Charles Stanley Research Policy

Charles Stanley Research Policy

Introduction

Charles Stanley & Co. Ltd ("Charles Stanley") is committed to providing customers with research
produced to high quality standards. As a firm authorised and regulated by the Financial Services
Authority, Charles Stanley is required to act in accordance with the Principles for Business as set
out in the FSA Handbook. These Principles include: conducting our business with integrity
(Principal 1) and due skill, care and diligence (Principle 2); paying due regard to the interests of
customers and treating them fairly (Principle 6); communicating information to clients in a way
that is clear, fair and not misleading (Principle 7); and managing conflicts of interest fairly
(Principle 8).

Invariably, all financial services firms will face areas of potential conflicts of interest. The nature of
these areas will depend upon the nature of a firm's business model. Charles Stanley conducts a
full service investment management, corporate finance and brokerage business.

Charles Stanley has or may seek corporate finance and broking relationships with a number of
the businesses referred to in our published research (known as "covered companies").
Furthermore, Charles Stanley and its connected companies, their directors, members, employees
and members of their families may have positions in the securities, including derivatives (such as
options and warrants) thereof, of covered companies referred to in our published research. From
time to time, the author of a research report might be remunerated by reference to the profitability
of the corporate finance and broking division of Charles Stanley.

As a result, investors should be aware that Charles Stanley might have actual or potential
conflicts of interest that could affect the objectivity, independence and impartiality of our research
reports. Where such conflicts exist, it is our policy to disclose them publicly, in accordance with
Principle 8 of the Principles for Business set out in the FSA Handbook.

We believe that our research is produced to a high quality standard. It is our view that the longterm
interests of our firm and of all our clients, whether investment clients or corporate finance
and broking clients, are best provided for by the provision by us of research that is wellresearched
and drawn from sources which we believe to be reliable.

Our research may be published under the names Charles Stanley & Co. Ltd, Charles Stanley
Sutherlands or Charles Stanley Securities. Both Charles Stanley Sutherlands and Charles
Stanley Securities are divisions of Charles Stanley & Co. Ltd.

This policy sets out the systems, controls and procedures by which Charles Stanley produces
research.

Relevant research

We consider the following Charles Stanley publications to be research:

- Individual research notes
- Research Handbooks
- Quarterly Equities Briefing
- The Week in Preview
- Retail Sector Review
- Croesus
- Morning Comment
- The Weekly Economic and Bond Briefing
- Market Focus
- Traders Bulletin
- Bond Recommended Buys & Sells
- Sterling Corporate Strategy
- Euro Corporate Strategy
- Charles Stanley Sutherlands Sunshine
- Daily Interest/Corporate Credit Updates
- Sector Strategy
- Stock Reports
- Asset Summary
- New Issue Reports
- Bond Pricing Service
- Covenant Ratings
- Other publications (except personal recommendations) that summarize the contents of any
of the above

This list may not be comprehensive and may change from time to time without notification, but at
all times our research publications will be clearly marked as such. If you are in doubt as to
whether a communication constitutes research, please contact our Compliance department at our
London head office.

Research methodologies and definitions of research recommendations

Equity research methodologies and definitions

Our equity research is based on a fundamental analysis of the companies covered, using the
application of multiples and, where appropriate, discounted cash flow valuation models. In
arriving at our equity research recommendations, macroeconomic conditions are also taken into
account.

Our equity research recommendations (for example 'Buy', 'Hold' or 'Sell') have the following
definitions:

Private Client Research (12 month timescale)

Strong Buy over +25% total absolute return
Buy +15% to +25% total absolute return
Accumulate +5% to +15% total absolute return
Hold up to +5% to - 5% total absolute return
Reduce -5% to -15% total absolute return
Sell less than -15% total absolute return

Charles Stanley Securities (12 month timescale)

Buy expected absolute change of +20% or more
Add expected absolute change between +10% and +20%
Hold expected absolute change between -10% and +10%
Reduce expected absolute change between -20% and -10%
Sell expected absolute change of -20% or more

Please note that Private Client Research and Charles Stanley Securities use different research
recommendation definitions.

