (NED) 4.39%



Hasgrove is an international digital and communication services

group operating through 4 subsidiaries: Amaze, The Chase,

Interact, and Landmarks Amaze. Together, they provide

solutions for digital marketing and strategy, graphic and web

design, communications and intranet, as well as offering brand

consulting and printing services. In 2011, the group disposed

of its public affairs and strategic communications division,

Interel, for €9.5m, so as to focus predominantly on digital

communications.

Following on from a challenging FY 2011 in which major

restructuring within the group occurred, H1 2012 results

proved the wisdom of such an overhaul, with group revenues

up 15.8% yoy to £12.2m. PBT from continuing operations

jumped 316.8% to £0.65m, and no exceptional costs resulted

in a headline net profit of £0.47m, in contrast to a loss of

£5.02m in H1 2011. Management also confirmed that trading

in FY 2012 will be in line with market expectations. Amaze,

the integrated marketing and technology division that accounts

for over three quarters of group revenue, encouragingly

secured noteworthy international accounts during the year. This

has assisted in enhancing its global presence and will

consequently drive future growth for Hasgrove.

The significance of the Board doubling the dividend pay out in

FY 2011, despite it being the group’s worst performing year

since becoming public, should not be understated. Adjusted

EPS had been in decline since 2008 and, excluding FY 2011,

dividend cover had not dropped below 12x. In FY 2011

however, despite the incurrence of substantial exceptional

costs, dividend cover dropped to 1.7 (using adjusted EPS).

Management’s confidence in the newly structured business

model, now focused on the digital communications aspects,

leads us to believe that there is substantial upside to the

dividend in the near term as profit margins continue to improve.

At the current share price, maintaining the adjusted FY 2011

dividend cover for 2012 would result in a reasonable yield of

c.4.0%, increasing to an appetizing 6.1% in FY 2013.

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Page 40 of 74

Highland Gold Mining Ltd

Summary Data

Sector Gold Mining




Ticker HGM.L







2011A 2012E 2013E 2014E

Revenue 300.2 351.4 422.3 467.7

EBITDA 161.3 162.8 203.5 220.7

EBIT 134.5 128.4 155.0 174.1

Pre Tax Profit 132.1 129.6 155.1 174.4

Net Profit 103.8 108.1 125.9 132.3

EPS (p) 21.0 21.3 24.7 26.9

DPS (p) 5.28 5.17 5.00 5.00

Net Debt/(Cash) -79.1 -52.6 -49.1 -181.3

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 4.89 4.81 4.16 3.81 Millhouse LLC 32.00%

Dividend Cover (EPS/DPS) 3.97 4.12 4.93 5.38 Prosperity Capital Management (RF) Ltd 9.70%

Net Cash/Dividend 3.01 2.04 1.97 7.29 Eugene Shvidler (Chairman) 8.63%

EV/EBITDA 2.84 2.81 2.25 2.07 Ivan Eugene Koulakov 5.40%

EBIT Margin 44.8% 36.5% 36.7% 37.2% JP Morgan Asset Management UK Ltd 4.98%

Net Profit Margin 34.6% 30.8% 29.8% 28.3% Peter Elam Hakansson 3.41%

Revenue Growth 23.2% 17.1% 20.2% 10.7% Van Eck Associates Corporation 3.31%

EPS Growth -15.0% 1.5% 15.8% 9.0%



Highland Gold Mining (“HGM”) was established in 2002, and

has since developed a valuable portfolio of gold mining

projects in Russia and Central Asia. The company currently

has two operating mines. In FY 2011, it produced a combined

184,102 gold and gold equivalent ounces. With numerous

development and exploration projects being actively

progressed, HGM looks set to continue ramping up production

output in the coming years.

2012 proved to be a mixed year for the company. Gold

production was up 18% yoy to 216,885 oz, putting it on track

to produce 225,000 – 240,000 oz in 2013. But while revenue

in H1 rose 2.1% to $161.5m, net profits for the period stood

at $45.0m, down 35.9% yoy. This was predominantly due to

the significant increase in cash costs per oz of gold, which

surged 51.4% to US$804 per oz. These figures largely

reflected higher waste stripping volumes and a decrease in the

average gold grade delivered for processing. The divestiture by

Barrick Gold Corporation of its entire holding (20.4%) at the

beginning of the year has also clearly weighed heavily on the

share price.

Nevertheless, the company’s balance sheet remains strong. A

recent trading statement reported a net cash position of

$52.6m as at 31 December 2012. There was also a 20.4%

increase yoy in total JORC compliant resources to 13.0m oz,

as a result of exploration and acquisitions. The company was

thus able to pay an interim special dividend of 4.8p, a

marginally lower figure than the total dividends paid in 2011.

HGM intends to continue paying special dividends as regularly

as possible, subject to cash flows, capital requirements and the

gold price. The upsurge in the latter over the past year, caused

by investors seeking its safe haven status, bodes well for

HGM’s near term future. Coupled with its debt free position,

we expect the company to have no difficultly in paying out

special dividends for the foreseeable future.

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Page 41 of 74

Holders Technology Plc

Summary Data





Ticker HDT.L







2011A 2012E 2013E 2014E

Revenue 19.6 16.5 18.8 na

EBITDA 0.52 0.10 0.30 na

EBIT 0.38 0.00 0.20 na

Pre Tax Profit 0.36 na na na

Net Profit 0.26 -0.02 0.10 na

EPS (p) 6.70 -0.51 3.20 na

DPS (p) 5.35 2.70 2.70 na

Net Debt/(Cash) -0.04 -0.10 -0.20 na

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 8.96 -117.65 18.75 na Rudolph Walter Weinreich (Chairman) 46.99%

Dividend Cover (EPS/DPS) 1.25 -0.19 1.19 na Andre Marcou 11.35%

Net Cash/Dividend 0.19 0.94 1.88 na Armstrong Investments Ltd 6.98%

EV/EBITDA 3.16 16.45 5.48 na Rath Dhu Ltd 6.92%

EBIT Margin 1.9% 0.0% 1.1% na Stockinvest Ltd 4.35%

Net Profit Margin 1.3% -0.1% 0.5% na


EPS Growth -47.9% -107.6% -727.5% na



Holders Technology is an international distributor of materials,

tools and services to the Printed Circuit Board (“PCB”)

industry. The company is also gaining market share as a light-

emitting diode (“LED”) solutions provider to the UK and

European lighting and industrial markets. Holders has been in

business since 1972, moving to AIM from the Official List of

the UK Listing Authority in October 2001.

In the past 18 months, the company’s primary business of

supplying the PCB industry has suffered, particularly in

mainland Europe where economic uncertainty continues to

prevail. As a result, its PCB activities only managed to break

even in H1 2012 (net profit of £3k as opposed to £564k in H1

2011). The company is also conducting a review of its PCB

operations in mainland China, and expects the outcome to

result in a non cash impairment charge in respect of its Chinese

PCB asset values. Nevertheless, management feels that due to

its wealth of experience, it is in a position to weather the

cyclical downturn without losing ground to competitors in the

PCB market.

In contrast, the company’s LED business continues to

improve. Revenue in the first half of the year surged by 45.2%

to £2.05m, with gross profits up 138.5%. Net losses

decreased to £72k (£282k in H1 2011). The company is

seeking to further widen its customer base and the range of

solutions it is able to offer in both Europe and the UK.

Due to the loss posted in H1 2012, the company cut its interim

dividend by 52.4% to 1p per share. It anticipates reporting a

break even result or a small loss for the year. It has, however,

managed to consistently pay a dividend of 5.35p for the past 5

years, and with cash of £0.74m as at 31 May 2012, the

company may yet opt to maintain its track record. However,

until the company returns to healthier levels of profitability we

see the dividend as vulnerable.

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Page 42 of 74

Hydrogen Group Plc

Summary Data

Sector Business Training & Employment Agencies




Ticker HYDG.L







2011A 2012E 2013E 2014E

Revenue 156.2 166.0 175.0 na

EBITDA 4.41 3.95 4.20 na

EBIT 3.87 3.40 3.65 na


Net Profit 2.40 2.24 2.45 na

EPS (p) 10.2 9.5 10.4 na

DPS (p) 4.3 4.4 4.5 na

Net Debt/(Cash) 1.4 2.8 3.5 na

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 8.64 9.29 8.49 na Ian Temple (Chairman) 17.60%

Dividend Cover (EPS/DPS) 2.38 2.17 2.32 na Chris Cole 12.46%

Net Cash/Dividend -1.33 -2.69 -3.26 na Timothy Smeaton (CEO) 11.99%

EV/EBITDA 5.47 6.11 5.75 na AXA Investment Management (UK) Ltd 9.67%

EBIT Margin 2.5% 2.0% 2.1% na Charles Marshall 7.88%

Net Profit Margin 1.5% 1.3% 1.4% na Majedie Asset Management Ltd 6.48%

Revenue Growth 26.6% 6.3% 5.4% na Daniel Church 5.68%

EPS Growth 35.6% -6.9% 9.4% na Hydrogen Group Employee Benefit Trust 5.03%



Hydrogen has achieved success in identifying and developing

new industry verticals, prime examples being Oil & Gas and

Life Sciences. These two recently established verticals

accounted for 37% of group net fee income (“NFI”) in H1

2012, albeit flattered somewhat by a 13% drop in NFI from

Hydrogen’s more traditional markets in Professional Support

Services. Group management has steered the operations safely

and profitably through the challenging markets of the past two

years while maintaining a prudent cost base.

Following a steady first six months of 2012 which saw modest

NFI growth of 3.5% and a maintained adjusted PBT of £2m,

we had anticipated an improved performance in H2 as the

investment in new sectors and geographies began to pay off.

We were therefore disappointed to learn that trading had

actually been adversely affected by slower NFI progress in

these areas than had been anticipated and which had been

exacerbated by the weak economic environment. As a result,

management stated that NFI would be limited to low single

digit growth for FY 2012 and profit was expected to be

“significantly below current market expectations”.

Most recently management has confirmed that it expects to

report a 5% increase in group NFI to £31.4m (FY 2011:

£29.8m) and that in Q4 its business had returned to more

typical levels of activity. The interim dividend was increased by

7% to 1.5p (1.4p) and assuming that trading levels remain

robust when the prelims are announced in March, we would

anticipate the final dividend at least being held at last year’s

level of 2.9p giving a total dividend for the year of 4.4p.

In our opinion Hydrogen remains one of the more attractive

smaller cap staffing companies. Dividends have been consistent

over the past five years, even in periods of troubled trading

(notably FY 2009, when basic EPS plunged to -22.25 and the

total dividend was nevertheless maintained at 4.1p). In light of

this, we envisage only a limited threat to the dividend in the mid

term, provided that the recovery in NFI is sustained.

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Page 43 of 74

Interior Services Group Plc

Summary Data





Ticker ISG.L







2011A 2012A 2013E 2014E

Revenue 1,173.8 1,281.5 1,337.5 1,367.5

EBITDA 14.65 8.65 12.00 13.00

EBIT 10.55 3.16 9.00 11.00

Pre Tax Profit 10.20 2.88 8.50 10.30

Net Profit 7.03 0.76 6.72 8.01

EPS (p) 24.9 7.4 20.1 24.0

DPS (p) 15.1 9.0 9.2 9.5

Net Debt/(Cash) -36.1 -25.4 -23.2 -24.7

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 5.53 18.48 6.84 5.74 Cathexis Capital LLC 9.78%

Dividend Cover (EPS/DPS) 1.65 0.83 2.18 2.51 Octopus Investments Ltd 9.10%

Net Cash/Dividend 7.17 8.44 7.52 7.73 ISG Employee Share Trust 5.72%

EV/EBITDA 1.40 2.38 1.72 1.58 River and Mercantile Asset Management LLP 5.19%

EBIT Margin 0.9% 0.2% 0.7% 0.8% Threadneedle Asset Management Ltd 4.79%

Net Profit Margin 0.6% 0.1% 0.5% 0.6% Investec Wealth & Investment Ltd 4.04%

Revenue Growth 20.7% 9.2% 4.4% 2.2% Hathaway Investment Management Ltd 3.46%

EPS Growth 16.9% -70.1% 170.2% 19.2% Brown, Shipley & Company Ltd 3.16%



ISG is an international construction group catering to a diverse

range of clients. In addition to construction and fit out services

provided in the UK, the company offers fit out services in

Europe, the Middle East and Asia, and special services, such

as project management and facilities management, in the latter

two regions. ISG listed on AIM in June 1998, and in the 14 full

financial years to date, has increased its revenues 542.3%, to

£1.28bn. It has posted a loss only once in that period, and that

was due to a write down of goodwill and exceptional costs.

