> MARCH 2012

INSIDE THIS ISSUE:

FRAUD BUSTERSFran Phillips on financial crime successes in 2011

'TIS THE SEASONJohn Heaton helps you prepare for your AGM

AMERICA JOINS THE ALLIANCEAST, CST and Wells Fargo sign up in North America

BRINGING IT ALL TOGETHEREquiniti takes benefits portals to a new level

BACS PAYMENT LIMITKeep your eyes out for £20m max payment

ROYAL MAIL POSTAGE PRICE INCREASESChanges announced by Royal Mail

WEBCAST John Daughtrey on Executive Share Plans

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FINANCIAL CRIME

Fran Phillips, Manager of Equiniti’s Financial Crime Team, looks back on the team’s performance over 2011

According to the KPMG Fraud Barometer, 2011 saw record levels of fraud in the UK, with the cost rising

to £3.5 billion. Identity fraud accounts for just under half of this and has increased by 10 per cent since 2010. Equiniti takes the security of its clients and their shareholders extremely seriously, and has a number of anti-fraud controls in place. Some of these are embedded within our systems and processes. Others are effected through intervention by our Financial Crime Team – a dedicated unit whose role is to continuously monitor shareholder activity and identify suspicious behaviour.

2011 was a busy year for the team, but one which has seen some impressive results, with the team handling 420 fraud cases. The combined potential loss resulting from these cases registers at more than £25m. However, as a direct result of our robust controls,

FRAUD BUSTERSfollow-up investigations and effective liaison with the police, banks and other agencies, actual losses to clients were crystallized at less than £50k.

Indeed, assisting the police and authorities to secure the conviction of fraudsters is an important role of the Financial Crime team. One major attempted fraud, identified by our internal controls, successfully resulted in a lengthy custodial sentence. Conviction was made possible only thanks to crucial information and evidence provided by Equiniti. In another case, proactive investigation by Equiniti resulted in the successful conviction of a Royal Mail sorting office employee, who had carried out a spate of frauds involving the interception of sale proceeds cheques issued to shareholders.

While spotting cases of wrongdoing is important, however, the Financial Crime

2011 was a busy year for the team, but one

which has seen some impressive results, with the team handling 420 fraud cases

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FINANCIAL CRIME

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Team is also focused on prevention of fraud, and continues to look for ways to strengthen our anti-fraud measures. Following the spate of cheque frauds, for example, a thorough review of outgoing mail processes was completed, which led to the implementation of improved enveloping and mailing methods to make the identification of outgoing cheque payments more difficult. We also commenced a series of ‘mystery shopping’ exercises in Q4 2011, which saw members of the Financial Crime Team imitating fraudsters and attempting to beat our anti-fraud controls. This initiative has confirmed both the overall strength of our measures in place and the vigilance of our staff, while also identifying additional possible enhancements. This work will continue during 2012.

Equiniti has also been carrying out work to forewarn clients about developments in share scam schemes. Also known as ‘boiler rooms’, this type of fraud has existed for some years, however fraudsters continue to find new ways to exploit and deceive shareholders. A Client Breakfast Briefing, initiated by Equiniti, therefore provided an excellent opportunity for guest speakers from both the Financial

FRAUD-BUSTING IN NUMBERS

IF YOU REQUIRE FURTHER INFORMATION ON THIS AREA

Please contact your Relationship Manager

£3.5BNTHE TOTAL COST OF UK FRAUD IN 2011

420NUMBER OF FRAUD CASES HANDLED BY EQUINITI’S FINANCIAL CRIME TEAM IN 2011

£150K THE COMBINED VALUE OF CASES WHERE CLIENTS HAVE BEEN COVERED BY EQUINITI’S FORGED TRANSFER INSURANCE PRODUCT

£25MPOTENTIAL COMBINED LOSS TO EQUINTI CUSTOMERS DUE TO FRAUD IN 2011

LESS THAN £50KACTUAL COMBINED LOSS TO EQUINTI CUSTOMERS DUE TO FRAUD IN 2011

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FINANCIAL CRIME

AGM PLANNING > ON PAGE 5

Services Authority (FSA) and City of London Police to answer questions and allay concerns over this development. Indeed, ongoing trend analysis and collation of intelligence by Equiniti has been key in helping to highlight this fraud risk to the wider population. Other initiatives include the re-launch of the FSA / ICSA share fraud warning flyer and creation of a dedicated website for investors and clients, which is due to go live shortly.