Fixed interest research methodologies and definitions

The Charles Stanley Sutherlands Bond Pricing Service is a quantitative analysis producing model
prices and yields calibrated to market data. It is an evolution of the Jarrow, Lando and Turnbull
model and utilises default and transition probabilities taken from historic information enhanced by
the current market risk factor. The Bond Pricing Service draws on our market overview,
experience and other relevant credit issues to impose a qualitative screen to our quantitative
bond model output. Using either our inputs or the client's inputs, the Bond Pricing Service
produces prices, yields and spreads which are compared with actual market data (sourced from
iboxx) to indicate whether a bond is cheap or dear. Variable inputs to the model include: credit
ratings, recovery rates, liquidity premiums and prices. A further feature of the model is the
Transition Matrix. This enables clients to calculate price and yield movements resulting from
changes in credit rating and recovery rates and is excellent for pricing new issues, deciding
spread levels, undertaking risk assessments for bonds and optimising performance.

This Service uses the following research recommendation definitions:

• "Recommended Buys" includes those bonds which the model calculates as tradingcheaply and offering investors good value, but which are also supported by our
  qualitative criteria and screens and therefore opportunity. As such, these bonds trade on
  higher market spreads than that predicted by our quantitative process. These bonds will
  generally trade on implied credit ratings below that of their composite credit rating.
• "Recommended Sells" lists those bonds which the model calculates as trading rich and expensive, but which also fail to be supported by our qualitative criteria and screens and are therefore at risk. As such, these bonds trade on lower market spreads than that predicted by our quantitative process. These bonds will generally trade on implied credit ratings above that of their composite credit rating.

Technical analysis research methodologies and definitions

Technical analysis is a method of evaluating securities on the assumption that market data, such
as charts of price, volume, and open interest, can help predict future (usually short or medium
term) market trends. Unlike fundamental analysis, the intrinsic value of the security is not
considered, instead the technical analyst looks at a security's historical prices and other trading
variables. Technical analysis assumes that market psychology influences trading in a way that
enables predicting when a stock will rise or fall. Technical analysis recommendations may often
be contingent, that is to say that an individual recommendation may be conditional upon future
price movements occurring. Where this is the case, this fact will be indicated in the research
itself.

In this context, a short-term Buy recommendation indicates the potential for an increase in
that security price of 5% or more in the near future, whilst a short-term Sell recommendation
indicates the potential for an decrease in that security price of 5% or more in the near future.

A medium-term Buy recommendation indicates the potential for an increase in that security price
of 10% or more over the next six months, whilst a medium-term Sell recommendation indicates
the potential for a decrease in that security price of 10% or more over the next six months.

Management of potential conflicts of interest

Identification of potential conflicts of interest

Senior management regularly review the policies set out below in order to ensure their ongoing
effectiveness and appropriateness for the management of potential conflicts of interest in relation
to our research.

Supervision and management of analysts

Analysts report to the relevant head of research.

The head of Private Client research reports to a main board director of Charles Stanley Group plc. The head of Charles Stanley Securities Research reports to the head of Charles StanleySecurities, who in turn reports to a different main board director of Charles Stanley Group plc.

The corporate finance and corporate broking departments have no responsibility for the
supervision and management of analysts, nor do they have any role in the production or the
content of research although they may be aware of the timing of research reports on corporate
finance and broking clients.

The research departments are physically segregated from the corporate finance departments.

The research departments are solely responsible for the determination of research coverage,
timing, content and recommendations, with the final decision in all cases resting with the relevant
research department head. In practice, research is prepared on corporate finance/broking clients.
From time to time, the corporate finance department may request a delay in the publication of a
particular research report on a corporate client where, for example, publication clashes with a
corporate transaction and might lead to a false market in the shares.

