Computershare’s client magazine

THE NEWSLETTER FROM COMPUTERSHARE – ISSUE 18 WINTER 2006

Computershare’s client magazine

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http://computershare.com

Foreword

Welcome to this winter edition of Insight,Computershare’s client magazine. This issuebrings you the highlights from our November‘Building Business Without Borders’ conferenceat the Cumberland Hotel in London. Attendeeshad the benefit of presentations from StandardLife and BHP Billiton on their global share plans;and were able to discuss with the MetropolitanPolice their initiatives for combating fraud,which as we all know is an ongoing problem forfinancial services businesses.

You’ll also find out about maximising yourstatement marketing and get the latest on theCompany Law Reform Bill.

As many of you will know, I stepped down asCEO after our AGM in November, following 30 immensely enjoyable years in the role.Stuart Crosby, our Chief Operating Officer hasstepped up as CEO, while I take on the role of

CERTAINTY INGENUITY ADVANTAGE

> Computershare Industry Conference

> Quality not just quantity: Delivering effectiveemployee share plans

> Launching an employee share plan at IPO: A casestudy on Standard Life

> Introducing a global web platform: A case study onBHP Billiton

> Fraud: The industry threat

> Industry update: Shareholder rights

> Global news

CLICK LINKS BELOW TO ACCESS CONTENTS

PREVIOUS NEXT ><

Executive Chairman of the Board as well ascontinuing as Managing Director for EMEA forthe foreseeable future.

Finally, children at Fair Furlong Primary Schoolin Bristol have been working hard coming upwith designs for our electronic Christmas card– the competition has been won by 10-year-oldJessica, who came up with what I thought wasthe best interpretation of the theme ‘ChristmasDown Under’.

Please forward any feedback you have on thisissue to [email protected]

I would like to take this opportunity to wish youall a very happy festive season – see you in theNew Year.

Chris Morris

Welcome from Chris Morris

OUR FESTIVE BRISTOL RECEPTION

> Ireland on course to dematerialise ahead of UK

> Meeting the ‘best practice’ benchmark inshareholder communication

> Thinking differently about annual reports

> A faster and simpler way for shareholders toreceive payments

> Computershare exhibits at ICSA Conference

> Webinars: The time-saving alternative to seminars

> The scene

mailto:[email protected]


Lead article: ‘Building Business Without Borders’ event

Interactive voting technology was provided byIML, a Computershare company, allowing gueststo vote on hot industry topics using wirelesshandsets. The voting sessions illustrated howaware companies are of industry developmentsand what measures they are currently taking toachieve best practice in areas such as shareholderfraud. The voting was very well received; resultscould be instantly viewed on screen:

> 86% of attendees voted that employeebehaviour is positively influenced by theirshare ownership

The aim of the event was to give clients theopportunity to meet face to face, to stay up to datewith market developments and to create a forumin which they could air their views and debatethem first-hand.

The day was arranged so that guests had ample time to network. Attendees includedrepresentatives from Orange, Prudential Plc, HSBCHoldings plc, Vodafone Group Plc and The RoyalBank of Scotland Group plc.

DURING THE CONFERENCE, GUEST SPEAKERSPRESENTED ON VARIOUS INDUSTRY TOPICS:

> Julie Mail, Compensation and BenefitsConsultant, Standard Life A case study on launching a global share planpackage to employees at IPO.

> Geraldine Pamphlett, Remuneration Manager,BHP Billiton A case study on developing and promoting electronic communications for shareholders.

> Chris Pearson, Company Secretary, Balfour BeattyA discussion about boiler room frauds – how to recognise and prevent them.

> Detective Sergeant Paul Salt, The Metropolitan PoliceProactive prevention of fraud.

CONTENTSPREVIOUS NEXT ><

On Thursday 2nd November, Computershare held its 2006 Industry Conference at London’s contemporary Cumberland Hotel in the Park Lane district.


> 43% of attendees plan to include electroniccommunications as a default on theircompany articles

> 36% of attendees were not aware of boilerroom scams, an issue which the conferencesought to rectify

> 48% of attendees have experience ofattempted or reported shareholder IDfrauds within the last 12 months and 36%had experienced Director ID frauds �

WHAT DID THE GUESTS THINK?

“The topics were very well presented; the case studies were particularly interesting”

“The use of IML handsets was worthwhile and they are very easy to use”

“Very relevant and topical issues presented”

Computershare Industry Conference

LOBBY OF CUMBERLAND HOTEL



THE RESEARCHProfessor Joseph Blasi of Rutgers University,New Jersey, USA, conducted a ‘SharedCapitalism’ study from 2002 to 2004 to assessthe effect that share plans have on theperformance of participating employees.Computershare assisted Blasi in his task bygathering detailed questionnaires on therelationship between employee ownership andjob commitment.

Professor Blasi’s research found greater“discretionary effort and willingness fromemployees” if their share plan investmentopportunity exceeded 7% of annualremuneration. The message for the businesscommunity is that a successful share plancannot simply be judged on the numbers ofemployees participating in the plan, but on theopportunity for each employee to have ameaningful holding. The larger an employee’sstake in a company, the more likely they are tobe highly motivated and committed.