Due to the economic downturn and continued uncertainty in the

Eurozone, the company has primarily focused on retaining

repeat clients in its UK operations. Although revenue was

maintained in the region’s fit out business, operating profit

decreased 19.5% to £6.5m in the year to 30 June 2012, as a

result of tighter margins. Margins, and consequently profits,

were likewise down in both the food retail and construction

businesses. However, overseas markets fared better in the

period, especially Continental Europe and Asia. Revenues

were up in those fit out divisions 39% and 22%, respectively.

The company has thus determined to seek organic growth and

bolt-on acquisitions principally in the overseas markets.

For the first time in the company’s history, total dividends in

FY 2012 were down on the previous period as a result of the

fall in net profits. The company has, however, indicated that

FY 2013 will see modest growth, in line with expectations.

With an estimated net cash position of £23m as at December

2012, which currently equates to c.50% of its market

capitalisation, the company is easily able to afford to increase

its dividend. However, the Board intends to resume its policy

of preserving a dividend cover of at least 2.0. An increase in

dividends will therefore only likely come to pass once

operating margins have been improved. However, given its

cash reserves, low valuation and stellar track record we think

ISG looks extremely attractive.

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Page 44 of 74

InterQuest Group Plc

Summary Data





Ticker ITQ.L







2011A 2012E 2013E 2014E

Revenue 120.9 114.5 128.0 na

EBITDA 4.03 2.15 3.27 na

EBIT 2.96 1.82 3.19 na


Net Profit -1.07 1.00 2.20 na

EPS (p) 7.83 3.63 6.05 na

DPS (p) 2.50 2.50 2.75 na

Net Debt/(Cash) 5.51 5.50 4.98 na

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 6.58 14.19 8.51 na Gary Ashworth (Chairman) 38.64%

Dividend Cover (EPS/DPS) 3.13 1.45 2.20 na ISIS Equity Partners LLP 6.82%

Net Cash/Dividend -6.65 -6.63 -5.46 na James Mellon 5.51%

EV/EBITDA 5.83 10.92 7.18 na AXA Investment Managers UK Ltd 5.15%

EBIT Margin 2.4% 1.6% 2.5% na Investec Wealth & Investment Ltd 4.82%

Net Profit Margin -0.9% 0.9% 1.7% na Martin Barrow 3.28%

Revenue Growth 7.8% -5.3% 11.8% na Newton Investment Management Ltd 3.03%

EPS Growth -6.1% -53.6% 66.7% na Octopus Investments Ltd 2.69%



Apart from the obvious recession induced downturn in 2009,

InterQuest had built up a solid earnings record since its

foundation in 2001. Strong organic growth has been supported

by targeted acquisitions resulting in a multi-branded IT

recruitment business focused on niche markets and skills for

both the pubic and private sectors. In 2011 the group

embarked upon a new chapter in its development beginning

with the appointment in April of Mark Braund as CEO.

Throughout 2011 the group increased investment in the

business – in the UK, consultant headcount was increased

from 144 to 169 and in H1 2012 to 194. Contract placement

is now increasingly focused on delivering candidates with niche

skills that can attract higher margins, while there has also been

a concerted effort to boost the level of permanent placements

undertaken.

H1 results showed a 20% rise in perm fees representing 36%

of net fee income (“NFI”) against 30% a year earlier.

Unfortunately, the group’s exposure to the depressed Financial

Services sector adversely impacted H1 results with NFI in this

business falling 17%. Together with a higher cost base, this

resulted in group adjusted PBT falling by 44% to £0.9m and a

reduction in expectations for the years ending December 2012

and 2013.

A recent trading update confirmed that the group was still

feeling the impact of a lower level of demand for permanent

hires, hence we are now forecasting an adjusted PBT of

around £1.6m (FY 2011: £3.5m) rising to £2.7m in 2013,

although with limited visibility this latter figure is only a

projection at this early stage and based upon an improvement

in demand for perm. Net debt should be similar to, or slightly

below, the level of last year which gives us some confidence

that the dividend will be maintained at last year’s level.

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Page 45 of 74

James Cropper Plc

Summary Data

Sector Paper




Ticker CRPR.L







2011A 2012A 2013E 2014E

Revenue 83.3 78.2 79.9 84.6

EBITDA 15.90 4.00 7.00 8.90

EBIT 12.90 1.30 2.46 3.64

Pre Tax Profit 12.80 1.00 1.96 3.24

Net Profit 8.50 0.80 1.57 2.43

EPS (p) -19.7 9.9 18.3 28.4

DPS (p) 7.9 7.9 8.0 9.0

Net Debt/(Cash) 1.7 6.5 8.8 7.7

Margins/Ratios

2011 2012 2013 2014


P/E Ratio -10.56 21.01 11.37 7.32 Mark Alexander James Cropper (Chairman) 13.62%

Dividend Cover (EPS/DPS) -2.49 1.25 2.29 3.16 J A Cropper 1974 Settlement 12.00%

Net Cash/Dividend -2.44 -9.30 -12.42 -9.66 Sanlam Private Investments (UK) Ltd 6.58%

EV/EBITDA 1.69 6.72 3.84 3.02 Sir James Anthony Cropper (NED) 6.42%

EBIT Margin 15.5% 1.7% 3.1% 4.3% CGA Trustee and Executor Company Ltd 3.18%


Revenue Growth 17.8% -6.1% 2.2% 5.9%

EPS Growth -192.5% -150.3% 84.8% 55.2%



James Cropper is a specialist paper manufacturing group.

Founded in 1845, the company listed on AIM in 2007 and

now operates in three separate divisions: Speciality Papers

provides an array of high quality, custom paper; Technical

Fibre Products (“TFP”) manufactures nonwoven mats and

veils for specialist purposes; and the Converting division

produces laminated and coated paper and film, and a selection

of display boards.

H1 2013 was largely in line with market expectations. Revenue

was unchanged at £39.0m, although margins slightly improved,

with trading profit after interest up 9.1% yoy to £1.2m. Total

revenues for TFP and Converting increased 12% and 21%

respectively, but the core Speciality Papers business saw its

sales decrease 7%. This was again due to a decline in value of

export sales. We also note the increase in the combined deficit

of the group’s two defined benefit pension schemes, by

c.£3.2m to c.£9.0m, as a result of the fall in bond yields in

2012.

The past year has witnessed a streamlining of operations by the

group. The TFP division consolidated geographically, with the

Cincinnati business closed and relocated to a new facility in

April. UK staff numbers were also cut by 8% in the period. On

a similar note, the company is seeking to secure a grant of up

to £3.1m from the Regional Growth Fund (“RGF”), which

would constitute over 44% of the total capex of £7m that the

steam raising plant in Kendal is expected to cost. The plant, if

constructed, would be in operation by late 2014, and would

save the group approximately £1m p.a. in energy costs.

Despite the decline in adjusted EPS by 23.3%, the company

nevertheless maintained an interim dividend of 2.2p in H1

2013. Owing to the improved output in the company’s newer

divisions and coupled with the Board’s confidence in future

performance the final dividend for 2013 may well be sustained.

However, given the low margins and geared balance sheet we

see the dividend stream as vulnerable.

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Page 46 of 74

Japan Residential Investment Company Ltd

Summary Data





Ticker JRIC.L







2011A 2012E 2013E 2014E

Revenue 19.3 19.8 20.2 na

EBITDA 11.10 12.50 13.50 na

EBIT 11.10 12.50 13.50 na


Net Profit 7.56 8.50 9.40 na

EPS (p) 4.0 4.3 4.5 na

DPS (p) 3.3 3.6 3.8 na


Margins/Ratios

2011 2012 2013 2014


P/E Ratio 13.69 12.73 12.06 na Ruffer LLP 27.97%

Dividend Cover (EPS/DPS) 1.21 1.19 1.19 na Aviva Investors Global Services Ltd 27.35%

Net Cash/Dividend -20.14 na na na Miton Capital Partners Ltd 16.15%

EV/EBITDA 20.64 18.33 16.97 na Baillie Gifford & Co. 5.84%

EBIT Margin 57.7% 63.2% 66.8% na Apollo Multi Asset management LLP 3.35%

Net Profit Margin 39.3% 43.0% 46.5% na CG Asset Management Ltd 3.02%

Revenue Growth 6.4% 2.8% 2.1% na Rathbone Investment Management Ltd 2.76%

EPS Growth -147.1% 7.5% 5.6% na



JRIC is a closed ended investment company that manages a

diversified portfolio of residential properties predominantly in

Japan’s three largest cities – Tokyo, Osaka and Nagoya. As at

30 November 2012, the portfolio consisted of 52 properties

(equating to over 2,200 rentable residential apartments) valued

at £249m. JRIC aims to realise value for shareholders primarily

via a steady income stream rather than through capital gains.

The company listed on AIM in 2006, raising £100m,

unfortunately on the eve of the credit crunch. As such it only

managed to book its first yearly profit in FY 2011.

Performance has however been maintained in H1 2012. Gross

rental income increased 4.8% yoy to £9.9m, and PBT

improved marginally, to £4.4m. Importantly, net assets were

up 12.3% to £135.6m, with property value gains totalling £6m

in the year to 30 November 2012. Occupancy rate as at 31

January was at 95.6%, up 1.0% on the previous year.

Furthermore, the balance sheet has been improved by

deleveraging activities, and the refinancing of debt with

extended maturities.

Encouragingly for JRIC it appears as though there is, at this

point in time, relatively limited downside to Japanese property

prices. The credit crunch of 2008, followed by the tsunami of

2011 and the on going European sovereign debt crisis, have

made sure that property values are at their lowest in two

decades. Now, with property yields on a downward trend,

management is confident that capital value, eroded in 2008 –

2010, will continue to be recovered in the coming years.

An interim dividend of 1.8p was paid out in H1 2012, up 20%

yoy. Maintaining the dividend cover adopted in FY 2011 and

applying our forecast EPS, total FY 2012 dividend would yield

an attractive 6.6%. The potential for capital gains is of equal

importance, with two unsolicited approaches for the group’s

portfolio having already been turned down. However, we note

the threat to the company's balance sheet of the recent

devaluation of the yen against the pound, and have tempered

our outlook accordingly.