Remuneration of analysts

Analysts are paid in part based on the profitability of Charles Stanley, which includes revenues
derived from corporate finance and broking clients. Under no circumstances is analyst pay linked
to the success of individual corporate transactions, although analysts may be paid in part
indirectly based on the profitability of the corporate finance and broking division of Charles
Stanley.

Personal account dealing policy for analysts

Analysts and connected persons are not permitted to buy securities, including derivatives (such
as options and warrants), of companies covered by that analyst, or in companies that have a
formal corporate finance and broking relationship with Charles Stanley. Where an analyst holds
securities or another financial interest in companies covered by them, this fact will be disclosed.

Involvement of analysts in non-research activities

Analysts do not produce research for use by Charles Stanley prior to circulation to investment clients.

Charles Stanley Securities analysts (but bot Private Client Research analysts) may occasionally
be involved in the marketing of the shares of corporate finance and broking clients, such as
attending corporate finance and broking client fundraising exercises. All analysts may attend nonfundraising meetings between investors, investment clients and corporate finance and broking
clients and may provide advice to corporate finance and broking clients on corporate matters,
such as potential acquisition opportunities.

Where Charles Stanley Securities is considering forming a corporate finance and broking
relationship with a company, the opinion of an analyst may be sought. Ordinarily, an analyst
would meet with management of a company as part of the due diligence process and his or her
view would be taken into consideration in deciding whether to enter into the corporate finance and
broking relationship.

Principal trading by Charles Stanley

From time to time, Charles Stanley may have a principal position in the securities, including
derivatives thereof, of a covered company. Chinese walls are in place to prevent those
responsible for making principal trading decisions from having prior access to research, or from
influencing the content or recommendations therein.

Where Charles Stanley has a principal position exceeding 5% of the total issued share capital of
a covered company, this fact will be disclosed. Where Charles Stanley's discretionary clients
have an aggregate position exceeding 5% of the total issued share capital of a covered company,
this fact will be disclosed. Where Charles Stanley has a principal position in the securities of a
company with which it has a corporate finance and broking relationship, this fact will be disclosed.

Policy on inducements and editorial influences on research

Charles Stanley does not produce "paid for" research, meaning research paid for directly by a
company.

Where a corporate finance and broking client retains Charles Stanley Securities for the provision
of corporate finance and broking services, Charles Stanley Securities may commit to producing
regular research reports on the corporate finance and broking client. Companies that are the
subject of research may be asked to review draft research reports, as may non-analysts within
Charles Stanley, but in all cases for factual errors only. The heads of research are responsible for
signing off on research reports prior to publication.

Analysts are not permitted to receive cash gifts from current, prospective or former clients. Any
other gift, favour or entertainment in excess of a certain amount must be reported to a compliance
officer and will be disclosed where appropriate.

Traders Bulletin

Traders Bulletin uses technical analysis to seek to predict the future trend of indices, share,
currency or commodity prices without taking account of the economic background or individual
companies' prospects.

Due to the nature of this form of analysis, the author of Traders Bulletin is responsible for the
timing, content and recommendations and therefore this publication does not conform to Charles
Stanley's research policy. The methodology used in technical analysis and the meaning of the
recommendations made are set out above.

Timing and manner of publication, distribution and communication

Our research is disseminated primarily electronically and, in some cases, in printed form.

Disclosure of actual or potential conflicts

Investors should be aware that Charles Stanley might have actual or potential conflicts of interest
that could affect the objectivity, independence and impartiality of our research reports. Where
such conflicts exist, it is our policy to disclose them publicly, in accordance with Principle 8 of the
Principles for Business set out in the FSA Handbook.

General regulatory disclosures

This document is a marketing communication.

This research has not been prepared in accordance with regulatory requirements designed to
promote the independence of investment research.

This report has been forwarded to you solely for your information and should not be considered
as an offer or solicitation of an offer to sell, buy or subscribe to any securities or any derivative
instrument or any other rights pertaining thereto ("financial instruments").