When asked

“Do you think employeebehaviour is more positivelyinfluenced by the extent ofshare ownership?” the audience answered:

78% yes

15% no

7% don’t know

SELF HELPThe research also highlighted the importanceof a ‘self-help’ approach to promoting andmanaging the plan. Geoff explained thatemployees have to make a conscious financialdecision to participate in the plan, much likeany other financial product. Consequently,ongoing service and support should beconsistent with other investment products.Employee participants need information attheir fingertips, as well as the ability to trackthe performance of their investment.


Quality not just quantityDelivering effective employee share plans

Geoff Price, Computershare Plans Director, delivered an informative presentation on thechanging emphasis of employee share plans. He discussed a common question posed by the business community: “Are share plans still worthwhile for today’s employees?”

>>

GEOFF PRICE



Lead article: continued

Increasingly it’s the employee participants’responsibility to inform themselves, and to knowhow to retrieve key information. The employerneeds to invest in the necessary planmanagement systems to make the informationeasily and readily available. Geoff championedthe use of a coherent website and interactivecommunication techniques to provide thesefacilities in the correct language, which cancommunicate all relevant information toemployee shareholders in the most efficient and convenient way possible.

Geoff discussed several other Computershareinitiatives to increase convenience andawareness in employee share plan ownershipsuch as the introduction of the ‘Plan ParticipantCard’, a credit card-sized passport to access theplan website, which encourages websitevisitation and usage. Employee plan statementshave also been redesigned and standardised toprovide additional information value andreliability, particularly for tax compliance, andemployees can create and download statementson demand �

IF YOU READ NOTHING ELSE, READ THIS:> According to US research conducted by

Prof Joseph Blasi, plans offering in excessof 7% of annual remuneration will increaseemployee discretionary effort and positiveworkplace behaviours

> ‘Self-help’ initiatives allow employees tomanage their own holdings, putting them100% in control

> Easy access to information is crucial.



PLAN PARTICIPANT CARD



Launching an employee share plan at IPOA case study on Standard Life

THE BACKGROUND> Standard Life was established in 1825 and

became a mutual assurance company in1925. They have more than 7 millioncustomers and 10,900 employees all overthe globe. 8,600 of their employees arebased in the UK with offices in Canada,Ireland, Germany and Austriaaccommodating the rest

> On 17th October 2005 the Board announcedits intention to recommend to its membersthat the company should demutualise andlist on the London Stock Exchange

> Flotation occurred in July 2006 and tocoincide with this a ‘free share’ offer waslaunched to their eligible employees.

THE OBJECTIVESStandard Life decided to launch a share plan atIPO as they wanted all employees to possess astake in the company. The offer of ‘free shares’was open to all eligible employees (even thoughsome may already have received demutualisationentitlement as a Standard Life member).

The overall objectives were: > to give employees the ability to become

shareholders – encouraging anunderstanding of the interests ofshareholders and aligning employees’interests with those of shareholders

> to provide employees with an element ofremuneration based on group performance

> to communicate with all employees, whethermember or non-member, in the same way topromote equality throughout the company.

Computershare was able to offer Standard Lifea global share plans service, incorporating amultilingual website and documentation. Thepartnership with Computershare offeredmaximum potential for Standard Life toefficiently communicate information aboutshare plans to all their employees.

CHALLENGES AND SOLUTIONSIt was imperative that the share plan reflectedStandard Life’s objective of equality across theglobal workforce. It was crucial to communicateprofessionally and efficiently with employees toachieve the highest level of ‘free share’ take-up.Initially an email blast notified eligible


Julie Mail, Compensation and Benefits Consultant for Standard Life and SandraWilcox, their Computershare Relationship Manager, spoke about the challengesfaced when Standard Life made the decision to launch their Employee ShareIncentive Plan (SIP) at the same time as their Initial Public Offering (IPO).


>>



employees of the plan, allowing them to acceptonline, making the process cost-effective forStandard Life and hassle-free for employees.

All documentation needed to be multilingualyet uniform in content and style; Julieexplained the complications of translatingdocuments while adhering to a standardstructure, particularly in German wheretranslations can double the length of adocument. Computershare was able to assist Standard Life in creating consistent, easy-to-use communications by utilising theirextensive global network and experience. We also developed a multilingual website foruse in conjunction with the employee shareplan system.

This is a global plan where Computershare hasused its expertise and knowledge to provideadministration services in Canada, Ireland andthe UK.

THE RESULT: LESSONS LEARNED?Employees were offered ‘free shares’ and thefollowing graph shows percentage take-up foreach region:

120

100

80

60

40

20

0

Julie expressed her delight that deadlines weremet in this case and that there had beenexcellent take-up overall, especially in the UK.During the Q&A session she was questionedabout the slightly lower take-up in Germany,which she explained could possibly be a result ofthe high taxation rates. In spite of the externalfactors she felt the take-up there was excellent.

She commented that she and her team learnedmany lessons as a result of the experience:

> Always allow twice as much time forplanning and implementation

> Allot time for testing services> Clear, well-delivered documentation

results in good take-up.

IF YOU READ NOTHING ELSE, READ THIS:

> Standard Life successfully launched anemployee share plan at IPO in July 2006through which all eligible employees in theUK, Ireland, Germany, Austria and Canadawere offered a ‘free share’ allocation

> There was an extremely successful take-upon the ‘free shares’ as a result of well-thought-out communication services

> For maximum success, always allow twice aslong as you anticipate to plan, test andimplement your share plan.