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Page 47 of 74

Jarvis Securities Plc

Summary Data

Sector Speciality Finance




Ticker JIM.L







2011A 2012A 2013E 2014E

Revenue 5.68 6.12 6.30 6.50

EBITDA 2.13 2.53 2.80 3.10

EBIT 1.94 2.37 2.60 2.90

Pre Tax Profit 1.94 2.35 2.60 2.90

Net Profit 1.46 1.76 1.95 2.18

EPS (p) 13.8 16.6 18.1 19.8

DPS (p) 10.0 11.3 12.5 13.9

Net Debt/(Cash) -2.1 -3.6 -4.0 -4.5

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 18.06 15.02 13.81 12.63 Andrew Grant (Chairman / CEO) 60.45%

Dividend Cover (EPS/DPS) 1.38 1.48 1.45 1.42 Unicorn Asset Management Ltd 4.27%

Net Cash/Dividend 1.99 3.02 3.02 3.05 Hargreave Hale Ltd 3.19%

EV/EBITDA 10.74 9.07 8.18 7.39 Chelverton Asset Management Ltd 2.44%

EBIT Margin 34.2% 38.8% 41.3% 44.6%


Revenue Growth 4.9% 7.7% 3.0% 3.2%

EPS Growth 0.5% 20.2% 8.8% 9.4%



Jarvis Securities is a Kent based financial services business

which provides execution only services to retail customers and

third party broking and administration services to commercial

clients. Recent full year results showed that the retail business

grew market share, increased active client numbers by more

than 20% yet suffered a decline in revenue due to lower daily

average trading volumes. Revenue from both retail and

commercial clients declined 9% as a whole, though cash under

administration rose strongly throughout the second half of the

year, closing the period at a little under £90m.

An impressive 38% increase in interest earned on cash held

either directly or on behalf of clients enabled Jarvis to raise

group revenue by almost 8% for the year. With the cost base

largely unchanged and an operating profit margin of a little over

40%, Jarvis reported a healthy 22% rise in profit before tax to

£2.35m. Andrew Grant, Jarvis’ chairman and chief executive,

stated that he is confident that the company can continue to

deliver similar growth rates in forthcoming years. In addition to

rising interest rates, the company is clearly well placed to

benefit from any revival in trading volumes and volatility that

may arise out of the recent rally in the UK equity market.

Jarvis has a stated policy of paying out two thirds of its profit

after tax as dividends. Somewhat unconventionally, this is paid

to shareholders on a quarterly basis. As little or no capital

expenditure is required to maintain its operations, it is able to

adopt this policy and still enhance its cash balances. Its annual

dividend, which rose 12.5% last year, can therefore be

expected to rise again in the current year. Despite the share

price rising sharply on the back of its results, the shares still

yield 5.0% based on this year’s forecasts.

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Page 48 of 74

Juridica Investments Ltd

Summary Data





Ticker JIL.L







2011A 2012E 2013E 2014E

Revenue 16.4 49.1 39.3 39.3


EBIT 8.94 na na na

Pre Tax Profit 7.19 49.07 29.44 29.44

Net Profit 32.92 na na na

EPS (p) 19.6 31.7 19.1 19.1

DPS (p) 7.0 21.1 13.2 13.2


Margins/Ratios

2011 2012 2013 2014


P/E Ratio 4.64 2.88 4.76 4.76 Invesco Asset Management Ltd 31.61%

Dividend Cover (EPS/DPS) 2.80 1.50 1.45 1.45 Baillie Gifford & Co. 16.83%

Net Cash/Dividend 3.84 na na na Jupiter Asset Management Ltd 11.86%

EV/EBITDA 13.65 na na na AXA Investment Managers (UK) Ltd 8.45%

EBIT Margin 54.6% na na na Artemis Investment Management LLP 4.65%

Net Profit Margin 201.1% na na na Reliance Mutual Insurance Society Ltd 4.06%

Revenue Growth 14.6% 199.8% -20.0% 0.0% Moore Capital Management LP 2.70%

EPS Growth -380.4% 61.3% -39.6% 0.0% Henderson Global Investors Ltd 2.64%



Juridica provides strategic capital to the US and UK legal

markets. Specifically, it invests in a diversified portfolio of

corporate claims in litigation and arbitration. The group has a

stringent vetting process in place, only taking on claims that

possess significant potential economic value, a large chance of

gaining a successful outcome in court, and that have already

been undertaken by world class lawyers. In essence, by

treating cases as corporate assets Juridica monetises these

claims, thus making them transferable and ultimately allowing

reduction in client risk. Juridica listed on AIM in 2007 as a

close ended investment company and as at 30 June 2012 had

total assets of over $225m.

FY 2012 has witnessed the maturing of the group’s portfolio,

and with it significant returns for shareholders. Although

Juridica posted a net loss of $1.6m in H1, this included

provisions for a decrease in fair value of debt securities of

$13.6m. Revenues for the period were $13.7m, with EBITDA

at $10.0m. In H2, the group announced that four separate

cases arriving at partial settlement agreements were generating

a combined $35.2m, which takes Juridica’s lifetime gross

proceeds to $85m. The group currently has a total of 18

investments representing 23 separate legal cases, with a

combined $157.1m committed to them. The majority of these

are now reaching their concluding phases. With the seven

investments that have reached completion so far providing a

gross IRR of c.85%, further substantial potential returns should

be expected over the next 18 months.

Juridica announced an interim dividend of 19.9c (13p) for H1

2012, owing to the post period settlements. Since fund

inception, the group has returned a total of $49m ($10m

through a share buyback programme). The Board is unwilling

to determine dividend pay outs without income being

confirmed first, which of course may well result in future yield

inconsistency. However, in light of the maturing portfolio and

the outstanding historic IRR, we are confident that superlative

yields will be maintained in the mid term.

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Page 49 of 74

M Winkworth Plc

Summary Data





Ticker WINK.L






Key data (Y/E Dec- (£m)

2011A 2012E 2013E 2014E

Revenue 4.0 4.3 4.5 na

EBITDA 1.33 1.50 1.60 na

EBIT na na na na


Net Profit 0.88 na na na

EPS (p) 7.1 7.9 8.7 na

DPS (p) 4.6 4.9 5.2 na


Margins/Ratios

2011 2012 2013 2014


P/E Ratio 12.45 11.20 10.17 na Simon Peter Agace (Chairman) 46.39%

Dividend Cover (EPS/DPS) 1.55 1.61 1.67 na Investec Wealth & Investment Ltd 9.80%

Net Cash/Dividend 3.09 na na na Anthony John Snarey 9.71%

EV/EBITDA 7.40 6.56 6.15 na Bujang Zaidi 7.10%

EBIT Margin na na na na Dominic Agace (CEO) 4.25%

Net Profit Margin 22.1% na na na Mohad Shukri Abdul Yajid 3.75%


EPS Growth 1.1% 11.1% 10.1% na



Winkworth is a UK franchisor of estate agencies. It provides

its franchisees with a well respected branded platform that

serves to increase recognition and that offers a more

competitive position in the marketplace. In return, Winkworth

benefits from the comprehensive local knowledge and

customer familiarity of its franchisees. Founded in 1835 and

listing on AIM in 2009, the company now operates through

over 90 offices in the UK, Portugal and France.

Conditions have proved challenging over the past 18 months.

In addition to a constriction of available mortgage funding

brought about by the general economic downturn, specific

governmental policies have negatively effected Winkworth’s

market, with the 2012 Budget including stamp duty hikes at

both ends of the spectrum. Rising overhead costs have also

been a strain on the sector. Even so, Winkworth has

impressively sustained its growth. H1 2012 revenues increased

5.8% yoy, to £1.9m. Although PBT was £0.4m (a decrease of

25.4% yoy), that was after accounting for £90k in exceptional

costs. Disruption to trading, especially in London, brought

about by the Jubilee and London Olympic Games, likewise

impacted upon the figure. The group continues to pursue its

strategy of diversifying its revenue stream by building its

network outside of the capital. The number of transactions

across the country offices increased by 45% yoy in H1 2012,

contributing to approximately 1/3 of the group total. Looking

abroad, a franchise agreement in Asia is also under discussion.

Having announced a final quarter dividend of 1.3p, the total

dividend for FY 2012 is thus in line with forecasts, despite the

£0.29m of exceptional costs accrued in the year. Given the

group’s aforementioned push for growth, its comfortable cash

position and its continually improving results, we see no reason

why the FY 2013 dividend will not increase by a similar

amount. For FY 2012, dividend cover should be in line with

the 1.6x average of the past 2 years. In our view, this serves as

a helpful indicator that future performance, and ultimately

growth in DPS, will not be slowing anytime soon.

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Page 50 of 74

Maintel Holdings Plc

Summary Data





Ticker MAI.L







2011A 2012E 2013E 2014E

Revenue 25.8 28.6 30.1 na

EBITDA 3.70 5.20 5.40 na

EBIT 3.10 4.42 4.59 na


Net Profit 2.10 3.50 3.71 na

EPS (p) 27.5 35.3 36.8 na

DPS (p) 10.6 13.8 14.4 na


Margins/Ratios

2011 2012 2013 2014


P/E Ratio 12.55 9.77 9.38 na John David Sebastian Booth (Chairman) 25.84%

Dividend Cover (EPS/DPS) 2.59 2.56 2.56 na Angus McCaffery (Dir.) 19.24%

Net Cash/Dividend 2.61 na na na John Alexander Spens 14.74%

EV/EBITDA 9.38 6.67 6.42 na Herald Investment Management Ltd 7.12%

EBIT Margin 12.0% 15.5% 15.2% na Octopus Investments Ltd 5.92%

Net Profit Margin 8.1% 12.2% 12.3% na Hargreave Hale Ltd 4.99%


EPS Growth 35.5% 28.4% 4.2% na



Maintel (“MAI”) is a UK market leading provider of

telecommunications solutions. The company operates in three

divisions, namely Maintenance and Equipment, Network

Services, and the recently established Mobile business. Since

listing on AIM in December 2004, MAI has increased its

annual revenues by 126%, and its net profits by 164%. Total

dividends have likewise not failed to increase yoy in the period.

The prevailing economic downturn has barely affected the

performance of the group. In an era of consolidation for the

telecommunications industry, MAI has held its own and made

bolt-on acquisitions to diversify revenue streams. Totality, a

specialist UK mobile telecoms provider, was acquired in

October 2011 for a total consideration of £7m. In its first six

months of trading (to 30 June 2012), the division contributed

£0.86m (16.7%) to group gross profits. Management has

stated that it will continue to look out for further potential

acquisitions, especially in the near term whilst market

uncertainty reigns for the smaller, independent firms in the

industry.

Performance improved in H1 2012 with group revenues of

£13.5m and adjusted pre tax profits of £2.35m, up 6.4% and

37.4% respectively. Despite a basic PBT of £0.19m being

realised, this was predominantly due to acquisition costs

(£1.8m). Indeed, adjusted EPS for the period increased 39%

to 16.6p.

The interim dividend of 6.3p was an increase of 37.0% yoy.

Although we note the consideration of £3.1m that has been

paid in respect of the Totality acquisition after the reporting

period and the effect that it will have on the end of year

balance sheet, we are nonetheless optimistic of the continued

growth in earnings in the mid and long term. A healthy net cash

balance, free of debt and fortified by a £1.5m revolving credit

facility, should accommodate the outstanding payments for

Totality. With an effective cash generative model, we believe

there is still a strong potential upside to the dividend.

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Page 51 of 74

Matchtech Group Plc

Summary Data





Ticker MTEC.L






Key data (Y/E Jul) - (£m)

2011A 2012A 2013E 2014E

Revenue 301.8 371.4 400.0 425.0

EBITDA 7.62 9.85 10.95 12.93

EBIT 7.11 9.15 10.30 12.28

Pre Tax Profit 6.39 7.97 9.25 11.23

Net Profit 4.73 5.70 6.66 8.08

EPS (p) 19.7 23.5 27.5 32.3

DPS (p) 15.6 15.6 15.6 15.6

Net Debt/(Cash) 16.0 14.5 12.5 11.0

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 14.17 11.91 10.17 8.65 George Douglas Peter Materna (Chairman) 33.60%

Dividend Cover (EPS/DPS) 1.27 1.51 1.76 2.07 Octopus Investments Ltd 10.98%

Net Cash/Dividend -4.36 -3.95 -3.43 -3.01 AXA Investment Managers (UK) Ltd 8.85%

EV/EBITDA 9.54 7.38 6.64 5.62 Paul John Raine 7.74%

EBIT Margin 2.4% 2.5% 2.6% 2.9% Andrew Francis White (Deputy Chairman) 4.66%

Net Profit Margin 1.6% 1.5% 1.7% 1.9% British Steel Pension Scheme 4.11%

Revenue Growth 14.1% 23.0% 7.7% 6.3%

EPS Growth -22.9% 19.0% 17.2% 17.5%



Matchtech is a broad based recruitment company with its roots

in the provision of staff into the engineering and construction

environment. In recent years it has successfully diversified its

range of verticals and now segments its business into three

main divisions: i) Matchtech Division - representing its

traditional technical specialisations in Engineering and Built

Environment sectors with the addition of Information Systems

and Technology and Science and Medical; ii) Professional

Services Division - trading under the Barclay Meade and

Alderwood Education brands; and iii) Elemense Division -

representing the group’s recruitment process outsourcing

services.

