Monthly Archives: July 2014

Resolution PLC

Resolution is a FTSE-100 company that is specialising on consolidating the life insurance sector.


The owner of Friends Life (formerly known as Friends Provident) run by Clive Cowdery, this second investment venture, after creating the first Resolution that was sold to Phoenix Life, now the new Resolution, again consolidating life funds, it now owns Friends Provident, AXA Sun Life Holdings UK that it bought from AXA of France and it bought Bupa Health Assurance. Its public name is Friends Life

With over £10 Billion in revenues and £111 Billion of assets under management it is a larger player in the investment management and life assurance sector.


The dividend yield is over 6%. Yes, in a climate of 0.5% interest rates, the yield is over 6%. Incredible.

Interest Payments on the UK National Debt.

The UK Government has been spending more money than it receives from taxation. Thus it is running a budget deficit. In rough numbers, it spends each year about £700 billion and its income is about £580 billion. Thus each year it has been having to borrow £120 billion to meet it public sector expenditure.

Today, the total debt public sector net has now hit a record of £1305 Billion which is £1.305 trillion.

For HM Government to borrow, it issues debt instruments know as Gilts (UK Government Bonds) that is sells to investors such as pension funds, mutual funds, unit trusts etc.

To have accumulated a total debt pile of £1305 Billion, HM Government has issued hundreds of Gilts.
For example in a particular month, if HM Government needs to raise £8 Billion, it would issue Gilts with varying maturities:

£2 Billion @3% Interest (Coupon) maturing in 2020.
£1 Billion @2% Interest (Coupon) maturing in 2030.
£2 Billion @2% Interest (Coupon) maturing in 2040.
£1 Billion @1% Interest (Coupon) maturing in 2044.
£2 Billion @3% Interest (Coupon) maturing in 2065.

So it offers investors different interest rates to meet the demands of varying types in investors.

So the total £1305 Billion has been accumulated by hundreds of auctions.

Thus it is impossible to say this £1305 Billion has one interest rate, but let’s assume the £1305 Billion as an average interest rate of say 2%.
This will then tell us the interest payments HM Government has to pay on its cumulative debt pile of £1305 Billion.

£1305 Billion @ 2% = £26.1 Billion a year in debt payments.

Yes, just on an approximate basis, HM Government needs to spend £26.1 Billion a year in debt payments which clearly comes out of the £700 Billion expenditure budget. However, this £26.1 Billion adds no value to the economy, it is not building schools or creating a new university, it is dead expenditure.

The numbers are staggering. But at least we are all in it together.

Imperial Innovations PLC

Imperial Innovations is a British technology transfer company that is leading the commercialisation of UK University academic research in the UK.


Originally formed as an office from The University of London’s Imperial College London
to transfer its technology, today, it is also now investing in technology and intellectual property from the University of Cambridge, the University of Oxford and University College London. Not a bad idea when you consider these institutions command annual research income of £1.3 bn (£1300 million).


With a value of over £619 million, listed on the Alternative Investment Market (AIM) it has some major shareholders:

Woodford Investment Management
Lansdowne Partners Limited
Invesco Fund Managers

An example of the UK’s technological innovation and commercialising the world class expertise from our Universities.

The Value of Iranian Oil Production.

Iran, a country with a deep heritage and rich cultural history in science, literature and mathematics, with pionners such as Omar Khayyam who excelled in mathematics, astronomy and also published some of the greatest literature, such as The Rubaiyat.

Today the country whose history is distorted by the past forty years, is a major oil producer. With 4.2% of global oil production coming from Iran, one can work out the value of this black gold.

Iran produces 3,680,000 barrels a day.
A barrel of oil is $107.18.

Thus each day Iran’s oil production is worth:

3,680,000 x $107.18 = $394,422,400 = £230,793,000

That is £230 million a day, yes nearly a quarter of a Billion pounds per day.

So just by looking at Crude Oil Production, and we are ignoring natural gas production, Iran should be an extremely wealthy country, but with UN sanctions, total economic mis-management and irrelevant political rhetoric from the Iranian government, has resulted in an economy that is weak, and the average person in Iran has not benefitted from the rich Iranian Natural Resources.

Intelligent Energy

The University of Loughborough [] has spun out the company Intelligent Energy.


Another sign of Britain’s growing ambition to be a technology leader.

Intelligent Energy  is an energy technology group that has developed advanced, power dense hydrogen fuel cell technology that provides efficient and clean power generation. The company’s intellectual property and expertise is based around its proprietary fuel cell technologies which are the result of over 25 years of research and development.

They have products for the business and consumer market, with power in short supply this company has some clever technology for global markets.

The floatation last week raised £55m after listing on the London Stock Exchange

With the initial listing of just 8.76pc of the company that raised £55m, means the total company is worth over £500m. Not bad for a start-up.

A key investor is the GIC of Singapore, the Government Investment Corporation, the massive Singaporean sovereign wealth fund.

British Innovation at its very best.

The Scottish Mortgage Investment Trust

The Scottish Mortgage Investment Trust managed by Baillie Gifford from Edinburgh.

A £2.5bn Listed Company that is over 100 years old, as it was founded in 1909 as an investment vehicle to help fund the rubber plantations in South East Asia, as there was Credit Crisis in 1909, and the planters had hardship in obtaining credit for their plantations.

Thus an investment company called The Straits Mortgage and Trust Company Limited to lend money to the planters, secured on the rubber estates. This became The Scottish Mortgage Investment Trust.


What is incredible that this fund has only ever cut its dividend once, and that was in 1933. Today it has over £2.6bn under management.