For more information about the Standard Life or any other global employee share plans,please contact Sandra Wilcox on 0870 889 3130or [email protected] �

UK Ireland Germany/ Canada OverallAustria take-up

COUNTRY

% T

AK

E-U

P




Introducing a global web platformA case study on BHP Billiton

COMPANY HISTORYBHP Billiton is the world’s largest resourcecompany, with 35,000 employees in over 20countries ranging from South Africa toSurinam. Their expansion has been rapid andprofitable; in 2002 their market capital wasUS$30 billion which had risen to US$123 billionin 2006. They are a dual-listed company on theLondon and Australian Stock Exchanges, with asecondary listing on the New York andJohannesburg exchanges.

THE CHALLENGES…THREE COMPLEX PLANSPlans offered by BHP Billiton include:> Group Incentive Scheme (GIS)> Long Term Incentive Plan (LTIP)> Legacy Plans.

Group Incentive SchemeThis is a deferred cash share award scheme,driven off participants’ annual bonuses, whichgive half as an annual cash payment. The otherhalf can be given either as nil cost deferredshares or market priced options.


Geraldine Pamphlett, Remuneration Manager at BHP Billiton, gave anengaging speech on how the company addressed lack of understandingand appreciation of share plan benefits within the company’s executiveworkforce. She was joined by Computershare Plan Manager Mike Cheesley.


ANGOSTURA, BHP BILLITON, TRINIDAD & TOBAGO>>



Long Term Incentive PlanThis is a performance-dependent plan whichrequires a 30% Total Shareholder Return (TSR)to out-perform against their comparatorgroups. Geraldine expressed the view that it isa highly lengthy and difficult plan.

Legacy PlansThese loan and option-based plans wereimplemented on BHP’s side before the mergerwith Billiton in 2002. Geraldine and Mike bothadmitted that the complex nature of theseplans meant they were out of the scope of this project.

MULTI-COUNTRY = MULTI-PROBLEMS!In order to create awareness of the share plansand the value they offer to current holders,BHP Billiton needed to create functionality togive employees easy access to their personalshareholding details. BHP employees possessedshares that were administered in countries thatuse different systems (UK and Australia), whichmeant they were held in different currencies.The share plans also differed depending onwhether the individual was originally employedby BHP Billiton Plc (LSE shares) or BHP BillitonLtd (ASX shares). Therefore, the solutionneeded to work on two platforms and allow forvarying levels of understanding as well asadhering to the specifics of an individual’s share plan.

LACK OF COMMUNICATION RESOURCEThese plans are intricate and diverse and BHPBilliton had already spent extensive time andmoney developing and communicating them.Research had shown that the shares representmore than 7% of remuneration for somepeople so it was crucial to create proficientcommunication systems. Geraldine explainedthat previously there was only herself and oneother managing the share plan administrationwhich meant she was fielding all the queriesregarding the share plans; resulting in a hugeworkload for her. She also highlighted thetechnology barrier by stating, “we’re miners,not computer whizzes”.



THE SOLUTIONIn order to best incorporate the needs of theirvarious shareholders and create a standardformat to their communication, Computersharesuggested a global web platform. Mikeexplained that this allows a collation ofinformation throughout the UK and Australiasystems. When an employee enters theirParticipant ID and PIN number the websitesearches each system and displays theircomplete portfolio on one page.

BHP could have opted for a ‘big bang’implementation; all information going live onthe Computershare website, allowingfunctionality to all users at once. However, thiswas considered too high risk for such acomplex scheme so Mike and his team deviseda phased approach.

Phase 1 focused on getting participants onlineand looking at their portfolio. Initially this waslaunched to participants in the GIS and LTIP. At the moment BHP Billiton is in Phase 2 andPhase 3 will allow participants to performtransactions and elections online. It will alsoincorporate access for participants of LegacyPlans. Once the phased approach is complete,all shareholders will have total control of theirholdings via electronic means.

>>



THE RESULTS… AND MOVING FORWARDGeraldine marvelled that despite the“incredibly complex” structure of the plans, theimproved communication levels andaccessibility have increased employeeknowledge and satisfaction of their holdings.

The ‘Shareholder Services’ website can now beaccessed easily via the BHP Billiton internet orintranet sites and participants can now viewtheir own portfolios and access relevantinformation about their share plan. The site hasbeen produced in the Computershare brand toemphasise that we administer the plans andday-to-day queries should be directed to us. All notifications are sent by email, which refersemployees to the website for further details.

BHP Billiton’s future projects include a global‘all-employee’ share plan, which Geraldine andMike are currently working on. The offering willbe completely paperless and targeted atemployees in 26 countries.

ANY LESSONS LEARNED?> The team should fully understand the share

plans they are communicating to globalshareholders

> When dealing with complex schemes, it ismore appropriate to implement a phasedapproach to communications

> A large team to deal with queries andimplementation avoids timely responsesand pressure on individuals like Geraldine

> Efficient communication and access toinformation creates informed andmotivated shareholders.



IF YOU READ NOTHING ELSE, READ THIS:> BHP Billiton needed to devise functionality

to communicate with its shareholdersregarding a variety of share options, inseveral countries on platforms in Australiaand the UK

> Computershare helped them devise aglobal website which enabled participantsin the plans to view and manage theirholdings online

> All communication is now doneelectronically, with the website holding allinformation a shareholder needs toeffectively administer their shares.