This diversification has fundamentally strengthened the business

which in the past was influenced by the group’s exposure to a

number of long term major Defence contracts and was brought

into sharp focus by the government’s Defence Spending

Review in 2010. Although being largely unaffected by the

spending cuts it prompted management to instigate a major

diversification programme that has met with success following

significant investment which took over a year to begin to pay

back. However over this period the group maintained its

dividend. The position now sees a company that grew earnings

by 19% in FY 2011/12 in market conditions that for other

recruitment companies were very testing. Contractors on

assignment grew 12% yoy and represented 68% of net fee

income with permanent placement income representing the

balance.

The most recent trading update from management was issued

in November 2012 and stated that the group continued to

perform in line with the Board’s expectations. Furthermore, it

related that skill shortages were driving unprecedented demand

for contract staff in the group’s markets with the diversification

strategy broadening the client base and enabling the group to

take market share. With earnings growing and dividend cover

increasing the dividend yield is looking increasingly secure.

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Page 52 of 74

May Gurney Integrated Services Plc

Summary Data





Ticker MAYG.L







2011A 2012A 2013E 2014E

Revenue 571.4 695.3 651.0 654.4

EBITDA 33.90 46.50 49.95 54.69

EBIT 25.10 30.10 26.51 28.23

Pre Tax Profit 18.80 19.30 12.30 19.57

Net Profit 13.30 13.80 6.65 18.45

EPS (p) 24.8 29.5 24.2 25.9

DPS (p) 6.6 8.4 8.4 8.6


Margins/Ratios

2011 2012 2013 2014


P/E Ratio 7.19 6.04 7.35 6.87 David William Edmund Sterry 9.62%

Dividend Cover (EPS/DPS) 3.75 3.50 2.88 3.00 Artemis Investment Management LLP 7.11%

Net Cash/Dividend 2.35 1.86 na na Polar Capital LLP 5.47%

EV/EBITDA 3.78 2.75 2.56 2.34 Fidelity Management and Research Company 5.01%

EBIT Margin 4.4% 4.3% 4.1% 4.3% Robert Ian Findlater 4.20%

Net Profit Margin 2.3% 2.0% 1.0% 2.8% Aviva Investors Global Services Ltd 4.00%

Revenue Growth 18.3% 21.7% -6.4% 0.5% Octopus Investments Ltd 3.97%

EPS Growth 13.0% 19.0% -17.8% 7.0% Majedie Asset Management Ltd 3.63%



May Gurney (“MAYG”) is a UK based infrastructure support

services group, operating in two units. The Public Sector

Services division (which currently accounts for 58% of

revenues) provides highway, environmental, and fleet and

passenger services, whilst the Regulated Sector Services

division (42% of revenues) offers utility, rail and waterways

services. Having listed on AIM in 2006, MAYG has since then

increased turnover and net profits by 71.1% and 29.0%,

respectively.

During the 6m period ending 30 September 2012, however,

MAYG reported a trio of significant operational issues. Two

long term environmental services contracts and the Scottish

Utilities businesses have underperformed, and the planned

closure of the Facility Services division cost significantly more

than anticipated. The £10m final closure provision set aside by

management for the latter, coupled with the contract issues,

resulted in a net loss for the period of £3.6m. In September,

when the trading update was released and the then CEO

announced his resignation, the share price fell as much as 56%.

Nonetheless, having ring fenced the issues, management

believes that MAYG will recover swiftly. As at 30 September,

it possessed an order book of c.£1.5bn, and potential contract

extensions offered a further c.£1.7bn. Confidence in future

performance was highlighted by the maintained interim dividend

of 2.79p. But having diminished its cash buffer to pay out, the

company is unlikely to be forced into repeating this, if under

performance continues. The Board has stressed that

improvements in operating margins are the group’s priority for

the foreseeable future. With the share price having bounced

c.90% from its September lows, and heavyweight investment

funds taking stakes, the market clearly envisages a turnaround.

Even so, until a solution to the environmental services contracts

is arrived at, and confirmation of improvements in performance

is given, we conclude that the final dividend is vulnerable to

being cut, and the upside potential to the share price is limited.

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Page 53 of 74

MCB Finance Group Plc

Summary Data

Sector Consumer Finance



Reporting currency EUR

Ticker MCRB.L






Key data (Y/E Dec) - (€m)

2011A 2012A 2013E 2014E

Revenue 18.2 27.3 29.1 36.3

EBITDA 4.84 6.45 9.12 12.58

EBIT 4.78 6.18 9.69 12.05

Pre Tax Profit 3.58 1.50 4.36 7.36

Net Profit 2.87 0.68 3.27 5.52

EPS (p) 14.9 3.3 16.6 28.0

DPS (p) 3.50 0.00 3.73 5.00


Margins/Ratios

2011 2012 2013 2014

Dividend Yield 4.4% na 4.7% 6.3% Key Shareholders

P/E Ratio 5.37 24.32 4.83 2.86 Kai Karttunen 43.34%

Dividend Cover (EPS/DPS) 4.26 na 4.44 5.59 Dermot F Desmond 14.61%

Net Cash/Dividend -16.35 na na na Richard Parkinson 12.05%

EV/EBITDA 8.14 6.11 4.32 3.13 Henry Nilert (Dir.) 6.95%

EBIT Margin 26.3% 22.7% 33.4% 33.2% Peter Lorange 4.78%

Net Profit Margin 15.8% 2.5% 11.3% 15.2% Philippe Duleyrie (NED) 4.55%

Revenue Growth 54.3% 50.0% 6.6% 25.0% Europanel AB 4.19%

EPS Growth 1453.1% -77.9% 403.3% 68.8% Conils Ltd 3.86%


Share price as of 01/03/2013.

Operating under its Credit24 brand, MCB provides flexible

credit solutions to retail consumers in Finland, Estonia, Latvia

and Lithuania. The company targets the non bank, unsecured

loan market, advancing loans of up to €2,000 for a maximum

of 2 years. MCB distinguishes itself by only serving high quality

customers with strong credit histories. Having listed on AIM in

2007, the company made a breakthrough in FY 2011 in terms

of growth in revenue and PBT, and was consequently in a

position to pay out a maiden dividend.

In FY 2012, MCB continued to expand its business rapidly.

Revenues were €27.3m, up 50.0% yoy. To drive growth,

MCB raised €29.4m gross through 2 bond issues offered to

Nordic investors. This enabled total issuance of loans to surge

45% yoy to €86.7m. There is plenty of scope for further

growth, despite a slowing rate in established markets. In July

2012, MCB launched a new consumer lending business in

Australia, which has almost trebled the group’s current target

market population to 34 million. A proprietary online sales

platform has also recently been launched in Lithuania.

Furthermore, MCB is continuing to develop and expand its

range of consumer finance products and services, including

loan packages with longer maturities.

The total dividend in FY 2011 was 3.5p (4c). Owing to new

business costs, the ramp up in borrowing and unrealised FX

differences, MCB posted a net profit in FY 2012 of €0.68m,

down 76.4% yoy. On a pro forma basis PBT looks somewhat

healthier at €2.52m (FY 2011: €3.67m), yet even so, finance

costs have increased materially, owing to the strategy of

aggressive growth. Although all bank loans and overdrafts

were consolidated into bonds, the annual interest due on these

securities as at year end was €3.79m, up over 215% yoy. As a

result, until geographical expansion and product development

has settled, we see minimal upside in the dividend in the near

term, as earnings are eaten up by growth. In the mid – long

term, however, the business model does look attractive in light

of its continued core growth, and we forecast more consistent

and healthier dividend potential beyond 2013.

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Page 54 of 74

Motivcom Plc

Summary Data





Ticker MCM.L







2011A 2012E 2013E 2014E

Revenue 106.0 na na na


EBIT 3.41 na na na


Net Profit 2.37 2.20 3.70 na

EPS (p) 7.8 7.5 11.8 na

DPS (p) 4.0 4.5 5.0 na


Margins/Ratios

2011 2012 2013 2014


P/E Ratio 13.95 14.47 9.19 na John Murray Sylvester (Dir.) 22.01%

Dividend Cover (EPS/DPS) 1.95 1.67 2.36 na Nigel William Wray 10.73%

Net Cash/Dividend 4.68 na na na BlackRock Investment Management (UK) Ltd 5.78%

EV/EBITDA 6.03 na na na Colin Thomas Lloyd (Chairman) 4.13%

EBIT Margin 3.2% na na na

Net Profit Margin 2.2% na na na

Revenue Growth -8.3% na na na

EPS Growth -24.4% -3.6% 57.3% na



Motivcom provides marketing communications, events and

conferences, and motivation and incentive expertise to UK and

European blue chip corporate clients. Its service offering,

provided through three divisions (Motivation, Events and

Promotions), is designed to positively influence the behaviour

of clients’ employees which in itself is intended to support

company growth. Based in the UK, the group listed on AIM in

2004 and has notably remained profitable in the eight full years

to date, having also not failed to increase its dividend every

year in that period.

The marketing industry has been struck especially hard by the

tough economic conditions of late as clients have cut significant

expenditure in the area. In FY 2011, Motivcom’s operations

witnessed a decrease in business intake with group revenues

and PBT dropping 8.3% and 25.2% respectively. PBT was

down by another 30.2% yoy in H1 2012 to £0.9m. Although

the Motivation division increased its operating profit in the 6

month period by almost 150%, with significant client wins from

the Royal Mail, the Post Office and Lloyds Banking Group,

operating profits for both the Events and Promotions segments

plummeted by over 50%.

Despite the decline in figures, management is nevertheless

optimistic that the group can weather the current economic

lethargy, as was stressed by an increase in the interim dividend

by 30.4% to 1.5p. We feel that Motivcom’s diversity of

revenue streams places it in a good position to benefit from the

eventual upturn in customer expenditure on marketing, and in

the meantime to maintain its market leading position. Bolt-on

acquisitions are also a possibility at present, although

management has stressed that it will not overpay. However,

given the current decline in earnings and relatively small net

cash balance we see the dividend under threat unless earnings

make a swifty recovery.

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Page 55 of 74

MTI Wireless Edge Ltd*

Summary Data

Sector Tech Hardware & Equipment




Ticker MWE.L







2011A 2012A 2013E 2014E

Revenue 14.7 12.7 13.3 na

EBITDA 0.78 0.22 0.69 na

EBIT 0.25 -0.31 0.19 na

Pre Tax Profit -0.04 -0.27 0.24 na

Net Profit 0.04 -0.19 0.26 na

EPS (p) 0.00 -0.40 0.30 na

DPS (p) 1.26 0.38 0.38 na

Net Debt/(Cash) -5.0 -5.1 -5.4 na

Margins/Ratios

2011 2012 2013 2014


P/E Ratio na na 22.21 na MTI Computers & Software Services 52.40%

Dividend Cover (EPS/DPS) na -1.04 0.80 na MTI Directors 7.40%

Net Cash/Dividend 4.99 17.01 17.94 na Herald Investment Management Ltd 5.40%

EV/EBITDA 0.30 1.11 0.35 na Employees 3.20%

EBIT Margin 1.7% -2.4% 1.4% na

Net Profit Margin 0.3% -1.5% 2.0% na


EPS Growth na na na na


Share price as of 01/03/2013 *Allenby Capital corporate client

MTI develops and manufactures complex antennas and

antenna systems used predominantly for the transmission and

reception of wireless broadband. The company has an

international customer base and sells products into both military

(16% of 2012 revenues) and commercial applications (84%).