Other than disclosures relating to Charles Stanley, the information and opinions expressed in this
report have been compiled from publicly available information considered to be reliable, but,
neither Charles Stanley, nor any of its directors, officers, or employees accepts liability from any
loss arising from the use hereof or makes any representations as to its accuracy and
completeness.

Any opinions, forecasts or estimates herein constitute a judgement as at the date of this report.
There can be no assurance that future results or events will be consistent with any such opinions,
forecasts or estimates. Past performance should not be taken as an indication or guarantee of
future performance, and no representation or warranty, express or implied is made regarding
future performance. This information is subject to change without notice, its accuracy is not
guaranteed, it may be incomplete or condensed and it may not contain all material information
concerning the company and its subsidiaries. Charles Stanley is not agreeing to nor is it required
to update the opinions, forecasts or estimates contained herein.

The value of any securities or financial instruments mentioned in this report can fall as well as
rise. Foreign currency denominated securities and financial instruments are subject to fluctuations
in exchange rates that may have a positive or adverse effect on the value, price or income of
such securities or financial instruments. Certain transactions, including those involving futures,
options and other derivative instruments, can give rise to substantial risk and are not suitable for
all investors. This report does not have regard to the specific instrument objectives, financial
situation and particular needs of any specific person who may receive this report. Investors
should seek financial advice regarding the appropriateness or suitability of investing in any
securities, financial instrument or investment strategies discussed in this report.

Charles Stanley & Co Ltd conducts a full service investment management, investment banking
and brokerage business. Charles Stanley & Co Ltd (or its directors, officers or employees) may,
to the extent permitted by law, own or have a position in the securities or financial instruments
(including derivative instruments or any other rights pertaining thereto) of any company or related
company referred to herein, and may add to or dispose of any such position or may make a
market or act as a principal in any transaction in such securities or financial instruments. Directors
of Charles Stanley & Co Ltd and Charles Stanley Securities may also be directors of any of the
companies mentioned in this report. Charles Stanley Securities may from time to time provide or
solicit investment banking, underwriting or other financial services to, for or from any company
referred to herein. Charles Stanley & Co Ltd (or its directors, officers or employees) may, to the
extent permitted by law, act upon or use the information or opinions presented herein, or research
or analysis on which they are based prior to the material being published.

As a result, investors should be aware that the firm may have a conflict of interest that could
affect the objectivity, independence and impartiality of this report. Investors should consider this
report as only a single factor in making their decision. Our policy on managing actual or potential
conflicts of interest can be found at:
www.charles-stanley.co.uk/documents/researchpolicy

Equity, bond and technical analysis use different research recommendations definitions.

Our equity sales staff, traders and other professionals may provide oral or written market
commentary or trading strategies to our clients and our proprietary trading desks that reflect
opinions that are contrary to the opinions expressed in this report. Our Asset Management area,
our proprietary trading desks and investment advisers may make investment decisions that are
inconsistent with the recommendations or views expressed in this research.

Charles Stanley may have issued other reports that are inconsistent with, and reach different
conclusions from, the information presented in this report. Those reports reflect the different
assumptions, views and analytical methods of the analysts who prepared them. Prior to
publication, a draft of this report may have been provided by Charles Stanley to the subject of the
report for factual corrections only.

This report is not an offer to sell or the solicitation of an offer to buy or sell any security in any
jurisdiction where such an offer or solicitation would be illegal. This report is not intended for use
or distribution for US corporations that do not meet the definition of a major US institutional
investor in the United States or for use by any citizen or resident of the United States.

© 2008 All rights reserved. No part of this report may be reproduced or distributed in any manner
without the written permission of Charles Stanley & Co. Ltd. Charles Stanley & Co. Ltd.
specifically prohibits the re-distribution of this report, via the internet or otherwise, and accepts no
liability whatsoever for the actions of third parties in this respect.

Charles Stanley & Co. Ltd is registered in England no. 1903304
Member of the London Stock Exchange
Authorised and regulated by the Financial Services Authority

Registered office: 25 Luke Street, London EC2A 4AR
Tel: 020 7739 8200 Fax: 020 7953 2822

January 2008