Enquiry screen

Only participants inrecent plans

All countries

Phase 1ENABLEMENT

Phase 2VISITATION

Phase 3SELF-SERVICE

Create statement

Modelling

Valuation

Advanced election

Exercise online

Legacy plans

For more information about BHP Billiton, or anyother global employee share plans, pleasecontact Mike Cheesley on 0870 702 0003 x 1832or [email protected] �




FraudThe industry threat

BOILER ROOMSChris Pearson, Company Secretary for BalfourBeatty, illustrated that the share industry isvulnerable to fraud such as that committed byboiler rooms, as a result of easy and legal accessto share registers.

Boiler rooms are individuals or groups ofindividuals who usually operate from a baseoverseas: the FSA is aware of over 250 currentlyin operation. As it has no regulatory influenceabroad the FSA cannot independently shut them down.

The dangers:Boiler rooms legally obtain shareholder detailsfrom a register then promote and sell‘investments’ that are either worthless orimpossible to sell. They may begin by offering amarket report on the company they are‘affiliated with’; if they think the target isinterested they will move to selling mode.

Post-sale, shareholders may also be contactedby a recovery room, which convinces theshareholder it is an appropriate time to sell theirshares. They require a fee to lift restrictionsassociated with the shares and once the fee ispaid, the recovery room disappears; theshareholder has lost further money and stillholds worthless shares.

Balfour Beatty’s experience:Balfour Beatty shareholders were targeted in2005. When Chris was personally contacted hetook the opportunity to press for informationbut the individual became nervous and endedthe call. As a preventative measure BalfourBeatty included a warning letter, approved bythe FSA, in their annual report in an effort tocombat further attempts.

IDENTITY THEFTNaz Sarkar, Director of Computershare InvestorServices PLC, outlined the threat posed to boththe public and private sectors by identity fraud.



A large portion of the conference was dedicated to fraud and the threats posed to both the public and private sectors.

ID THEFT CAN OCCUR BY MEANS OF A FRAUDULENT:> change of shareholder address

(typically followed by a request for a duplicate certificate)

> change to dividend mandate> transfer of shares using an off-

market transfer> alteration or forgery of dividend

or interest payments.

>>


GOVERNMENT INITIATIVES> National Identity Fraud Prevention Week> Fraud Alert – collates details of scams in

order to study the evolution of fraud > Recruitment and vetting – encouraging

companies to include a proper vettingprocess

> Money Transfer – increasing safety oftransfer systems online

> Scams Conference> Companies House registration process> Company prevention strategies.


E-CRIMEDetective Sergeant Paul Salt from the Economicand Specialist Crime Unit of the MetropolitanPolice gave details of the technologicaldevelopments enabling fraudsters to carry outtheir scams.

The Internet has made fraud increasingly simpleto commit, as individuals do not look for theobvious and are too quick to assume thatinternet content is trustworthy. With over onebillion users, the Internet offers fraudsters thechance to reap huge financial rewards with aminimal risk of detection.

It is almost impossible to know the true scale ofinternet crime; as internet commerce takesplace on a global scale, cross-borderinvestigations are very difficult to conduct. This is further hindered by differences in laws,protocol and enforcement priorities and lack ofintelligence-sharing between countries. Inaddition, there is reluctance among

governments to take responsibility for internetcrime. These factors combine to makeconvicting fraudsters extremely problematic.

The most successful tool for fraud prevention,in DS Salt’s opinion, would be a nationalreporting system. Currently it is impossible tojudge the extent of internet fraud unlesspeople notify the police directly; but in certaincases the only link to a fraudster may be afalse address.

DS Salt expressed the need to look at theProceeds of Crime Act and Money LaunderingAct to establish what measures need to betaken. Reference to the new Fraud Act will alsobe important in moving forward.

PREVENTIONThe message that prevailed was the need forcommunication, both within the industry and toour clients. The introduction of new lawsthrough The Companies Act 2006 will allowtighter restrictions on the share register,helping to reduce the threat of identity fraudand targeting by boiler rooms. The letterproduced by Balfour Beatty is available on theICSA website and can be included in companymailings to increase shareholder awareness.

Naz explained that Computershare’s ‘SecurityLetters’ allow shareholders to verify a requestto change details (eg change of address).Currently 200 Computershare clients havemoved to ‘Security Letters’ and as a result 21potentially fraudulent acts have been

prevented. One of those shareholders targetedwas a company director. The money lost ifthese frauds had succeeded could have beenover £1.8m.

To date in 2006, Computershare hasdiscovered and prevented attempted fraud tothe value of £6 million. In our proactive effortsto create industry awareness we have sharedthe sources of these attempts with fellowregistrars and related companies.



LINKS TO RECENT ARTICLES ON FRAUD:Queen’s Speech heralds fraud shake-upASIC puts $4m cold call scam on iceNorfolk police probe global shares scamPolice warning over scam investments offer �

http://www.stop-idfraud.co.uk

http://www.met.police.uk/fraudalert/

http://news.bbc.co.uk/1/hi/business/6147596.stm

http://www.news.com.au/business/story/0,23636,20810862-462,00.html

http://www.thisisthenortheast.co.uk/display.var.1031009.0.police_warning_over_scam_investments_offer.php

http://www-uk.computershare.com/WebContent/doc.aspx?docid=02bd7d80-de95-4d63-8f08-46d8d6a909b1


http://www.eveningnews24.co.uk/search/story.aspx?brand=ENOnline&category=News&itemid=NOED30%20Nov%202006%2011:43:15:117&tBrand=ENOnline&tCategory=search

Industry update

The changes to the rules on electroniccommunications contained within theCompanies Bill will allow issuers, subject toshareholder approval, to offer the option ofelectronic or hard copy (paper)communications. Notice of meetings and theagenda will be made available on the issuers’website. Electronic voting will be facilitated andthe result of the poll on each resolution will beavailable on the website, post meeting.