Our work isn’t limited to the UK, however. With global tensions rising in some areas of the globe, particularly in North Africa and the Middle East, significant work has been undertaken in screening share registers and customer databases for any individuals or entities subject to UK and/or UN financial sanctions. This screening is ongoing and forms a key support role performed for clients by the Financial Crime Team. Furthermore, due to the known higher risk of fraudulent activity in certain countries, a recent series of attacks on Nigerian resident shareholders was rapidly identified and closed out, thanks to our comprehensive monitoring tools, with enhanced protection of associated holdings now in place.

Finally, for those shareholders who were victims of fraudulent activity, our bespoke Forged Transfer Insurance product also resulted in 30 cases being put on notice to the insurers, with a combined valued of £150k. £39k was subsequently settled via insurance claims, with the remaining cases recovered as a result of our effective case management procedures, which form a key support role performed by the Financial Crime Team for any clients who take out FTI cover.

FOR MORE INFORMATION On the work of the Financial Crime Team, and any Equiniti

products and initiatives which can help to protect your business and shareholders from fraud, contact your Relationship Manager.

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AGM PLANNING

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As companies across the UK prepare for their AGMs, John Heaton takes a look at some pitfalls and perils

‘TIS THE SEASON

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The AGM season is upon us once more. As organisations gear up for the big event, headlines have tended

to focus on the lack of new requirements – a welcome change from recent years. Yet any company secretaries who dig out the project plan for the 2011 AGM with a sigh of relief run the risk of missing elephant traps which need to be avoided or prepared for over the coming months.

Perhaps the greatest potential stumbling block is executive remuneration. While there have been almost no changes to formal requirements, continued intense political and media attention will ensure that it remains in the thoughts of commentators and shareholders. And, having been strongly reminded of their responsibilities as good stewards of corporate Britain, there will certainly be some shareholders who will not want to disappoint.

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AGM PLANNING

The likely publication of Vince Cable’s plans in the midst of the AGM season is also likely to reignite any flagging interest – while the final results of the government’s review have not yet been published, their flavour is clear, and preparations for the AGM should include an assessment of compliance with the likely outcome. If this suggests that the company may be deficient had the requirements been in place this year (rather than, as expected, for 2013), then explanations should be prepared. In other words, it’s important to manage the perceptions of investors and public opinion upfront.

Perhaps the greatest potential stumbling

block is executive remuneration…continued intense political and media attention will ensure that it remains in the thoughts of commentators and shareholders.

The outcomes of the review are likely to include a focus on:

■■ the transparency and simplicity of the performance criteria

■■ whether generous awards (i.e. any significant increase) are self-evidently linked to superior performance

■■ how increases compare with other outflows (e.g. dividends, capital spending and tax payments) and pay awards for other employees

■■ the clarity of both the remuneration report and decision-making process of the remuneration committee, including the role of remuneration consultants

As in the past, other resolutions to be put to the meeting may include the ability of the company to hold general meetings at fewer than 21 days’ notice, precautionary authorisation of political donations, and the authority of the company to allot up to one-third or two-thirds of its share capital. The decision must also be taken on whether to put up all the directors for annual re-election,

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and, if not, a good reason must be given, in compliance with the UK Corporate Governance Code (‘the Code’).

Note should also be taken of the guidance issued by the ABI and NAPF, in September and November 2011 respectively, and of that published by PIRC in March 2012. In each case, if your company’s policy is significantly different, be prepared. In addition, if your company has significant foreign, institutional shareholdings, it would be wise to consider international attitudes to issues which vary between countries and from the UK position – particularly the guidance from ISS and Glass Lewis. The latter, in particular, has taken against the UK practice of holding general meetings other than the AGM at fewer than 21 days’ notice.

