Investment research

The investment research available on the Investbx website is provided by The Share Centre’s Advice Team, whose approach to investment research is set out below:

The services offered by Investbx are provided and administered by The Share Centre. Investbx users wishing to buy, sell, hold or subscribe for shares will become customers of The Share Centre.

The Share Centre aims to identify and prevent conflicts of interest which may arise between itself and its customers, and between one customer and another, in order to avoid any adverse effect on its customers. This Policy sets out procedures, practices and controls in place to achieve this.

The avoidance of potential conflicts of interest is a key consideration, so operational structures and procedures, password-controlled systems, data hierarchy, and the clear segregation of roles and responsibilities are all designed to work preventing any conflicts arising in the first place.

This Policy applies to all officers (whether Executive or Non-Executive) of The Share Centre, employees and any persons directly or indirectly linked to the Share plc (holding company of The Share Centre) group of companies (“the Group”) and refers to all interactions with all customers of the Group.

Scope
Types of conflict which may carry a material risk of damage to the interests of a customer include, but are not limited to, the following.

Where the Group or any person directly or indirectly linked to the Group:

• Is likely to make a financial gain or avoid a financial loss at the expense of the customer;
• Has an interest in the outcome of a service provided to, or of a transaction carried out on behalf of, the customer which is distinct from that customer’s interest in that outcome;
• Has a financial or other incentive to favour the interest of another customer or group of customers over the interests of the customer;
• Carries on the same business as the customer;
• Receives, or will receive, from a person other than the customer an inducement in relation to the service provided to the customer in the form of monies, goods or services, other than the standard commission or fee for that service;
• Designs, markets or recommends a product or service without properly considering all the Group’s other products and services and the interest of their customers.

Guarding against conflicts of interest
A number of different safeguard systems and processes are in place in order that the potential for conflicts of interest is minimised:

• Personal account dealing requirements upon all officers, employees and certain associates of The Share Centre and Investbx in relation to their own investments;
• An Investment Research Policy covering the production and dissemination of investment research by The Share Centre;
• A Register of Information logging receipt and use of any ‘inside information’ by The Share Centre and Investbx;
• Chinese Walls restricting the flow of price sensitive information within The Share Centre and Investbx;
• A Gifts and Inducements Log registering the solicitation, offer or receipt of certain benefits;
• External business interests conflicting with The Share Centre’s interests are prohibited for The Share Centre’s officers and employees, unless Board approval is provided;
• Job roles and system access is subject to appropriate segregation of duties considerations, detailed within a separate Policy;
• Remuneration packages within The Share Centre are structured to minimise any link with levels of business generated with retail customers;
• Corporate governance requirements are followed as appropriate to the size and nature of Share plc;
• Legal and regulatory record keeping requirements are followed, including the maintenance of a Privacy Policy for Internet users;
• A Public Interest Disclosure Policy (“whistle blowing”) is in place for The Share Centre employees;
• Where a conflict of interest arises, The Share Centre will, if known, disclose it to a customer prior to undertaking investment business for that customer.

A full version of the Conflicts of Interest Policy is available on request from The Share Centre’s Compliance and Legal Services Team.

Investment recommendations are classified into one of three groups:

• Buy: Expected to outperform the market by 15% or more.
• Hold: Expected to perform in-line with the market, plus or minus 5%.
• Sell: Expected to under-perform the market by 15% or more.

Direct investment into shares and investment trusts is regarded as moderate risk, relative to other forms of investment. Within this rating, shares on which we publish a recommendation are given one of three risk classifications:

• Lower Risk: shares in this category will, in the main, be FTSE 100 companies and are regarded as lower risk relative to medium and smaller-sized companies.
• Medium Risk: mostly FTSE 250 firms, with some FTSE 100 and rated medium risk compared to 'safer' shares.
• Higher Risk: companies within this classification will, in the main, be smaller companies, such as those which make up the FTSE Small Cap Index or medium/large companies with an above average risk.

The Share Centre recommends for FTSE 100 stocks that a stop loss level of 15%, FTSE 250, 20% and Aim stocks to have a stop loss of at least 25%. Stop losses indicated on our FTSE 100 recommendations are taken from the point of the recommendation being made and are not a tracking stop loss. Stop losses should be set from the point of your purchase price.

Stop loss levels explanation:
FTSE 100 (15%): FTSE 100 companies are generally less volatile and there is more liquidity in the market and regarded as lower risk.
FTSE 250 (20%): FTSE 250 companies are generally classed as medium risk investments, there are small spreads on the stocks, however there can be less liquidity than FTSE 100 companies.
FTSE Small Cap/Aim (+25%): These markets are more volatile and are likely to be affected by larger spreads on the stock and lower liquidity levels.

The Advice Team draws on a range of news, analysis and research tools to provide the base data for their recommendations.

The primary source is the Proquote facility, available directly to each Team member, and providing access to:

• Regulatory News Service (RNS) information; the route by which all companies quoted on the UK markets (LSE and AIM) must release all market-sensitive information
• AFX News service, covering business, financial, economic and general news
• Charts, from intra-day to 9 years
• Broker recommendations, providing individual and consensus views from leading analysts
• Fundamentals data, accessible for individual shares and market sectors and including historic and forecast P/E ratios, Earnings per share forecasts, past results, current dividends, directors' dealings, volumes of trading, Net Asset Values (NAVs)
• Brokers' research, direct access to brokers' notes and research on individual companies.

