Equiniti Ezine February 2014

EZINE > FEBRUARY 2014 INSIDE THIS ISSUE: PERSPECTIVE ● Stuart Ellen is optimistic about the future ESSENTIALS ● Equiniti Consultant John Heaton updates us on changes to proxy voting and meetings CLIENT FOCUS ● Preparing for changes to SIP and SAYE savings limits UPDATE ● Equiniti employees work with Tapestry to gain qualifications in Employee Share Plans ● The latest edition of EQ magazine is out now

PERSPECTIVE

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Stuart Ellen, Managing Director, Equiniti Registration Services, is optimistic about the future

REASONS TO BE CHEERFUL I’m sure those clients with 31st December year-ends are, as usual, fully immersed in year-end activities and AGM planning. Coupled with the new remuneration and reporting rules, you can probably expect to be heavily involved in several re-drafts of your annual reports too.

Most economic indicators are providing a positive outlook for 2014. The UK economy grew by 0.7% in the fourth quarter of 2013 according to the latest figures from the Office for National Statistics (ONS).

This means that in 2013 the economy showed its strongest growth since 2007.

Meanwhile, UK manufacturing also continued to grow strongly in January, which is a welcome relief to many export based companies. Coupled with unemployment in the UK moving in the right direction, I think it is fair to say that things are looking more positive than they have for some time.

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Equiniti Managing Director Stuart Ellen

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PERSPECTIVE For Equiniti we are starting to see the IPO market gather increasing momentum. We were thrilled to receive the mandate from the Department for Business, Innovation and Skills (BIS) to deliver the IPO services, and from Royal Mail itself to provide employee share plan and share registration services.

This was the largest and highest profile IPO for many years and the first in the digital age, where technology and the internet played

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pivotal roles.The task generated a great deal of interest from the public, employees and the media and Equiniti was firmly in the spotlight.

Over 400,000 people applied directly for shares (a further 300,000 applied for shares through intermediaries) and in addition, 10% of all shares were given to 150,000 employees who received these as Free Shares in a Share Incentive Plan.

During the task, we managed to create a few records within Equiniti: ■■ Over

15,000 sales received in one day, with more than 100,000 trades completed in the first three weeks of dealing ■■ 6,500 application website hits per second at the height of the task ■■ 20,000 calls to the Contact Centres in one day ■■ First UK flotation to utilise online application and payment.

Jon Millidge, Company Secretary (now HR Director) at Royal Mail commented: “We knew that this would be a difficult challenge and we appreciate the advice and help that we received from Equiniti before and during the task and also now as we move into a business as usual mode. We got great support on the

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Employee Share Scheme in particular – which was massive – and are looking forward to developing the relationship.”

In 2013 we also undertook IPO services for Crest Nicholson, Tungston Corporation, Just Retirement, Infinis Energy, esure, Partnership Assurance, Eclectic Bar Group, Arria NLG plc, Benchmark Holdings and HellermanTyton. It’s great to welcome all of these new clients.

At the same time as the Royal Mail task, we also successfully managed and delivered the Barclays Rights issue, which had a very complex daily sale and cashless take-up facility, which was run in partnership with Barclays Stockbrokers. Feedback again was excellent. Clare Barrett, Director, Company Secretary Services, Barclays said: “I was delighted with the support David Farbon and his team provided for the Barclays Rights Issue.

They provided clear guidance and worked collaboratively with the Barclays project team, including our lawyers, our ADR (American Depositary Receipt) provider and our print and mail house to determine a realistic timetable.

We worked together to update shareholder documentation to facilitate the communication of the rights offering for eligible shareholders.

Equiniti provided support for trading in the

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PERSPECTIVE Rights and their helpline took over 20,000 calls in a 15-day period. They kept us informed on feedback from shareholders, the take up of the offer and worked closely with our brokers on managing the receipt of funds. Shareholders received their documentation promptly. Overall, a fantastic job. Thank you.”

We recognise that corporate actions are a vital element of services to our clients and a key part of our planning is to ensure that our high levels of service are maintained to all of our clients, their shareholders and employees whilst delivering these major projects.