Shareholders who do not return an election, for electronic or paper communications, muststill be advised when the company is holding ameeting, where they can obtain details of thedate, time and place of the meeting and thebusiness to be conducted. The advice may be in the form of a note or a formal notice ofmeeting. They must also be reminded on anannual basis of their option to make an electionfor electronic or paper communications.

Under Part 9 of the Bill, communication rightsare extended to underlying beneficial owners,ie those holding shares via PEPs, ISAs orcommercial/broker nominees.

Shareholder rights are a significant aspect of the Companies Bill 2006, which receivedRoyal Assent in November. The full Bill will be enacted by October 2008, but it has beenannounced that the clauses enabling electronic communications for shareholders will come into force in January 2007.



Shareholder rights

>>


Industry update: continued

The rules on access to shareholder detailscontained within share registers have also beenstrengthened in order to prevent the abuse ofsuch data. A request for shareholder data mustbe for a proper purpose. Although ‘properpurpose’ is not defined in the Bill the Instituteof Chartered Secretaries and Administrators(ICSA) is drafting a suggested list of suchpurposes, to assist issuers in deciding whetheror not to release the data.

Any request for a copy of the names andholdings contained in the register will need tostate the name and address of the personmaking the request and warrant the purpose forwhich it has been requested. If the details are tobe passed to a third party, the request will needto state the name and address of the third partyand the purpose for which the shareholder data is to be used. In the absence of suchinformation, issuers will be able to refuse toprovide shareholder details. The misuse ofshare register data will become an offence.

Shareholder rights are also the subject of aproposed EU Directive currently underdiscussion and expected to be finalised in 2007.The UK Government has stated that improvingthe effective exercise of shareholder rightsacross borders is important to enhancinggovernance, market confidence and theopportunity for cross-border investment.

The Directive is expected to introduce a UK-stylerecord date for meetings and abolish ‘share-blocking’, a mainly European directive requiring

shareholders wishing to vote to transfer sharesinto a designated depositary where no tradingcan take place prior to the company meeting.This will mean that sufficient advance notice ofmeetings will be required along with the removalof legal obstacles to electronic voting, againsimilar to the current position in the UK. Apotential change for UK shareholders would bethe introduction of the right to vote, by post orelectronic means, without appointing a proxy orattending the meeting.

Computershare has been actively monitoringthese developments and contributing to thedebate. We will keep you informed as theDirective is developed and finalised.

To get all the latest industry updates,join us for our next Industry InFocus webinar(online seminar) on 18th January 2007. Click here to sign up. �

IF YOU READ NOTHING ELSE, READ THIS:

> The Companies Bill 2006 received RoyalAssent in November with clauses enablingelectronic communications for shareholderscoming into force in January 2007

> The Bill will allow issuers, subject toshareholder approval, to offer the option ofelectronic or hard copy (paper)communications

> A potential change for UK shareholderswould be the introduction of the right tovote, by post or electronic means, withoutappointing a proxy or attending the meeting

> Look out for the Computershare-sponsoredsupplement in the January edition ofChartered Secretary magazine.



When asked“ Do you plan to change your articles to

include electronic communications asthe default?” this was the response:

43% yes

19% no

38% don’t know

When asked “ Do you welcome dematerialisation?”

the audience were firmly in favour of the process:

96% yes

2% no

2% don’t know

The audience at the recent Computershare Industry Conference had the followingviews on the topics:

https://computersharewebinars.webex.com/computersharewebinars/onstage/tool/event/event_status.php?MK=849599096&Rnd=&Rnd7678=0.34834724740663475


COMPUTERSHARE ANNOUNCES RUSSIAN ACQUISITIONSComputershare is pleased to announce twotransactions with BANK URALSIB, continuing ourlong-term strategy to build a substantial market-leading registry service in Russia.

Firstly, we have acquired a controlling interest inThe National Registry Company (NRC), Russia’slargest independent registrar; and secondly, wehave acquired a substantial stake in RegistrarNIKoil, Russia’s number three registrar andlargest mutual fund transfer agent.

These acquisitions have strengthened our clientbase and created significant consolidationopportunities within the registry market. ChrisMorris, Computershare’s Executive Chairman,feels that this further expansion demonstratesComputershare’s unswerving commitment tocreating a global registry service for its clients: “Weare the only company able to offer comprehensive,local registry services on all five continents in 17countries and firmly believe that Russia will playa key part in our portfolio going forward.” �

Regional report

Global news

Computershare held its eagerly awaited annualindustry AGM Management Seminar on the 26thand 27th October. The seminar was held in thestylish surroundings of Munich Airport’sKempinski Hotel, famous for the futuristicarchitecture of Helmut Jahn. Over 120 delegatesattended from companies such as BASF,DaimlerChrysler and E.ON to discuss relevanttopics surrounding AGMs.