MTI is headquartered in Israel, has a production facility in

India and at the end of December 2012 had 76 employees.

Recently reported FY 2012 results were, on the face of it,

disappointing given the reported pre tax loss of $268k.

However, the results were obscured by a $300k one off

charge incurred in Q1 2012 and, on an underlying basis, the

second half of the year showed an upturn in profitability. The

company declared a dividend of 0.58c per share to be paid in

April. With healthy cash reserves and an overall strong balance

sheet we expect a similar dividend level for 2013.

The military side of the business continues to struggle.

Revenues fell 42% in the year and the business now accounts

for only 16% of group sales. Reassuringly, management

expects growth in the military segment in 2013 given the

current backlog and order pipe line. The commercial business

is proving more stable. Although revenues in this business fell

5% year on year, EBIT improved to $399k from $128k in

2011, helped by products such as the 60-80 Ghz range where

revenues tripled year on year.

The company appreciates the importance of dividends to

shareholders and the 0.58c that will be payable in April

represents a yield of over 5%. Although earnings are currently

depressed, given the strong balance sheet we remain confident

that a similar dividend will be paid in 2013. In addition to the

attractive yield, we calculate a Net Asset Value of around 13p

(predominantly cash or liquid securities) hence MTI is clearly

undervalued at the current price.

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Page 56 of 74

Murgitroyd Group Plc

Summary Data





Ticker MUR.L






Key data (Y/E May) - (£m)

2011A 2012A 2013E 2014E

Revenue 33.2 35.7 36.6 38.3

EBITDA 4.40 4.76 4.95 5.20

EBIT 4.20 4.54 4.70 5.00

Pre Tax Profit 4.04 4.30 4.60 4.90

Net Profit 2.65 3.14 3.80 3.90

EPS (p) 30.0 36.0 38.9 41.1

DPS (p) 10.8 12.0 13.0 14.0

Net Debt/(Cash) -4.6 -3.2 -1.3 0.7

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 17.08 14.24 13.17 12.47 Ian Murgitroyd (Chairman) 28.01%

Dividend Cover (EPS/DPS) 2.78 3.00 2.99 2.94 Liontrust Asset Management Plc 9.62%

Net Cash/Dividend 4.85 3.03 1.14 -0.57 Schroder Investment Management Ltd 6.99%

EV/EBITDA 10.89 10.06 9.68 9.21 George Edward Murgitroyd (Deputy Chairman) 4.41%

EBIT Margin 12.6% 12.7% 12.8% 13.1% Elizabeth-Anne Thomson 4.41%

Net Profit Margin 8.0% 8.8% 10.4% 10.2% Close Brothers Asset Management 3.50%

Revenue Growth 12.9% 7.5% 2.5% 4.6% Investec Wealth & Investment Ltd 3.21%

EPS Growth -3.2% 20.0% 8.1% 5.7% Mawer Investment Management Ltd 2.84%

Sources: Thomson Reuters, Hardman & Co, Allenby Capital


Murgitroyd is a Glasgow headquartered, International Patent

and Trade Mark Attorney with offices throughout the UK,

Europe and the US. Although its dividend yield is relatively low

compared to others in our analysis, the company has a

successful track record of organic and acquisitive growth

which has led to steadily increasing dividends (the dividend has

increased by over 250% since 2005). Murgitroyd operates in

a very stable industry thus we see minimal volatility in earnings.

At a c.35% discount to its closest peer we feel there remains

the opportunity for further share price upside.

Murgitroyd is the only UK listed patent Attorney and provides

Intellectual Property (“IP”) services including filing, due

diligence, litigation and translation of Patents and Trade Marks

to clients from a range of industries. Ian Murgitroyd (current

largest shareholder with 28%) started the business as a sole

practitioner in Glasgow in 1975, converting to a partnership in

1978. In 2001 the company listed on AIM and has since

acquired and integrated five smaller practices.

One of Murgitroyd’s advantages over competitors (who tend

to be small practices in this fragmented industry) is its

technology platform. This has allowed the flow of work to be

separated and managed more efficiently between the fee

earning Attorneys. The benefits of this are higher margins and

the opportunity for post acquisition synergy gains when target

companies are migrated into the new work flow system.

The patent cycle is a lengthy process and includes renewal

work thus creating an element of revenue which is largely

known at the beginning of the year for Murgitroyd (c.15%).

This further de-risks the business model and provides a level of

stability of revenues. With no other listed patent Attorneys,

AIM listed Patent translator RWS Holdings Plc is

Murgitroyd’s closest peer. Murgitroyd trades on around a

35% discount to RWS, which suggests further upside potential.

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Page 57 of 74

Naibu Global International Plc

Summary Data

Sector Retail (China)




Ticker NBU.L






Key data (Y/E Dec) - (RMBm)

2011A 2012E 2013E 2014E

Revenue 1,492 1,670 1,870 2,057

EBITDA 348 380 420 462

EBIT 345 379 421 463


Net Profit 283 285 316 348

EPS (p) 53.7 50.4 55.6 61.2

DPS (p) na 3.00 6.00 6.00


Margins/Ratios

2011 2012 2013 2014

Dividend Yield na 2.9% 5.7% 5.7% Key Shareholders

P/E Ratio 1.96 2.08 1.89 1.72 Huoyan Lin (Chairman) 46.8%

Dividend Cover (EPS/DPS) na 16.80 9.27 10.20 Allied Property Capital Ltd 23.7%

Net Cash/Dividend na na na na Easy Capital International Ltd 8.42%

EV/EBITDA 0.70 0.64 0.58 0.53 Riemann investment Holdings Ltd 5.47%

EBIT Margin 23.1% 22.7% 22.5% 22.5% Win Zone Ltd 4.01%


Revenue Growth 19.8% 11.9% 12.0% 10.0%

EPS Growth 24.7% -6.1% 10.4% 10.0%



Naibu designs, manufacturers and retails sports shoes, sports

clothing and sporting accessories under the Naibu brand. The

company targets the mass market – specifically young adults

and young business travellers. Naibu is China's 10th largest

sportswear brand with a wide distribution network and close

to 3,000 branded outlets. Revenue is generated entirely in the

PRC and is split into 3 segments: shoes (c.52% of revenues in

H1 2012), apparel (46%) and accessories (2%). Naibu listed

on AIM in April 2012 raising approximately £6m.

The company reported solid earnings in H1 2012 with sales

increasing by 16.6% yoy and net profit by 28.3% to RMB

135.6 (c.£14m). However, cash flow generation disappointed.

Excluding the IPO proceeds cash actually decreased mainly

due to adverse swings in working capital.

The Chinese sportswear market has had a tough 18 months

with many of Naibu’s HK listed peers such as Li Ning

(2331.HK) and 361Degrees(1361.HK) reducing earnings

expectations - possibly dragging Naibu down with this

sentiment. However, we feel the sector is slowly resolving its

issues - predominantly excess inventory in the retail chain.

Furthermore, economic data out from China since the

beginning of 2013 has been strong and the government

continues to promote urbanisation thus strengthening the case

for increasing consumer expenditure.

Naibu looks exceptionally undervalued on every measure and

is forecast to pay a c.5.7% dividend yield in 2013. At 30th

June 2012 the company had c.£33m of cash on the balance

sheet so there should be no concerns about the sustainability of

the dividend given the forecast dividend for 2013 will only

consume c.£3.3m of cash. Liquidity has historically been poor

but has improved since the December 2012 Camkids

(CAMK.L) IPO which highlighted the value in the Chinese

retail sector. Sector woes and the ‘China factor’ will likely

weigh on the stock for some time but we expect a steady re-

rating.

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Page 58 of 74

Nationwide Accident Repair Services Plc

Summary Data





Ticker NARS.L







2011A 2012E 2013E 2014E

Revenue 172.9 163.1 165.6 na

EBITDA 7.60 7.60 7.60 na

EBIT -2.88 4.80 5.50 na

Pre Tax Profit -2.59 2.10 5.68 na

Net Profit -2.38 1.70 4.37 na

EPS (p) -5.5 8.9 10.1 na

DPS (p) 5.5 5.5 5.5 na

Net Debt/(Cash) -8.0 -5.4 -5.9 na

Margins/Ratios

2011 2012 2013 2014


P/E Ratio -12.64 7.81 6.88 na Harwood Private Equity 31.88%

Dividend Cover (EPS/DPS) -1.00 1.62 1.84 na Octopus Investments Ltd 9.76%

Net Cash/Dividend 3.37 2.27 2.48 na AXA Investment Managers (UK) Ltd 6.48%

EV/EBITDA 2.90 2.90 2.90 na Close Brothers Asset Management 5.88%

EBIT Margin -1.7% 2.9% 3.3% na Investec Wealth & Investment Ltd 5.05%

Net Profit Margin -1.4% 1.0% 2.6% na MAM Funds Plc 4.86%


EPS Growth -152.9% -261.8% 13.5% na



Nationwide is the UK market leading provider of automotive

repair and support services. The group’s largest business,

Nationwide Crash Repair Centres (“NCRC”), operates a

network of 63 repair centres across the UK, servicing over

175,000 vehicles each year. Network Services (“NNC”)

provides accident administration services to insurance

companies, predominantly deploying the claims (over 40,000

of which were made in H1 2012) into NCRC. The group also

operates a fleet of mobile units through its Mobile Repairs

division (incorporated in NCRC) and a glass services business,

Motorglass.

In H2 2011, the group highlighted the adverse impact that

uncertain economic conditions were causing on its core

insurance market. Specifically, drivers were making fewer

claims for smaller repairs. A cost cutting programme of £8.1m

resulted in the group posting its first loss since listing. However,

with expected annualised cost savings of £1.9m, and a revised

strategy adopted of driving growth in the emerging fleet and

retail markets, Nationwide is optimistic that it is in a position to

leverage its network and brand to grow its market share in

both the insurance and emerging markets.

H1 2012 revenues decreased 12.9% to £80.7m as a result of

the slimming of operations in 2011 and the downward trend in

the insurance market (with insurance related revenues down

12.7% yoy). Group PBT declined by 28.4%, to £2.1m. But

the attempted push into the emerging sectors appears to be

paying off, with revenues generated by Mobile Repairs of

£11.8m, up 28% yoy. Revenues from NCRC retail sales and

Motorglass, although modest, increased 75% and 20%

respectively.

From the maintained interim dividend of 1.9p we conclude

that, given the healthy net cash position and the Board’s

confidence in continued growth in non insurance markets, the

total dividend will be in line with the previous period. At the

current share price, that would equate to a yield of c.7.9%.