Evidence of this came via a number of sources last year. We were crowned the UK’s No.1 Share Registrar in the Capital Analytics UK Registrars Benchmarking 2013 survey*.

We also took home the accolade of ‘Best Shareholder Services Provider’ at the Shares Awards 2013 for the second year in a row, and for the fourth year running, our Contact Centre won the CCA Global Standard award – Equiniti is the only business in this sector to achieve this.

In Q4 2013, Equiniti Financial Services Limited was proud to have been awarded Membership of the London Stock Exchange (LSE). The

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application process involves a robust vetting of a company’s practices and procedures.

Attaining Member Firm status is affirmation of Equiniti’s maturity and capability as an organisation to operate under the LSE’s well established principles and rules.

For our corporate clients and their shareholders and employees it is a further reassurance that our investment administration and share dealing services are achieving the highest security and regulatory standards.

It will also provide a number of commercial benefits including access to a wider panel of brokers. This will enable us to provide a more competitive offering to both our corporate clients and end investors.

The 2014 events calendar is starting to build and we are looking forward to seeing many of you at the forthcoming discussion forums regarding Narrative Reporting and changes to SIP and SAYE savings limits. We are also making preparations for our annual Share Registration Conference to be held in June in London – invitations will follow very soon.

All of the satisfaction survey achievements, industry awards and new business reinforce Equiniti’s expertise in the market and our

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Corporate actions are a vital element of services to our clients and a key part of our planning is to ensure that our high levels of service are maintained to all of our clients, their shareholders and employees

commitment to continuous improvement.

Combined with an outstanding contract renewal rate from many, many major clients, 2014 is looking very positive indeed. *Overall satisfaction results.

IF YOU WOULD LIKE MORE INFORMATION on this topic please contact your Relationship Manager CONTINUED ON PAGE 5

ESSENTIALS

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Equiniti Consultant, John Heaton, discusses changes to proxy voting and meetings

LOOKING TO THE NOT-TOO-DISTANT HORIZON Many of you will be in the throes of grappling with the new executive remuneration policy and implementation report, and the revised narrative reporting rules, in advance of your imminent annual report and AGM mailing. I do hope the prospect of a binding resolution on the remuneration policy is not causing you too many sleepless nights. You may have expected that, after last year, things would settle down, and there wouldn’t be too many changes coming up. That may be true for some of you whom new initiatives do not affect, but there will be quite a number of you who will be looking closely at current proposals.

Disregarding, for the time being, possible EU changes (to the Shareholder Rights Directive, investor cooperation and corporate governance, and share ownership) whose timing is very uncertain, there are new things coming out of the Financial Conduct Authority

(FCA) which are already in place or imminent, and discussion on legislative changes from the Department of Business, Innovation and Science (BIS) which are starting. All of these will involve changes to proxy appointments and polls – the exclusion of some shareholders from voting on some resolutions.

The first change will impact a small number of AGMs this year. The FCA Handbook has recently been amended to reflect the 4th EU Capital Requirements Directive and restricts the vote of certain employee shareholders working for some financial institutions. The second FCA initiative is contained in the recently published paper, CP13/15 – Enhancing the effectiveness of the Listing Regime and further consultation. That confirms that the FCA has considered the responses to proposals published in a consultation which closed a year ago, and will proceed with dual voting for premium-listed companies with a ‘controlling

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John Heaton, Equiniti Consultant

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ESSENTIALS shareholder’ (i.e. a company in which a shareholder, including ‘associates’ and others with whom it is acting ‘in concert’, owns or influences 30% of the shares or more). Such companies will be subject to certain provisions.

Amongst these is that the resolution(s) (re-) electing independent directors will need to be approved by the shareholders as a whole and by a majority of independent shareholders of the listed company. This will present a number of challenges as part of the proxy appoint process and at the meeting to ensure that disallowed shareholders are excluded from voting on the second resolution(s). The FCA is consulting on a number of other related changes to the Listing Rules, including a similar regime for the cancellation of listings. The ICSA Registrars Group will respond by the deadline on the 5th February, and Equiniti and other members are engaging with the FCA to talk about the practical implications. However, the FCA has stated that they intend to make the amendments in mid-2014 and the dual voting provisions will come into force immediately and affect any notices of meetings mailed after the implementation date.