Topics included how the German law affectsthe convening of general meetings, methods ofhandling ‘critical shareholders’ during the AGM,an insight into the 2007 AGM season and theimportance of the AGM for the public andpress. Georgeson’s Oliver Linde took thepodium and delivered a joint presentation withThomson Financial on proxy solicitation andshareholder identification.

During the event, Computersharedemonstrated the capabilities of IML’s range ofvoting technologies with delegates gettinghands-on experience using the wirelesshandset. We also got the opportunity toshowcase our new brand look and feel, whichwas very well received. The day ended with aconvivial dinner which allowed the delegates tonetwork and exchange industry viewpoints.


German AGM seminar is a huge success.



Ireland on course to dematerialise ahead of UK

Following an industry-wide consultationprocess, the legislation to allow for fulldematerialisation of Irish Equities was includedas part of the Companies, Investment Fund,Takeovers and Consumer (Amendment) Bill2006. The Bill had its first reading in theOireachtas (Irish Parliament) on 5th July 2006,and its second reading on 14th November. It isexpected that the Bill will become Law byChristmas 2006.

Once the law is in place, the Department ofEmployment, Trade and Enterprise (DETE) willamend the Uncertificated Securities Regulations(USRs) and CREST will issue an amended FileTransfer Data Exchange (DEX) manual in early2007. Together, these will largely define themodel and allow the market participants,including registrars, to begin work on making the various system and operational changesnecessary to implement dematerialisation.

The driving force on the road todematerialisation has been TheDematerialisation Implementation Group (DIG).Under the guidance of the Irish Stock Exchange(ISE), DIG was formed to promote and tofacilitate dematerialisation of listed companies.Key constituents are the ISE, stockbrokers,listed companies, registrars, custodians, theFinancial Regulator, DETE, together withrepresentation from the legal profession and CREST.

At a recent DIG meeting, the question ofwhether Ireland should go ahead of the UK wasraised. DIG Chairman, Brian Healy of ISE, statedthat “the ISE supports the agreement of a firmindicative date for dematerialisation in Quarter1 2008, which would give participants morethan a year to prepare. The ISE felt that ifdematerialisation is good for the Irishshareholder, as was concluded in the Morroghsreport from a shareholder protection point ofview, that the Irish market should forge aheadeven if the UK lags behind rather than

disadvantaging the Irish shareholder bydeciding to postpone implementing a bettersystem as soon as possible”.

There was unanimous agreement thatoperational, legislative and investor educationshould proceed with everyone’s fullcommitment. DIG is now working on a drafttimetable to implement dematerialisation bythe end of Quarter 1 2008.

WATCH THIS SPACE! �

Regional report: continued CONTENTSPREVIOUS NEXT ><


DUBLIN'S HA'PENNY BRIDGE – photograph courtesy of Phillip O'Toole


Feature: Shareholder communication

Meeting the ‘best-practice’ benchmark inshareholder communication

In today’s hectic and fast-paced society thevolume of information sent to the averageperson via email, letters and faxes has neverbeen greater; while the amount of free timethat they have to read and respond to it isshorter than ever. This especially holds true forthe private investor with a portfolio of severalcompanies who may be receiving sharestatements, dividends, meeting requests andcompany announcements by the bucketful.

With this in mind, it is more important than everfor issuers to recognise the best practicebenchmark for communication with theirshareholders and to avoid common pitfalls.

Unless the shareholder is quickly able to read anddigest the document, ascertain what they need todo and action it accordingly, they will make mistakesin completion, or just take the easy course andconsign the document to the bin or filing cabinet.

Failing to persuade shareholders to take clearaction undermines the effectiveness of thecommunication and calls into question the valueof dispatching such documentation to holders.Badly formatted documents will generateenquiries from holders, with call centresbecoming swamped by people asking why theyhave received their communication and whatthey should do with it.



ENTERTAINMENT RIGHTS INCREASESHAREHOLDER RESPONSE BY 61% Entertainment Rights Plc (ER) is one of theUK’s leading specialist media groups focusedon the ownership of high-quality children’s andfamily programming, characters and brands,including Postman Pat, Basil Brush and RupertBear. For further information on ER visitwww.entertainmentrights.com

They have had first-hand experience of howswitching to a new best practice proxy formcan dramatically improve shareholderresponse. Paul Ashworth, ER Finance Manager,explains. “Our earlier proxy mailings did notgenerate the response that we were hoping for.The issue identified was that the proxy formswere not shareholder friendly. They took timeto complete, the voting was open and overallthe cards did not look very professional.

“We worked with Computershare toincorporate their enCompass documentation inour 2006 AGM proxy mailing. We really likedthe design and layout of the forms – they weresimple to read and easy to respond to. This wasborne out by a vastly improved shareholderresponse rate – an increase of over 61% fromthe previous year.”

ENTERTAINMENT RIGHTS’ NEW PROXY FORMENTERTAINMENT RIGHTS’ OLD PROXY FORM >>

http://www.entertainmentrights.com


Feature: continued

WHAT SHOULD YOUR SHAREHOLDERCOMMUNICATIONS DO?

Maintain consistency for shareholdersThe more similar in design and layout repeatedmailings are, the more a shareholder can getused to reading, understanding and successfullyfilling them out. Even simple measures such aslocating shareholder information in the sameposition each time can enable call centre agentsto easily direct callers to the specific location,ensuring speedy call resolution.