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Page 59 of 74

NewRiver Retail Ltd

Summary Data

Sector Retail REITs




Ticker NRR.L







2011A 2012A 2013E 2014E

Revenue 4.4 12.8 15.4 16.9

EBITDA 2.50 9.82 10.68 11.18

EBIT 2.50 9.81 10.67 11.62

Pre Tax Profit 4.91 3.97 5.61 7.67

Net Profit 3.19 3.85 4.60 7.73

EPS (p) 6.3 15.2 17.2 22.1

DPS (p) 5.5 15.0 16.2 16.7

Net Debt/(Cash) 74.1 99.3 141.5 142.5

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 31.35 12.99 11.48 8.94 Asset Value Investors Ltd 9.40%

Dividend Cover (EPS/DPS) 1.15 1.01 1.06 1.33 Pacific Investment Management Company LLC 8.67%

Net Cash/Dividend -39.58 -19.45 -25.71 -25.12 Spearpoint Ltd 6.36%

EV/EBITDA 68.03 17.32 15.93 15.21 AXA Investment Managers (UK) Ltd 5.47%

EBIT Margin 56.4% 76.7% 69.2% 68.9% Cheviot Asset Management Ltd 5.07%

Net Profit Margin 72.0% 30.1% 29.8% 45.8% David Lockhart (CEO) 4.77%

Revenue Growth 1242.4% 188.7% 20.6% 9.3% Artemis Investment Management LLP 4.55%

EPS Growth -70.2% 141.3% 13.2% 28.5% Schroder Investment Management Ltd 4.42%



NewRiver is a Retail Estate Investment Trust focused on the

UK food and value retail sector. Having raised a total of £25m

through listing on AIM and CISX in 2009, the company today

has assets under management of c.£400 million, totalling 2.8

million square feet of property. NewRiver’s investment

philosophy comprises strict criteria that creates a high income

producing business model. Its chosen niche, the food and value

sectors, are traditionally resilient in economic downturns. As a

result, the group has managed to maintain a high occupancy

rate of c.96%. NewRiver’s core holdings are its 23 shopping

centres, which offer initial yields of c.8% – 9%.

Astute acquisitions of portfolios, coupled with a proactive

management approach, combining risk control development

and marketing strategies, resulted in H1 2013 revenues

increasing by 37.1% yoy to £8.7m. While PBT was down

83.2% in the period, this was due to a revaluation deficit in the

period of £1.4m, after a similar gain in the prior period of

£1.4m. PBT on income generated by yields was up 34.0%.

Furthermore, the fall in portfolio valuation of 0.5%

outperformed the wider index (which saw a fall of 2% over the

period). An £85m shopping centre portfolio joint venture

announced in December with a PIMCO subsidiary highlights

the group’s ambition to become the UK’s leading specialist

REIT. The deal leverages NewRiver’s management expertise

as the company has been given the responsibility of managing

the portfolio for a projected £0.4m annual fee, in addition to its

10% share of rental income.

The interim dividend for H1 2013 was maintained at 6p. The

JV portfolio acquisition will be significantly earnings accretive in

the short term, and we envision EPS to build steadily for the

foreseeable future. With a policy of paying out the majority of

recurring profits to shareholders (subject to investment needs),

we are therefore confident that the strong dividend growth will

continue. Moreover, we also feel that there is a potential

upside to the share price at present, owing to the c.20%

discount to NAV (246p per share as at 30 September 2012).

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Page 60 of 74

Numis Corporation Plc

Summary Data

Sector Financial Services

Share Price (p) 153.0



Ticker NUM.L

Market Cap (£m) 175.5

Last reported Net debt/(cash) (£m ) -35.8





2011A 2012A 2013E 2014E

Revenue 54.2 50.1 55.1 60.6

EBITDA 8.73 7.86 8.65 9.51

EBIT 8.30 7.40 8.14 8.95

Pre Tax Profit 8.90 7.70 8.47 9.32

Net Profit 7.40 6.70 7.37 8.11

EPS (p) 6.8 6.0 6.6 7.3

DPS (p) 8.0 8.0 8.0 8.0

Net Debt/(Cash) -41.8 -35.9 -35.9 -40.0

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 22.50 25.50 23.18 21.07 Numis Corporation Plc Employee Benefit Trust No.2 13.81%

Dividend Cover (EPS/DPS) 0.85 0.75 0.83 0.91 Oliver A Hemsley (CEO) 10.72%

Net Cash/Dividend 4.55 3.91 3.91 4.36 BlackRock Investment Management (UK) Ltd 9.59%

EV/EBITDA 16.01 17.78 16.16 14.69 Edward Farquhar 6.43%

EBIT Margin 15.3% 14.8% 14.8% 14.8% Aviva Investors Global Services Ltd 6.20%

Net Profit Margin 13.7% 13.4% 13.4% 13.4% David Poutney 5.83%

Revenue Growth 4.4% -7.6% 10.0% 10.0% Kabouter Management LLC 5.10%

EPS Growth 9.7% -11.8% 10.0% 10.0% Majedie Asset Management Ltd 4.77%



Numis is a banking and stockbroking group focused on UK

companies in the small to mid cap range. The company offers a

full range of services to corporate clients including research,

execution, corporate broking and corporate finance advice.

Numis is coping well in a tough market environment -

particularly so for those players operating at the smaller end of

the market which is suffering from both an excess of capacity

and a dearth of attractive IPOs.

In 2012 the total funds raised on AIM and the Main Market

was down c.40% on the prior year. As such, we views Numis’

performance in the year to end September 2012 as admirable

given that it reported a decrease in revenues and underlying pre

tax profits of just 8% and 14% respectively. During 2012 the

company further diversified its revenues streams by increasing

its position in the retail bond market which adds to its existing

strong positions in more mainstream equity finance, secondary

trading activity and corporate advisory work.

In 2012 the company increased its number of corporate clients

from 140 to 144 (1 FTSE100, 28 FTSE250, 59 Small

Cap/Fledgling, 52 AIM and 4 other Main Market companies).

The average mkt. cap. of Numis’ clients has doubled over the

last 5 years to the current level of £332m.

Whilst no publically available forecasts are available, given the

recent pick up in stock markets and the exit from the market of

a few industry participants we forecast a steady increase in

earnings for Numis in 2013 and 2014. We forecast the

dividend to be maintained at 8p. Numis has a good brand and

we take comfort that c.43% of shares are effectively held by

staff and directors. On a PE ratio the business looks expensive

but we think a comparison to NAV is more appropriate given

the cash balance (£36m) and portfolio of trading investments

(£39m). With an NAV of £97m the company is trading on

1.8x NAV. Whilst not overly expensive, we see this as fair

value at present and see limited near term upside.

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Page 61 of 74

Pennant International Group Plc

Summary Data

Sector Software




Ticker PEN.L







2011A 2012E 2013E 2014E

Revenue 10.4 14.2 14.9 na


EBIT 0.71 na na na


Net Profit 0.55 1.17 1.33 na

EPS (p) 2.0 4.4 5.0 na

DPS (p) 1.5 1.8 2.0 na


Margins/Ratios

2011 2012 2013 2014


P/E Ratio 22.72 10.17 9.02 na Christopher Charles Powell (Chairman) 39.07%

Dividend Cover (EPS/DPS) 1.31 2.44 2.48 na John Mark Waller (FD) 5.94%

Net Cash/Dividend 5.92 na na na Christopher Snook (CEO) 5.64%

EV/EBITDA 10.93 na na na David James Seal 5.12%

EBIT Margin 6.9% na na na Rathbone Investment Management Ltd 4.98%



EPS Growth 0.5% 123.4% 12.7% na



Pennant is a provider of software products and services

predominantly to governments and the defence, rail, aerospace

and naval sectors. The group operates through three

subsidiaries. The Training Systems division (accounting for

53% of group revenue in FY 2011) provides services that

specialise in Software Emulation and Hardware Simulation,

and Computer Based Training and e-Learning. Data Services

(17% of group revenue) covers Technical Documentation,

including IPC Compiling, Authoring and Illustration, and

Graphic Design and Media services. The third division,

Software Services (31%), owns market leading software suites

which support long life engineering assets.

FY 2008 witnessed an alarming slip in revenues for Pennant,

when customers cut costs drastically in the depths of the credit

crunch. Since then, however, revenues and PBT have both

improved year on year, and H1 2012 continued the trend.

Group revenues increased 43.1% yoy to £7.1m, with PBT

leaping 177.8% to £0.76m. Notable activities in the period

included extensive work on the Maintenance Training

Equipment contract for the Lynx Wildcat helicopter with

AgustaWestland; and the preparation of a tender for a JV

project with BAE Systems Australia and the Royal Melbourne

Institute of Technology. The contract would last for up to 20

years, supplying the Australian Defence Force with aviation

technical training. Besides these major long term contracts, and

multiple similar ones in the pipeline, the group is also benefitting

from established revenue streams from consultancy and

support contracts.

The 2012 interim dividend was increased by 20% to 0.60p.

With basic EPS at 2.21, this equates to a dividend cover of

3.68, which is significantly higher than in recent years.

Therefore although we have been cautious in forecasting an

equal 20% rise in total dividends, there is a strong possibility of

a steeper gain. This applies even more so for the forecast FY

2013 yield, especially given the increasing net cash position.

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Page 62 of 74

Powerflute Oyj

Summary Data

Sector Paper



Reporting currency EUR

Ticker POWR.L






Key data (Y/E Dec) - (€m)

2011A 2012E 2013E 2014E

Revenue 121.5 115.4 126.6 129.7

EBITDA 18.29 12.84 18.95 19.59

EBIT 13.75 10.50 13.65 13.95

Pre Tax Profit 12.39 7.00 13.29 13.87

Net Profit 10.06 5.20 9.87 10.26

EPS (p) 3.5 1.6 3.0 3.0

DPS (p) 1.1 1.0 1.2 1.3

Net Debt/(Cash) -19.1 -16.9 -21.3 -26.0

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 6.45 14.50 7.47 7.47 Michael Smurfit 21.68%

Dividend Cover (EPS/DPS) 3.11 1.61 2.46 2.40 Dermot Smurfit (Chairman) 15.58%

Net Cash/Dividend 5.21 5.38 5.34 6.38 Henderson Global Investors Ltd 10.99%

EV/EBITDA 3.18 4.53 3.07 2.97 Bestinver Gestión S.G.I.I.C. S.A. 10.08%

EBIT Margin 11.3% 9.1% 10.8% 10.8% L&G Investment Management (UK) Ltd 5.94%


Revenue Growth 15.2% -5.0% 9.7% 2.5%

EPS Growth -130.8% -55.6% 94.2% 0.0%



Powerflute (“POWR”) is a holding company focused on

investing in the international paper and packaging sector.

Having listed on AIM in 2005, the company holds one wholly

owned subsidiary, Savon Sellu Oy, a paper mill operator

based in Kuopio, Finland. Specifically, the mill manufactures

Nordic semi-chemical fluting, a material made from Finnish and

Russian birch, and used in the production of corrugated boxes

(which are predominantly utilised for the transportation of fruit

and vegetables). In June 2012, the company made a second

investment, taking a 10% stake in Kotkamills Oy, a Finnish

integrated forest products company that manufactures a range

of laminating papers.

The economic downturn in the Eurozone, keenly felt in the

Southern member states that account for significant markets for

the company’s products, has forced down selling prices.

Financial results for the half year to 30 June 2012 were thus

below expectations. Exacerbating the figures was the loss in

production of c.12,000 tonnes (10% of expected total) caused

by machinery malfunction and maintenance work at the Savon

Sellu mill. This curbed profits by c.€2m, resulting in a net profit

for H1 of €1.6m, down 66.7% yoy. Factory issues struck

again in September, triggering approximately the same volume

of lost production as in H1.

Although profits for FY 2012 will accordingly be considerably

down on FY 2011, the Board is nevertheless optimistic in its

outlook. The paper mill has been upgraded sufficiently and

should ensure consistent performance going forward.

Furthermore, market conditions in H2 have improved, and a

prices increase announcement for the company’s products has

been accepted by all major markets. With a healthy net cash

position, we expect POWR to maintain its final dividend.

Going into FY 2013, we see considerable upside potential in

earnings as the mill upgrades come to fruition, leading to EPS

and DPS growth.