Ultimately, the Code is an evolving document. Its requirements on boardroom diversity, in response to the Davies Report, do not come into effect until 1 October 2012, but the Financial Reporting Council (FRC) ‘strongly encourages’ listed companies to apply these changes this year. This is the Code’s first year, applying to listed companies with accounting

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GLOBAL SHARE ALLIANCE > ON PAGE 8

AGM PLANNING

periods beginning on or after 29 June 2010. And though it does not differ to a great extent from its predecessor, the Combined Code, references should be updated to the new Code. One particular area of change which now requires adherence to ‘comply or explain’ is the question of board evaluation. This includes not just triennial external evaluation, but regular chairman reviews of the directors’ training and development needs, and succession planning. It also requires an annual review of the effectiveness of both a company’s risk management and internal controls systems, and its business model and strategy.

Finally, while the government’s definitive proposals on narrative reporting are still pending, the FRC has given guidance on best practice and areas in which companies need to improve, and it would be sensible to review these in order to identify any glaring discrepancies with the annual report.

All in all, whilst not a huge amount of change, there is nevertheless plenty to keep a watchful eye on!

IF YOU HAVE ANY QUERIES ON THIS TOPIC Please contact your Relationship Manager

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BENEFITS PORTAL > ON PAGE 9

Equiniti strengthens its international services partnership with the addition of American Stock Transfer (AST), Canadian Stock Transfer(CST) and Wells Fargo

GLOBAL SHARE ALLIANCE

Equiniti’s Global Share Alliance provides a market-leading technology and financial services offering to

globally listed companies. A partnership between Equiniti, Hong Kong-based Tricor and Link Market Services in Australia, the Alliance will now be further strengthened by the addition of North American share registrars AST, CST and Wells Fargo.

Equiniti established the Global Share Alliance in 2011 to support international businesses which require share registration and employee share plan services in multiple territories, using a common international platform.

With the addition of AST, CST and Wells Fargo, the Alliance represents over 40 million shareholders worldwide, and will provide support in the planning and execution of

AMERICA JOINS THE ALLIANCEglobal corporate actions, as well as supplying common management information and reporting services.

“With growing numbers of our UK clients expanding their operations into multiple markets, we have seen increased demand for commonality of support internationally,” comments John Parker, Equiniti Managing Director and Global Share Alliance Chairman. “The Global Share Alliance was established to facilitate a holistic approach to corporate actions and all the necessary supporting services. The addition of AST, CST and Wells Fargo means that the Alliance can provide the widest possible coverage for our clients.”

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FOR MORE INFORMATION For more information please contact Paul Matthews at

Paul.Matthews@Equiniti.com

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BENEFITS PORTAL

Equiniti's Benefits Portal is in the process of delivering one of the most comprehensive online benefits portals available

There is a lot more to Flex than just a once-a-year enrolment and, at Equiniti, we believe that if it’s communicated

and administered well, it can be one of the most powerful tools at a Reward Manager's disposal.

We are in the process of delivering what we think will be the most comprehensive online benefits portal in the industry. It includes Pensions, Flex, TRS and even Share Plans, allowing participants to enquire and transact in real time and offering employers the benefits of single sign-on, richer MI and customisable branding.

Our view is that an employee benefits proposition should be constantly evolving. We have over 10 years’ experience providing Flex and Total Reward services to more than 80,000 employees and, as such, we are currently one of the top flexible benefits administrators in the UK based on the number of employees under management.

BRINGING IT ALL TOGETHER

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BACS LIMITS > ON PAGE 11

BENEFITS PORTAL

FLEX AND TOTAL REWARD AT A GLANCE

Flex:■■ Provides benefits such as insurance, high street products or Government-backed products such as Childcare Vouchers, Cycle To Work and Pension Extra for employees which can be tax and/or NI efficient.■■ This enhances the employee's overall package and should allow benefits applicable to the lifestyle of the employees to be purchased at a discount.■■ The benefits to the company include aiding recruitment, staff retention and where there are relevant tax efficient benefits, they can make a significant secondary NI saving which can sometimes more than cover the cost of running the scheme.

Total Reward■■ Total Reward brings everything together so employees can see the true value of their benefits. This can include everything from salary and car allowance to holiday entitlement and company pension contributions.■■ Total Reward can be communicated to employees in many different ways, with the most popular being an annual paper statement, an electronic PDF, an annual online statement or perhaps a real-time benefits portal.