Meet your shareholders’ security expectationsA document can be compromised byinadequate security features should it fall intothe wrong hands. State-of-the-art safeguardssuch as UV sensitive inks, micro print lines and chemically reactive paper will reduce the risk of fraudulent certificates remainingundetected when presented in support ofbogus trading activity.

Simple design and process For an issuer, the processes involved indeveloping a document can be extremelylengthy and offer very little scope for last-minute amendments. To tackle this, we feel it isimportant to create the document and managethe data within a single system-basedarchitecture. This massively reduces thepossibility for human error and mitigates risk.

WHAT IS COMPUTERSHARE DOING TO MEET‘BEST PRACTICE’?As shareholders become more familiar withand accustomed to the layout and ease ofcompleting ‘best-practice’ documentation, itwill send a clear wake-up call to the industry tofollow the growing trend.

We recognise the importance of clarity andconsistency in shareholder mailings and to meetthis need, Computershare CommunicationServices has developed a shareholdercommunication tool called enCompass, speciallydesigned to deliver the best communicationsexperience to your shareholder. All documentscreated via enCompass have a consistent lookand feel with a clear message and call to action,in a format designed to enable key messagesand information to be clearly displayed torecipients. The suite of documents availableincludes proxy cards, forms of instruction,dividend payments and tax advice, SCRIP/DRIPpayments, shareholder cards and certificates.enCompass is currently being used by a numberof global clients in many different industries.

For more information on how you can improveyour shareholder documentation, pleasecontact your usual Computershare contact oremail [email protected] �



IF YOU READ NOTHING ELSE, READ THIS:> Shareholders have less time than ever to

read and assimilate company mailings

> Companies should recognise theimportance of providing clearcommunications to their shareholders

> A higher rate of response can be achievedusing best-practice documentation.



Feature: Annual reports

Thinking differently about annual reports



Following Gordon Brown’s well-publicised u-turnon the mandatory publication of Operational andFinancial Reviews (OFRs) at the end of 2005, alarge number of companies are now rethinkingtheir whole approach towards the way in whichthey share their OFRs with shareholders.

To comply with the new legislation, companiesmust now meet the less-stringent EU AccountsModernisation Directive requirements (nowincorporated into the 1985 Companies Act) andprovide a business review in their Directors’report. This includes key performanceindicators (KPIs) and risks faced, but nothingon the strategic direction of the company andits future prospects. Although these issues arebeing addressed in the Companies Act 2006,implementation is likely to be some way off.

Despite OFR reporting no longer beingmandatory, it is commonly held that sharingstrategic thinking with shareholders is in acompany’s best interests and can be used todemonstrate best practice. Philip Moore, CEOof Friends Provident, agrees and believes thatin future OFRs will form an invaluable part ofits reporting to all shareholders. In a recentlypublished article, Moore argues that producing

the report is not that difficult. “The OFR isbasically information that we have internallyanyway – it is the strategic thinking and contextsetting that informs every board meeting. Whyshouldn’t we share this with our stakeholders?”

Moore also believes that the OFR should beshort enough to be read. Shareholders’ time ismore at a premium than ever these days, andpeople don’t always have the time to wadethrough traditional annual reports. When youconsider that some annual reports run intohundreds of pages and contain a huge quantityof charts, facts and figures, it’s not surprisingthat the key messages the company is trying toget over to shareholders are sometimes lost.“What we need is for the Government tointroduce primary legislation that will allowcompanies to file their accounts electronicallyand put the full report on their website,” Mooresays. “But the document we send toshareholders and stakeholders together withthe OFR, should strive to be no more than 60pages long. Not many people want a200-page brick thudding through their letterbox.”

IF YOU READ NOTHING ELSE, READ THIS:> Companies are rethinking the ways in

which they communicate withshareholders following the relaxation ofthe law relating to the mandatorypublication of OFRs

> Sharing strategic thinking withshareholders is in their best interest andcan be used to demonstrate best practice

> Some companies are finding thatproducing a shorter, more succinct versionof their annual report is providing greatertransparency for shareholders

> Companies are placing more emphasis oncorporate social responsibility (CSR)reporting in their annual reports.

Legislation update gives companies the opportunity to achieve better practice in OFRs.

>>


Feature: Annual reports: continued

Flag, a creative design agency (a wholly ownedsubsidiary of Computershare), assisted FriendsProvident with their annual report, which wasrated highly by the market. Flag’s CreativeDirector Piers Evelegh explained that the key toits success was in providing greatertransparency to readers. “We aimed to ensurethat the information and layout was presentedin a way that made the content easily accessibleto readers who were not necessarily expertusers of financial reports.”

Piers also highlights the fact that shareholdersare becoming more aware of corporate socialresponsibility reporting, and are puttingpressure on companies toadopt moreenvironmentally friendlyapproaches to how theyconduct theiroperations. “We areseeing aconvergence ofcorporate socialresponsibilityreporting aspart of thestandardannualreportingpackage,” he said �

ASK OUR EXPERTS Today, we are seeing increasing pressure fortransparency and a greater convergence ofcorporate social responsibility reporting as partof the standard annual reporting package. Flagprovides corporate reporting design, productionand consulting for companies around the world,including FTSE100 companies in the UK. Toassist Computershare clients we have set up anemail address that allows you to ask questionsof our experts.