BIS is currently reviewing the progress of the Kay Review recommendations. Surprisingly, some might say, despite the fact that Professor

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Kay came to the conclusion that he did not support disenfranchising shareholders, who acquired their shares after a takeover or merger is announced, BIS has resurrected the idea and is currently reconsidering the pros and cons and how it might work in practice.

The focus on effective shareholder governance and the beefed-up Stewardship Code mean that all parties in the investment chain could potentially be challenged as to how they exercise their responsibilities

Clearly, these changes will not affect all companies, although here at Equiniti, we have identified over 20 with ‘controlling shareholders’ and a further 10 or so with substantial shareholders who, with currently unknown ‘associates’ or if further shares are added, could exceed the threshold. However,

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another topic under discussion could affect all clients.

The focus on effective shareholder governance and the beefed-up Stewardship Code mean that all parties in the investment chain could potentially be challenged as to how they exercise their responsibilities. There are a number of ways that the appointment of proxies by institutional investors could be monitored, which are being explored by the Shareholder Voting Working Group. This body was originally set up in 2003 under the chairmanship of Lord Myners and is currently chaired by David Jackson, the company secretary of BP plc. One line of thought being pursued is requesting vote confirmation from issuers (i.e. that the proxy instruction down the chain was converted into a vote in a poll at a meeting). Again, what this means in practice will be the subject of much further discussion but could impact us all. We will keep you informed, watch this space!

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CLIENT FOCUS

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The results of our online survey show the impact new savings limits are having on clients’ plans

IMMINENT CHANGES TO SIP AND SAYE SAVINGS LIMITS The last increase to the limit on SAYE-linked savings was back in September 1991 when it increased from £150 to £250 a month. SIP has retained the same monetary limits since its introduction in 2000. However, the Office of Tax Simplification’s review of tax-advantaged share plans reported in March 2012 that the limits were out of date and said that if share plans are to be encouraged, the limits should be reviewed on a regular basis.

Despite a number of other changes made to share plans as part of the review, no indication was given that limits were to change. So, it was a big surprise when the Chancellor announced an increase for both SAYE and SIP plans in the 2013 Autumn Statement.

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CLIENT FOCUS Was it just coincidence that the changes came after the share price premium at flotation meant Royal Mail employees’ Free Share allocation exceeded the maximum allowed in the tax year?

In summary, the changes which take effect from April 2014 are:

SAYE ■■ The

maximum monthly amount that can be saved will double from £250 to £500

SIP

■■ The

amount of Free Shares which an employee can receive in a tax year is rising from £3,000 to £3,600 ■■ The amount of savings an employee can make for Partnership shares each year increases from £1,500 to £1,800 (or to £150 a month) ■■ The amount of Matching shares is linked to the amount of Partnership shares (max 2:1) so will go from £3,000 to £3,600.

We have surveyed clients on the impact of these changes and survey results are being available via this link.

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Phil Ainsley, Managing Director, Employee Services is upbeat about the changes and said it was a positive step which would encourage wider share ownership in the workplace.

Summarising the SAYE and SIP survey results received from clients, he said: “They showed that most companies are likely to increase the monthly savings limits for their plans, although the benefit will be greatest for those participants already saving at the limits. It was also recognised that there are additional employer NI savings with SIP plans and those companies without plans are reviewing their stance.” However, there remain concerns around headroom for granting Sharesave options and sourcing shares. There is a need to check whether scheme rules need updating and whether any changes are needed by payroll to manage the new limits.

IF YOU WOULD LIKE MORE INFORMATION on this topic please contact your Relationship Manager

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UPDATE

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ALL OF THE LATEST INDUSTRY NEWS FROM THE EQUINITI GROUP

CHAMPIONING CONTINUOUS DEVELOPMENT Equiniti employees are improving their knowledge with ICSA qualifications in Employee Share Plans

Investing in the training of employees is vital to the future of any business, and for Equiniti, it is no different. The Equiniti Employee Benefits team has been boosting its qualifications by sending employees to Tapestry Insight to gain the Institute of Chartered Secretaries and Administrators (ICSA) Certificate in Employee Share Plans.