By using a mix of this information, the advisers form an opinion on the current and, more importantly, future prospects of individual companies. Both the immediate and longer-term prospects are taken into account.

The view formed is a general one, based on the 'average' investor with a minimum timeframe of some 5 years. Specific, personal advice provided to customers will be given in the light of further information being provided about their personal financial circumstances and may, therefore, vary from the published view.

Changes to published recommendations are accessible via The Share Centre’s website, www.share.com.

The Share Centre has adopted a formal policy to govern the operation of itsour advice services, as follows:

• Investment research is intended to be an objective assessment of a company, sector or market and is prepared and published by The Share Centre's Advice Team, which is subject to oversight by the Compliance Department.
• All members of The Share Centre's Advice Team are salaried employees. Profit-sharing arrangements exist for each individual and are related to the general profits of the firm, or other performance-related objectives. Profit-sharing is not linked to specific transactions or to recommendations contained in investment research.
• The Advice Team Manager supervises the members of the Advice Team and reports directly to the Compliance and Legal Services Director.
• Members of the Advice Team are prohibited from being involved in activities which may in any way suggest they are representing the interests of The Share Centre or of a client if the activity is likely to appear to be inconsistent with providing an objective and unbiased assessment of the value or prospects of the relevant investments.
• Advice Team members must not participate in marketing activity, for example, in pitches to solicit or obtain business from the issuer of a relevant investment, if this could give the perception of a later bias in their investment research. Likewise, Advice Team members must not act in a way which appears to be representing the issuer of a relevant investment, for example, in road shows relating to issues or allocations of relevant investments.
• No Team member may offer or accept an inducement to provide favourable investment research.
• The Share Centre will not give effective editorial control to someone whose role or commercial interests might reasonably be considered to conflict with the interests of the clients to whom the investment research is to be published or distributed. Accordingly, The Share Centre does not allow anyone other than a member of the Advice Team (subject only to Compliance oversight) to approve the content of investment research before publication. The Share Centre will only allow a person from outside The Share Centre (such as a relevant issuer), or any other member of staff outside the Advice Team, to view its investment research before publication for the verification of factual information contained within it.
• Investment research will only be published or distributed via The Share Centre's usual channels, which include The Shareholder magazine and The Share Centre's websites, www.share.com and Investbx’s website, www.investbx.com.
• The Share Centre will always consider whether or not its business activities could create the perception that its investment research may not be a true and fair analysis of the market in, or the value or prospects of, a relevant investment. Where it believes such an impression may be created, it will delay or restrict the publication of the investment research.
• The Share Centre will always make available such additional information, such as disclosures, that it feels appropriate to accompany investment research it publishes or distributes.
• Investment research will not be initially prepared for The Share Centre's internal use and then later used for publication or distribution to clients.
• No member of the Advice Team may buy or sell an equity investment which has been, or will be, the subject of published investment research originated by The Share Centre for the 10 business days preceding and/or subsequent to the date of publication.
• No member of The Share Centre's staff, whether or not a member of the Advice Team, may communicate the substance of any investment research, except as set out in this Policy.

Andy Parsons - Advice Team Manager
Andy joined The Share Centre in February 2006, following 18 years experience within the wider financial services industry with the likes of The Equitable Life and HBOS. His career spans such areas as Marketing, Strategic Projects and more recently as a Financial Adviser.

He took over management of the Advice Team in June 2006, leading the development of advice on funds/collective investments. He has also introduced a broadening of the financial planning topics covered to help customers determine whether some or all of their investments might be better held within tax advantaged accounts, such as ISAs.

A contributor to radio and other broadcast media, Andy also writes for The Share Centre’s magazine, The Shareholder, often looking at broader issues such as how to achieve the right blend of investments.

Graham Spooner - Investment adviser
An approved investment adviser under FSA Approved Persons category CF21. With over 25 years experience in the stock market, Graham is the author of a monthly column in Bloomberg Money and regularly contributes to the Guardian, The Times and Yorkshire Post newspapers, amongst others, and participates in a variety of radio broadcasts.

Having worked as a dealer with Simon & Coates, Svenska Bank and Midland Bank, and in fund management with emerging-markets specialists City of London, he understands market influences from a variety of perspectives.

Graham joined The Share Centre Advice Team in 2001 and has a particular focus on the Banks, House Builders, and Utilities sectors. He also covers smaller companies, niche opportunities and investment trusts.

Nick Raynor - Investment Adviser
An approved investment adviser under FSA Approved Persons category CF21. Nick has been with The Share Centre since 1998, initially as a dealer before joining the Advice team in May, 2002. He contributes to articles in various national papers, including The Sunday Times, Daily Express and News of the World, and participates in a variety of radio broadcasts.

He has a particular focus on the Health, Mining, and Telecoms sectors, and on smaller / higher-risk companies.

Sheridan Admans - Investment Adviser
An approved investment adviser under FSA Approved Persons category CF21. Sheridan joined The Share Centre in September 2006, having previously worked as a Financial Adviser within the Bank of Scotland Investment Service (part of HBOS), and has an MBA in Financial Analysis.

Sheridan currently specialises in investments within Collective Funds.

Previous Recommendations
During the period 1st August 2006 to 31st October 2006, The Share Centre's recommendations consisted of:

• Buys 52%
• Holds 30%
• Sells 18%

Each recommendation published since 1 July 2005 includes our view, and the date and price at the time that view was given. Where our view subsequently changes, we will show the last published view and the date it was given alongside the new recommendation.