It is an international investor, whose investments are global:-

North America 38.0%

Continental Europe 24.1%

Asia Pacific 21.3%

United Kingdom 9.3%

Emerging Markets 5.2%

Net Liquid Assets and Bonds 1.4%

Japan 0.7%

It’s top 15 investments are:- 7.8%

Illumina 7.7% 7.2%

Tencent 6.1%

Inditex 5.2%


Kering 2.9%

Banco Santander 2.8%

Atlas Copco 2.6%

Fiat 2.6%

Prudential 2.6%

Tesla Motors 2.4%

Alibaba Group 2.2%

BASF 2.1%

Apple 2.0%

A diversified investment company, with an investment horizon that is clearly the long term.

The Woodford Equity Income Fund.

Neil Woodford is the former rock star fund manager at Invesco Perpetual.
He runs the new CF Woodford Equity Fund is the new equity fund that has just launched.


With £1.6bn under management in the CF Woodford Equity Fund its top 10 holdings are:

AstraZeneca 8.3%
GlaxoSmithKline 7.1%
British American Tobacco 6.2%
BT 6%
Imperial Tobacco 5.3%
Roche 3.9%
Imperial Innovations 3.6%
Reynolds American 3.6%
Rolls-Royce 3.5%
Capita 3.4%

So with £1.6bn under management on day one and holding world class companies like BT and Astra Zeneca on day one, and also very interesting to see Neil backing British start-ups like Imperial College’s technology spin out Imperial Innovations, a small tech investor that invests in technology companies whose roots are from the University of London’s science and technology university.

We see that the fund has 6% of its £1.6 Billion in BT plc, the world’s most dynamic telecoms and media player, that equates to an investment of £96 Million into BT.
With the BT share price at about £3.80 (Fri 11th July) that means the CF Woodford Equity Fund has about 25,263,157 shares in BT, about 25 million shares in the worlds most innovative telecoms company.

Neil Woodford backing British Industry.

Capital in the Twenty-First Century.

Thomas Piketty’s new book is called Capital in the Twenty-First Century.


A non-trivial read, at over 600 pages, but makes some clear warnings about the future. It is very thought provoking as essentially the message is that the rich are owning a larger and increasing proportion of the developed world’s wealth and are earning a greater proportion of the developed world’s income. With this wealth comes power, and are able to see the cause great divisions in society with the gap between rich and poor getting wider. We can see this is many ways, the power and influence of the UHNW (Ultra High Net Worth), flats in Central London selling for £100m etc.

What is happening is that the wealthy are able to keep their wealth in the family, and pass it down the generations which then produces a privileged class that control more and more assets while the remaining parts of society have their social mobility restricted.

A lot of talk regarding whether this book is trying to scare people, but massive gaps in wealth between rich and poor is never good for society.

UK HM Government June 2014 borrowings…..

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In June 2014, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 3 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office ( to raise cash for HM Treasury :-

12-Jun-2014 0 1/8% Index-linked Treasury Gilt 2019  £1,469.760 Million
10-Jun-2014 2¾% Treasury Gilt 2024 £3,250 Million
03-Jun-2014 1¾% Treasury Gilt 2019  £4,028.420 Million

When you add the cash raised:-

∑(£1,469.760 Million  + £3,250 Million + £4,028.420 Million) = £8,748.180 Million

£8,748.180 Million = £8.748 Billion

On another way of looking at it, is in the 30 days in June, HM Government borrowed:-

£291 million each day for the 30 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature, 2019, and 2024. All long term borrowings, we are mortgaging our futures, but at least we are “in it together…..


The Dow 30: Record High

Yesterday (Thur 3rd July 2014) the Dow Jones Index hit 17,000 points.
This was an all time high for the US Flag Ship Index that tracks 30 of the most important US companies as agreed by the Dow Jones team.

Who are the Dow Jones 30 companies ?

American Express
Cisco Systems
General Electric
Goldman Sachs
The Home Depot
Johnson & Johnson
JPMorgan Chase
Procter & Gamble
UnitedHealth Group
United Technologies
Walt Disney

The United States most valuable companies, General Electric has had the longest continuous presence on the index, when it joined the Index in 1907.

Global Wealth.

The Boston Consulting Group has published a report on Private Wealth.


The numbers are incredible.

US$152 Trillion = £90 Trillion.

To quantify that number that is about 9 times the annual US GDP or 56 times the UK GDP.

The report gives the reason for the rise in wealth down to the growth in growth stock markets, but it does not give a reason for that equity inflation. For sure, with central banks like the US Federal Reserve and the Bank of England flooding the markets with cheap cash via Quantative Easing, this cash is driving up share prices.

Why hold cash at 0.5% when shares offer a higher return.

The report talks about the acceleration in growth in Asia-Pacific the Asia-Pacific region and its new wealth will account for about half of the total growth.
China was has 2.4 million people with assets of over $1million and this is more than Japan.

The total number of millionaire households (in US dollars) reached 16.3 million in 2013.

If each of these 16.3 million people each had $1,000,000 each that equates to:-

16,300,000 x $1,000,000 = $16,300,000,000,000.
That is $16,300 Million = $16.3 Trillion of wealth

But of course these 16.3 million clearly have more than just $1,000,000, thus the number of US$152 Trillion = £90 Trillion.

The ten countries and the number of millionaires

USA = 7,135,000
China = 2,378,000
Japan = 1,240,000
UK = 513,000
Switzerland = 435,000
Germany = 386,000
Canada = 384,000
Taiwan = 329,000
Italy = 281,000
France = 274,000

Incredible numbers of the wealthy who are defined with assets over $1,000,000 and the UNHW (Ultra High Net Worth) individuals with assets of $100 million or above.