Tapestry’s Janet Cooper developed the ICSA Certificate in Employee Share Plans 10 years ago in conjunction with the ICSA and there have now been more than 600 people graduating with the certificate.

L-R: Wendy Butcher, Stuart Hack, Graham Bull, Charlotte Hodges, Nigel Denyer, Tim Roberts, Danielle Hamer, Graham Avinou and Jeff Schooley

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In recent years, nine Equiniti employees have gained the ICSA Employee Share Plans certificate and a further four are currently taking the course. It takes between six and twelve months to complete, with 30 hours in classroom training and is split into two main modules, each with a final examination.

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UPDATE For share plans offered by UK companies or offered in the UK by overseas companies, the course covers many areas including: plan design, legal and regulatory (including Listing Rules, Model Code and latest governance considerations), executive share plans (including deferred bonus plans), long-term incentive plans and option plans, operating plans overseas, UK tax, accounting, administration, disclosure and reporting to shareholders. In the next course, Janet, who is always keen to stay abreast of industry developments, also plans to cover the recent changes made in the Finance Act 2013 to HMRC approved plans and self-certification and the coverage of remuneration regulations.

Graham Bull, Senior Manager, Client Services at Equiniti, who has undertaken the course, said: “The world of employee share plans is vast and extremely complex. This course is structured in such a way that it makes a daunting and overwhelming subject a logical journey covering each and every aspect you may deal with. Janet and her team should be congratulated for putting together such an interesting and valuable qualification and even more so for the friendly and engaging manner in which it was delivered. This brilliant and well-designed course was easy to follow and

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even the complex accountancy and taxation elements proved simpler than I first feared.

I learnt a terrific amount and it’s great to be able to bring this knowledge back to my team at Equiniti. I highly recommend this to all. Our clients are really benefitting from the wealth of information we have absorbed on the course.

Some topic areas are relevant to roles on a daily basis and other areas, such as overseas plans, gives a useful background and reasoning to why each market and plan is highly individualised and intricate.”

Janet Cooper, Partner at Tapestry, said: “Equiniti has had a clear commitment to staff development for many years. It’s been a pleasure to have their colleagues on the course for their active participation in group discussions and continued involvement in alumni events.”

MORE INFORMATION ABOUT THE COURSE IS AVAILABLE HERE If you would like more information on the ICSA Certificate in Employee Share Plans or would like to register, please contact Janet Cooper or Gabrielle Miranda (+44 7896 768669).

Tapestry specialise in all aspects of global HR legal work, including employee and executive share plans. For more information follow the link www.tapestrycompliance. com.

Many other well-known companies, some of which are existing Equiniti Employee Services clients, have also attended the course, including Centrica, BT, Arm Holdings, Howells Associates, Legal & General, BP and Diageo.

If you would like to find out more about this topic, please contact your Relationship Manager.

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UPDATE

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HAVE YOU READ EQ YET? The latest edition of EQ magazine is out now and could transform the way you work The first EQ magazine of 2014 is out now, and it’s crammed full of big interviews, expert advice and essential information. After focusing on innovation in our previous issue, we now turn our attention to the theme of transformation, and how managing transformation is key to any business that wishes to grow, develop and thrive.

In this issue, start-up champion and one of Wall Street Journal’s 30 most influential women in Europe, Julie Meyer, has experienced the impact of explosive growth first hand, and shows that change shouldn’t be shied away from. Elsewhere, we present our four golden rules for coping with growth as your business booms, and look at how implementing marginal gains – or the 1% – can lead to big business wins.

2013 was another fantastic year for Equiniti, topped off by the recent success of the Royal Mail IPO. We hear from five Equiniti employees, who share their perspectives on the project and what it meant for them to be involved.

EQ is available to read online now at http:// www.equiniti.com/MEDIACENTRE/Pages/ publications.aspx. If you would like to share any feedback on the magazine, please email marketing@equiniti.com.

2014 AGM MEETINGS

The AGM team is now scheduling and planning for the forthcoming 2014 meetings season. If you haven’t already done so, please can you email your proposed date to Helen.Wilson@equiniti.com

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