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Page 63 of 74

Printing.com Plc

Summary Data





Ticker PDC.L







2011A 2012A 2013E 2014E

Revenue 17.0 21.8 21.0 22.0

EBITDA 2.86 3.43 3.00 3.00

EBIT 1.46 1.30 na na

Pre Tax Profit 1.31 1.26 1.00 1.00

Net Profit 0.93 1.10 0.75 0.75

EPS (p) 2.02 2.32 1.60 1.60

DPS (p) 3.15 2.55 2.55 1.50

Net Debt/(Cash) -1.2 -1.8 -1.0 -1.3

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 13.12 11.42 16.56 16.56 Anthony Rafferty (CEO) 18.21%

Dividend Cover (EPS/DPS) 0.64 0.91 0.63 1.07 Investmentaktiengesellschaft fur Langfristige Investoren TG17.18%

Net Cash/Dividend 0.81 1.46 0.83 1.75 3G Capital Management LLC 5.76%

EV/EBITDA 4.02 3.35 3.83 3.83 Investec Wealth & Investment Limited 4.42%

EBIT Margin 8.6% 6.0% na na Hans Scheffer 3.99%

Net Profit Margin 5.4% 5.1% 3.6% 3.4% Reginald George Hardie 3.52%

Revenue Growth 17.7% 27.9% -3.5% 4.8% Van Dijk Participates & Advies BV 2.69%

EPS Growth -29.4% 14.9% -31.0% 0.0% Peter R Gunning (Dir.) 1.44%



Printing.com (“PDC”) provides an online printing service to

clients which tend to be small and medium sized businesses.

The majority of revenues are derived from the UK but it has

presence in Ireland and mainland Europe – mainly Holland and

Belgium post the 2010 acquisition of MFG BV. Products

available include leaflets, booklets, postcards, invitations and

business cards. In addition to the online service, PDC has 3

other routes to market: Company-Owned Stores, Franchise

Stores and Bolt-On Franchises (where an existing business

adds on the PDC capabilities to its existing offering). PDC is

also about to launch a white label offering (“W3P”).

The model was established to challenge the accepted norms of

high street printing. Instead of a traditional outlet with limited

print capability on site, PDC has an industrial sized production

hub in Manchester enabling a higher standard of printing. The

100+ outlets and online offering use proprietary software to

link to the hub enabling the group to benefit from economies of

scale. Delivery to the customer is usually within three days.

On 20 February the company announced that it will be

materially behind market expectations in the current year (Y/E

March 2013). However, management is optimistic about the

future and, combined with the debt free balance sheet, has

recommended a final dividend at the same level as the previous

year (1.5p), taking the 2013 DPS to 2.55p. At 30 September

2012 the group had net cash of £1.1m.

The company has an admirable desire to maintain the fullest

dividend possible and 2014 Reuters consensus forecast is

currently 2.7p. However, the 2013 dividend will absorb

c.£1.2m of cash. Given that the company is trading behind the

prior year levels and that it operates in a low growth/low

margin industry, we feel with just £1.1m of cash on the balance

sheet there is a strong likelihood that the high level of dividend

pay out will soon be reduced hence our forecast of 1.5p.

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Page 64 of 74

Randall & Quilter Investment Holdings Plc

Summary Data

Sector Non-Life Insurance




Ticker RQIH.L







2011A 2012E 2013E 2014E

Revenue 36.8 47.2 57.7 na

EBITDA 9.99 11.50 12.30 na

EBIT 9.39 10.95 11.70 na


Net Profit 12.97 9.10 10.20 na

EPS (p) 18.1 18.2 20.4 na

DPS (p) 8.1 8.5 8.9 na


Margins/Ratios

2011 2012 2013 2014


P/E Ratio 7.27 7.25 6.45 na Kenneth Randall (Chairman) 34.98%

Dividend Cover (EPS/DPS) 2.23 2.14 2.29 na Alan Quilter (COO) 8.07%

Net Cash/Dividend 2.49 11.73 na na Henderson Global Investors Ltd 5.73%

EV/EBITDA 4.36 3.79 3.54 na Miton Group Plc 5.34%

EBIT Margin 25.5% 23.2% 20.3% na Mark Randall 3.22%

Net Profit Margin 35.3% 19.3% 17.7% na L&G Investment Management (UK) Ltd 2.61%

Revenue Growth 12.2% 28.3% 22.3% na RQIH Employee Benefit Trust 1.42%

EPS Growth na 0.3% 12.4% na B.P. Marsh & Partners Plc 1.33%

Sources: Thomson Reuters, Equity Development, Allenby Capital


When an insurance company no longer accepts any new

business but continues to settle claims, the insurance company

is referred to as being in ‘run-off’. The assets of the company

in run-off are used to pay out the cost of claims on policies as

they fall due and the costs of managing the process. At the end

of the process, when all claims have been settled, the fund is

said to have reached finality (or closure) and any excess capital

can be distributed to the shareholders. Additionally, before

reaching finality, capital can be released from the company,

subject to regulatory approval. Randall & Quilter Investment

Holdings (“R&Q”) is a leading player in the non life run-off

insurance sector. The company is run by a management team

that has been operating successfully in this market space since

the early 1980s.

The run-off process can be lengthy and unprofitable if there has

been a miscalculation of liabilities or if the company does not

have the necessary skill base in order to manage the run-off

process efficiently. As such, insurance companies engage with

R&Q’s ‘Insurance Services’ business in order to gain

assistance in taking their portfolios to finality. Additionally, run-

off portfolios are often seen as a distraction or inefficient use of

management time and can unnecessarily tie up capital on a

company’s balance sheet. Hence, R&Q is also an acquirer of

portfolios in run-off (through its ‘Insurance Investments’

business). It acquires them at discounts to NAV and then takes

the risk (of taking the portfolio to finality) onto its own balance

sheet.

R&Q has a policy of dividend growth of at least 5% per

annum from the base level of 7.4p per share in 2009. We see

no reason why this should not be achieved near term given the

recent profitable performance and that at 30 June 2012 the

company had a net cash position of £22.4m. Furthermore, the

valuation is supported at the same date by a NAV of 106.7p

per share.

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Page 65 of 74

Slingsby (HC) Plc

Summary Data

Sector Industrial Machinery




Ticker SLNG.L







2011A 2012E 2013E 2014E

Revenue 15.2 13.7 12.3 na

EBITDA 0.86 0.77 0.70 na

EBIT 0.42 0.38 0.34 na


Net Profit 0.32 0.29 0.26 na

EPS (p) 32.0 28.8 25.9 na

DPS (p) 32.0 24.0 24.0 na

Net Debt/(Cash) -2.4 -2.5 -2.5 na

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 15.63 17.36 19.29 na Michael Chadwick 8.10%

Dividend Cover (EPS/DPS) 1.00 1.20 1.08 na Thomas Edward Jones 5.49%

Net Cash/Dividend 7.62 10.42 10.42 na John Henry Ridley 5.43%

EV/EBITDA 2.34 2.60 2.89 na Christian James Slingsby (Dir.) 5.39%

EBIT Margin 2.8% 2.8% 2.8% na Dominic Stanley Slingsby (MD) 5.12%


Revenue Growth -8.6% -10.0% -10.0% na

EPS Growth -55.4% -10.0% -10.0% na



Slingsby is a manufacturer and distributor of industrial and

commercial equipment, specifically through distance selling. Its

list of products currently consists of over 35,000 items, ranging

from office furniture and equipment, to flooring treatments and

matting, to storage and shelving. The company has been in

existence since 1893, becoming a Plc in 1961 and joining AIM

in May 2005. As such, it has managed to cement its position as

one of the UK’s market leaders in the industry.

From Q2 2011, the company’s trading has suffered

significantly due to depressed economic conditions. For the

year ending 31 December 2011, revenue slipped 9.0% yoy

and net profits, 55.4%. The market downturn continued into

2012, with H1 revenue and net profits down 3.3% and 20.4%

yoy, respectively. Net assets likewise decreased in value by

39.7% in the six month period.

Nevertheless, the company has been proactive in attempting to

maintain margins, with a tightening of control on costs, further

investment in I.T., and an increased sourcing of products from

the Far East. Add in the company’s diverse customer base, its

extensive product range and a robust balance sheet, and one

can understand the Board’s confidence that it can weather the

downturn and take advantage of any recovery in the economy.

Slingsby is consistent in paying dividends, having failed only 4

times not to maintain or increase it yoy in 25 years. The

company tends to pay c.12% – 17% of its total dividend in the

interim instalment. 4p per share has already been distributed

subsequent to the 2012 interims: we therefore expect a

minimum final dividend of 20p in FY 2012. With cash in the

bank of £3.0m (as at 30 June 2012) and the total cost of such

a dividend to be £0.2.m, this should not be a stretch for the

company. The dividend cover in 2011 was only 1.0x, perhaps

further evidence of the Board’s bullish outlook for future

growth.

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Stadium Group Plc

Summary Data





Ticker SDM.L







2011A 2012E 2013E 2014E

Revenue 44.9 40.6 46.5 na

EBITDA 4.62 2.50 4.05 na

EBIT 4.00 2.30 3.40 na


Net Profit 2.62 1.30 2.30 na

EPS (p) 9.0 4.5 7.7 na

DPS (p) 2.8 2.8 3.1 na

Net Debt/(Cash) -2.9 -3.9 -7.3 na

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 5.11 10.22 5.97 na AXA Investment Managers UK Ltd 13.89%

Dividend Cover (EPS/DPS) 3.21 1.61 2.48 na Henderson Global Investors UK Ltd 7.10%

Net Cash/Dividend 3.57 4.74 8.01 na Midas Capital Partners Ltd 5.03%

EV/EBITDA 2.60 4.81 2.97 na Georgina Deborah Fry 4.87%

EBIT Margin 8.9% 5.7% 7.3% na Chelverton Asset Management Ltd 3.99%



EPS Growth 32.4% -50.0% 71.1% na



Stadium Group provides power supplies and electronic

manufacturing services (“EMS”) to the professional electronics

market. Stadium has evolved from a pioneer of early plastic

injection moulding processes into an integrated electronic

technologies group that operates in the UK, China and Hong

Kong, employing over 1,100 people. In 2012, the company

also ventured into the intelligent displays market by acquiring

IGT Industries Ltd (“IGT”) for a maximum cash consideration

of £4.5m.

Operations in 2012 were hit hard by the continued slowdown

in the EMS marketplace. In the first half of the year, revenues

generated by the company’s core Electronics division were

£18.16m, a 12% decline yoy. Trading in Asia was responsible

for much of this reduction (a slump in turnover of 18% in the

period), where steps were taken to address the poor

profitability of some legacy contracts. Overall, operating profit

for the Electronics division was down by 90% to £0.12m. The

company has reported that operations in H2 2012 were again

below market expectations, and has begun evaluating its

options with regard to the division’s activities.

Conversely, the newer Power division posted an operating

profit in H1 of £0.62m on revenues of £2.77m, up 18% and

12%, respectively. The acquisition of IGT, which recorded an

annual operating profit of £0.58m in its most recent accounts,

should also make a significant contribution to group profits

from 2013.

The company’s policy is to pay a dividend that is covered 3

times by earnings. The interim remained unchanged at 1.05p.

While full year results are expected to be below market

expectations, and a £3.45m cash consideration was paid for

IGT, the company did however book a £2.3m exceptional

profit on the disposal of its Hong Kong property, and

furthermore increased its debt facility with HSBC to £11.5m.

A maintained final dividend is therefore feasible, although

management would be forced to temporarily bend their policy

on cover in order to achieve this.