FOR MORE INFORMATION Please contact David Coleman on 0207 469 1895 or email David.coleman@equiniti.com

OUR SOLUTION INCLUDES THE FULL SUITE OF SERVICES THAT CAN BE PACKAGED OR UTILISED SEPARATELY. THIS INCLUDES:

■■ Benefits consultancy ■■ Branding, design & creative strategy■■ Benefit broking■■ System delivery■■ Scheme administration■■ Contact centre

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POSTAL SERVICES > ON PAGE 12

HEADS UP ON BACS

BACS LIMITS

At the end of February, BACS (Bacs Payment Schemes Limited, the UK scheme for the electronic

processing of financial transactions, originally Bankers' Automated Clearing Services) announced that a new maximum limit of £20 million would be applied from 31st May 2012 to any individual payment included in a file of payments processed through the BACS system, such as a dividend payment file. Some clients may receive a direct notification of this new limit from BACS. Although very few of the payments that we make on behalf of our clients will be affected by this change – which was introduced without any consultation or warning – it clearly has some significant impacts, and we are working with BACS, our BACS sponsor Lloyds TSB Bank, and the other members of the ICSA Registrars Group to

agree industry best practice as to how such payments are made in the future. Those few companies affected will be advised by their Relationship Manager of the outcome of these discussions.

BACS £20M PAYMENT LIMIT

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FOR MORE INFORMATION For further information please contact Peter Swabey

at Peter.Swabey@equiniti.com

POSTAL SERVICES

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Changes announced by Royal Mail

Royal Mail has notified us of their intention to increase their contract prices from 2nd April. This change

is subject to Royal Mail’s regulator, Ofcom, publishing their final decision about the future regulation of postal services, which Royal Mail expects to be in mid-to-late March. A summary of the changes impacting services used by Equiniti is below. For more information please visit www.royalmail.com/prices2012

We recognise the importance of helping our clients manage their postage costs, so we are currently engaged in discussions with alternative mail service providers so that we can offer clients alternative arrangements for handling their mail. We will keep you updated on progress.

Value Added Tax (VAT) on our servicesChanges to the rules about VAT on postal services and the way in which Royal Mail

services are regulated have affected the VAT status of a number of their products. A limited range of their services became subject to VAT through 2011, and this will extend to all non-Universal Service Obligation services from 2

April 2012. For clarification, this results from changes made in the Postal Services Act 2011 and is not affected by Ofcom’s regulatory consultations. The key services Equiniti use that will be impacted include Cleanmail, Mailsort and Selectapost (business reply returns). A summary of the main services affected is available at www.royalmail.com/vat

Royal Mail Product ChangesApril 2012 also sees the launch of Royal Mail’s biggest ever overhaul of bulk mail services.

What is changing?Royal Mail are enhancing their products and providing more options that make it easier to choose what you need. They have developed a portfolio of products that are more accessible, simpler to understand and easier to use. They’re renaming and reorganising them into five product groups, so they can better meet our business requirements:

ROYAL MAIL POSTAGE PRICE INCREASES

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POSTAL SERVICES

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■■ Advertising Mail™ - for all your marketing needs■■ Sustainable® Advertising Mail – reducing

the environmental impact of your marketing■■ Publishing Mail - for publications and

periodicals■■ Business Mail 1st Class - for urgent general

correspondence including bills / statements■■ Business Mail - for general correspondence

including bills / statements

What Do I Need To Do?There is no need for you to do anything. We are working with Royal Mail to ensure a smooth transition to the new services which will be live from 2nd April 2012, although Royal Mail will continue to accept your mail using the current products until Saturday May 12th 2012. Products used by Equiniti for mail sent out on your behalf like Mailsort or Cleanmail will be amended, renamed or replaced with comparable alternatives. We will ensure suitable alternative services are used as well as making sure envelope stationery is changed where necessary to show the new product indicia (markings on a mail piece showing that postage has been paid by the sender).

FOR MORE INFORMATION You can find out more by visiting www.royalmail.com/

bulkmail2012 If you have any questions please contact your Relationship Manager.

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WEBCAST

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John Daughtrey, Head of Employee Benefits Business Development, gives an overview of employee share plans, and explains how Equiniti's experts can help

WEBCAST: EXECUTIVE SHARE PLANS

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