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Swallowfield Plc

Summary Data

Sector Consumer Products




Ticker SWL.L







2011A 2012A 2013E 2014E

Revenue 57.5 57.9 54.0 56.0

EBITDA 2.62 2.84 2.00 3.00

EBIT 1.41 1.57 1.00 2.00

Pre Tax Profit 1.33 1.56 1.00 2.00

Net Profit 1.08 1.26 1.00 2.00

EPS (p) 9.6 11.2 5.3 13.2

DPS (p) 6.3 6.3 6.3 7.1

Net Debt/(Cash) 4.7 4.1 5.0 4.0

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 9.22 7.90 16.70 6.70 Peter Gyllenhammar 29.56%

Dividend Cover (EPS/DPS) 1.52 1.78 0.84 1.86 Western Selection 16.53%

Net Cash/Dividend -6.58 -5.77 -7.02 -4.98 R&A Persey 9.67%

EV/EBITDA 5.39 4.97 7.06 4.71 J&L Wardell 5.59%

EBIT Margin 2.5% 2.7% 1.9% 3.6% A&T Dowsett 3.53%

Net Profit Margin 1.9% 2.2% 1.9% 3.6% M A Wardell 3.06%

Revenue Growth 9.5% 0.7% -6.7% 3.7%

EPS Growth 17.1% 16.7% -52.7% 149.1%



Swallowfield designs, develops and manufactures cosmetics,

toiletries and related household goods such as bodycare,

skincare, haircare and fragrances and colour cosmetics. Clients

include global brands and leading retailers. The company is

headquartered in the UK but also has a production facility in

the Czech Republic, a sourcing office and a manufacturing joint

venture in China and sales operations in France and the US.

Current key markets are the UK, US, Europe and Japan. The

company had been performing admirably over the last few

years and consistently paid a dividend of 6.3p. However, a

recent profits warning leads us to expect a cut to the 2013 pay

out.

Faced with weakening global economies at the end of the last

decade, Swallowfield set about increasing its geographical

spread, widening its product range and focusing on its cost

base. The company made significant progress and in the two

years to June 2012 revenue and profit before tax grew 10%

and 32% respectively. Net debt was reduced in the year to

June 2012 from £4.7m to £4.1m and the dividend payment

was maintained at 6.3p. All was progressing well and the

company noticed trends such as the diminishing cost advantage

of manufacturing and shipping from China compared to

European production and hence some customers were wishing

to increase the proportion of local production from domestic

markets.

The good news came to an end on 15 November when the

company warned that due to difficult trading conditions

turnover in the 6 month period to 31 December 2012 would

be significantly lower than the prior year and that full year

earnings would be significantly below current market

expectations. Consenus earnings forecasts have come down

with 2013 EPS forecasts now 5.3p, although the Reuters

consensus dividend forecast remains 6.3p. Given the

company’s policy to have a dividend cover of around 2.0x, we

expect the 2013 dividend to more likely be around the 2.65p

level.

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Tristel Plc

Summary Data

Sector Health Care Providers




Ticker TSTL.L







2011A 2012A 2013E 2014E

Revenue 9.3 10.9 10.2 11.9

EBITDA 1.20 1.64 1.20 1.80

EBIT 0.53 0.59 0.20 0.90

Pre Tax Profit 0.51 0.58 -1.80 0.90

Net Profit 0.48 0.71 -0.80 0.70

EPS (p) 1.21 1.77 -2.00 2.60

DPS (p) 0.56 0.62 0.21 0.80

Net Debt/(Cash) -0.33 -0.54 0.40 0.70

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 18.60 12.71 -11.25 8.65 Francisco Soler (NED) 21.76%

Dividend Cover (EPS/DPS) 2.16 2.85 -9.68 3.25 Downing LLP 8.12%

Net Cash/Dividend 1.47 2.18 -4.84 -2.19 Amati Global Investors Ltd 6.29%

EV/EBITDA 7.05 5.16 7.05 4.70 ISIS Equity Partners LLP 5.44%

EBIT Margin 5.7% 5.4% 2.0% 7.6% Unicorn Asset Management Ltd 4.09%

Net Profit Margin 5.2% 6.5% -7.8% 5.9% Williams de Broë Ltd 4.03%

Revenue Growth 6.1% 17.8% -6.8% 16.7% Investec Wealth & Investemnt Ltd 3.47%

EPS Growth -67.0% 46.3% -213.0% -230.0%



Tristel operates under three principle brands: the core brand,

Tristel, provides proprietary infection prevention products to

the Human Healthcare market. The Crystel brand sells its

products to the Contamination Control market, with clients

ranging from pharmacies to manufacturing plants. Anistel, the

final brand, was created in March 2012 after the termination of

the supply arrangement with the distributor Medichem

International. Its products are sold directly to the Animal

Healthcare market. Since listing on AIM in 2005, the group

has impressively increased its revenue yoy, and has remained

profitable throughout.

The 6m period to 30 December 2012 witnessed Tristel post its

first interim loss in its history. Revenues dropped 13.0% yoy to

£4.4m, with a pre tax loss of £0.64m. This was largely due to

the stuttering sales of the legacy endoscopy disinfectant

business, which is in the process of being wound up. Revenues

from the division fell by £0.73m, or 52.7%. Final restructuring

and legacy asset write offs also contributed to a non cash

exceptional charge of £2 million.

Nevertheless, the long restructuring process which focused on

boosting production capacity, expanding the product range,

and broadening the geographical footprint, is almost complete.

The novel Tristel Wipes System, which management believes is

now the ‘gold standard’ for the decontamination of ultrasound

probes and ENT endoscopes, has become the key revenue

driver. Sales for the Wipes System increased by 56.6% yoy in

FY 2012, to £3.4m, and in January 2013 gained regulatory

approval to be sold in China. In tandem, continued

international expansion is a second key revenue driver. In FY

2012, group export sales increased by 107.6% to £2.1m.

A token interim dividend of 0.08p was announced in the 2013

interims. Although this does not bode well for the total FY

2013 dividend, we are confident that there is a significant

upside to both earnings and dividend in the long term, owing

almost entirely to the unique and highly sought after Wipes

System. Crucially, its patent has a further ten years to run.

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Page 69 of 74

Vianet Group Plc

Summary Data





Ticker VNET.L







2011A 2012A 2013E 2014E

Revenue 24.3 23.0 21.8 22.7

EBITDA 4.27 4.34 3.60 4.80

EBIT 3.09 3.90 3.00 5.10

Pre Tax Profit 3.03 2.34 2.90 4.40

Net Profit 2.43 2.26 2.90 4.10

EPS (p) 8.6 8.0 11.9 15.2

DPS (p) 5.7 5.7 5.7 5.9

Net Debt/(Cash) 1.2 3.4 1.5 -1.4

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 11.32 12.19 8.19 6.41 James William Dickson (Chairman) 15.19%

Dividend Cover (EPS/DPS) 1.52 1.41 2.09 2.58 Axa Investment Managers UK Ltd 13.04%

Net Cash/Dividend -0.78 -2.16 -0.95 0.85 ISIS Equity Partners LLP 9.61%

EV/EBITDA 6.90 6.79 8.19 6.14 Octopus Investments Ltd 4.62%

EBIT Margin 12.7% 17.0% 13.8% 22.5% Downing LLP 3.81%

Net Profit Margin 10.0% 9.8% 13.3% 18.1% Is Partners Helium Special Situations Fund 3.60%

Revenue Growth 22.4% -5.4% -5.1% 4.1%

EPS Growth -20.9% -7.1% 48.8% 27.7%



Vianet (formerly Brulines Group Plc) is the UK leading

provider of real time monitoring systems and data management

services, both to the leisure and petrol forecourt sectors.

Having diversified considerably over the past two years via

multiple acquisitions and product innovation, it now operates in

two segments: Vianet Ltd (Leisure, Vending and Technology)

and Vianet Fuel Solutions Ltd (Fuel). Since listing on AIM in

2006, the company has impressively increased its dividend

year on year, with the 2012 total dividend up 89% in the 6

years to date.

The core Leisure Solutions division (accounting for 70.4% of

group revenue in H1 2013), that provides beer monitoring

solutions to pubs and bars, re-launched its higher value

iDraught product in 2010. As an improved product on the

company’s principal Dispense Monitoring Solutions (“DMS”),

it is capable of measuring volume, flow rate, etc. – and

consequently offers an accurate measurement of yields on

particular products for customers. As such, it is fast becoming

a key revenue driver for the group. 669 of the 716 new

installations in the half year to 30 September 2012 were for

iDraught, many of them due to existing customers upgrading

their DMS product. Management believes there are strong

growth prospects for the product internationally, and will be

launching iDraught in the USA in Q4 2013.

Importantly, the nascent Fuel Solutions division became

profitable for the first time in September 2012, and there are

likewise significant sales opportunities for the Vending and

Technology businesses. Net profits for the group in the six

months to 30 September 2012 increased by 5.3%, and the

interim dividend by 1.8%, to 1.7p. A profits warning update in

February 2013 shook investor confidence in the company, yet

management’s buoyant outlook for its prospects in the medium

and long term is emphasised by its decision to maintain the final

dividend at 4p. With a still comfortable dividend cover, we do

not believe the cost of conserving the final dividend will place

any undue strain on the balance sheet.

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Page 70 of 74

William Sinclair Holdings Plc

Summary Data

Sector Durable Household Products




Ticker SNCL.L







2011A 2012A 2013E 2014E

Revenue 54.3 48.2 55.0 60.1

EBITDA 5.43 2.64 4.70 6.00

EBIT 3.37 0.54 2.20 3.80

Pre Tax Profit 3.18 0.26 2.00 3.40

Net Profit 2.35 0.11 1.42 2.50

EPS (p) 13.4 0.7 8.3 14.7

DPS (p) 6.2 4.5 4.8 5.5

Net Debt/(Cash) -2.7 6.2 5.7 5.4

Margins/Ratios

2011 2012 2013 2014


P/E Ratio 10.6 217.7 17.0 9.7 Noquer Investments Sa 8.85%

Dividend Cover (EPS/DPS) 2.16 0.14 1.73 2.66 Midas Capital Partners Ltd 7.17%

Net Cash/Dividend 2.51 -8.01 -6.96 -5.76 Slater Investments Ltd 7.06%

EV/EBITDA 5.58 11.47 6.44 5.05 J.M. Finn & Co. 4.96%

EBIT Margin 6.2% 1.1% 4.0% 6.3% Henderson Global Investors Ltd 4.81%

Net Profit Margin 4.3% 0.2% 2.6% 4.2% Investec Wealth & Investment Ltd 3.99%

Revenue Growth 12.0% -11.1% 14.0% 9.2%

EPS Growth 38.1% -95.1% 1176.9% 76.5%



William Sinclair Holdings (“WSH”) is a leading UK producer

of commercial horticulture and branded garden products.

Customers include Sainsburys, Homebase and B&Q in

addition to a range of independent garden centres. Profitability

in the year to 30 September 2012 fell sharply (underlying PBT

of £0.26m vs. £3.18m in 2011) as the wettest year in the UK

for 100 years impacted the company’s sales.

The poor weather also impacted the peat volumes harvested

by the company and other producers. To maintain supplies to

its customers in 2013 the company has committed to buying

peat from 3rd parties, much of which is being sourced from

Canada. It has also accelerated its investment in peat drying

capacity. The UK government continues to try to eliminate the

usage of peat. Whilst this constrains WSH’s production it is,

combined with the weather induced supply shortage, leading to

a rising peat price thus increasing the value of WSH’s peat

reserves. A rising peat price likewise means an increase in the

price of alternatives to peat for compost, such as SupaFyba, a

leading peat substitute made from household garden waste.

WSH now produces this substitute, having opened a new

SupaFyba production and packaging site in September 2012

in Cheshire.

WSH ended September 2012 with a net debt position of

£6.2m, £5m of which is a 5 year bank loan for the purchase of

the Cheshire site. Furthermore, the company has a £13.2m

pension deficit. A conclusion in 2013 to the company’s claim

for compensation for the cessation of peat harvesting at its

Bolton Fell site could provide a boost to cash balances.

Given the debt and the pension deficit we see the WSH

balance sheet as stretched. Additionally, wet weather

unfortunately seems to be a more common occurrence in the

UK. As such we feel consensus forecasts for such a strong

profits rebound and dividend increase are on the optimistic

side. We hope the sun shines and we are proven wrong!

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