Barry Semark will be able to provide directionon annual reports, Piers Evelegh will answer anyquestions on report design while Rob Cameronwill deal with your enquiries regarding reportingon corporate social responsibility. Alternatively,you can contact your usual Computersharecontact who can arrange for a visit from Flag todiscuss your annual report design andproduction requirements. You can contact theCorporate Reporting team [email protected]




http://www.friendsprovident.com/common/layouts/subSectionLayout.jhtml?pageId=fpcouk/SitePageHTML%3Afinancial_reports


Feature: Global Payments Service

A faster and simpler way forshareholders to receive payments



Computershare has teamed up with Citigroup,one of the world’s leading foreign exchangeproviders, to launch a new ‘Global PaymentsService’, aimed at providing shareholdersliving abroad with a fast, secure and cost-effective method of receiving their dividend orinterest payments in their local currency. Themoney will be electronically transmitted directto their bank account, speeding up receipt ofthe funds to up to nine days earlier andeliminating the cost and inconvenience ofdealing with a sterling cheque.

This is a great value-added service to offer toshareholders living abroad, and one that isoffered at no charge to the issuer.

Since its launch on 20th November, the GlobalPayments Service has supported electronicpayments direct to shareholders’ bankaccounts in many of the most popular globalcurrencies including Euros, US Dollars,Swedish Kroner, Swiss Francs and Hong Kong,Canadian, Singapore and Australian Dollars.By January 2007, 40 more currencies will beavailable to shareholders.

We can arrange for a targeted mailing to besent to relevant shareholders at no charge. Ifyou would like to take up this offer or requirefurther information, please speak to yourusual Computershare contact or [email protected] �



Events

Computershare exhibits at ICSA Conference

Computershare recently showcased its rangeof services at the Institute of CharteredSecretaries and Administrators (ICSA) AnnualConference and Exhibition at Lord’s CricketGround on 5th October. The event was well-attended, attracting over 400 delegates, andprovided us with an excellent opportunity toreveal our new-look exhibition stand andliterature, reflecting our new brand values ofCertainty, Ingenuity and Advantage. There

were also lively demonstrations of ourinteractive keypad voting technology. Visitorsused the keypads to vote on hot industrytopics, such as: ‘Has corporate governancegone too far?’. Instant voting results weredisplayed live on the main screen, ignitingenergetic debate and discussions amongaudience members. The show was a greatsuccess, with lots of new and old faces present.

HAND-HELD VOTING TECHNOLOGYSHOWCASED AT MOCK AGM Computershare’s Mock AGM was held atSainsbury’s offices in Holborn London, on 3rd October. During the meeting thefunctionality and benefits of the IML MeetingManagement and Electronic Voting Systemwas demonstrated live, showcasing the latestdevelopments in audience participationsolutions for 2007. These included MultiSite,where votes can be cast by shareholdersattending simultaneous meetings in differentcountries and Question Management, whichaffords companies greater control of shareholders’ questions during themeeting. The session was attended byrepresentatives from FTSE 100 and 250companies such as HBOS plc and BritishAirways Plc.

In an attempt to make the event as realisticas possible, personalised CDS proxy formswere printed using the enCompass productand dispatched with the invitations. Aninternet voting site was available forattendees to register their votes online andexperience the system first-hand.

It was an excellent opportunity for clients, not only to see the system in action, but tomeet with other clients who currently use thehandheld electronic voting technology and toshare experiences �


THE COMPUTERSHARE STAND



Events

Webinars


Computershare held its Industry Infocus event as a webinar on28th September, which proved to be a great success. In total 17delegates participated, including representatives from The RoyalBank of Scotland Group plc, J Sainsbury plc and VodafoneGroup Plc.

Webinars are simply online seminars that can be attended bymany people at one time from the comfort of their own desk –all you need is a computer and a telephone. By using thistechnology clients can get regular industry updates with ease –compared to the alternative of leaving the office and travellingto a face-to-face event.

Invitations are sent by email and once the delegate accepts, theyare sent a link to click on to join the webinar at the appointedtime. Delegates can watch and listen to the presentation on theirPCs, and are given the option to comment during and after thepresentation. The whole process usually takes around one hour.

Despite the success of webinars, Computershare remainscommitted to maintaining a physical presence at industry events,such as our recent Industry Conference �

TRY A WEBINAR! The next Industry InFocus webinar is being held on 18th January2007 when you will be updated on hot topics and developmentswithin the industry. Click here to sign up �


The time-saving alternative to seminars.

https://computersharewebinars.webex.com/computersharewebinars/onstage/tool/event/event_status.php?MK=849599096&Rnd=&Rnd1751=0.5203756572259001


News

The scene

COMPUTERSHARE ON BBC TV’S WORKING LUNCHJeff Sainsbury, Executive Vice President, GlobalCapital Markets Group, appeared on BBC TV’sWorking Lunch on Tuesday 10th October toanswer questions on whether or not it’s a badsign when a company comes to its shareholdersin a bid to raise funds (known as a rights issue).

Jeff thinks not. “If existing shareholderschoose not to take up their ‘rights’ thennormally their entitlement would be sold andthe proceeds of the ‘nil-paid rights’ paid tothem. Each rights issue should be looked atseparately – there is no blanket yes or no as towhether to subscribe to them.”

Jeff suggests you seek advice from yourstockbroker and/or read the financial press and make your own mind up. “After all, it’s your money!” �

CONSERVATIVE PARTY CONFERENCEADOPTS IML VOTING TECHNOLOGYThe Conservative Party Conference on 2nd–4thOctober 2006 made use of electronic voting andtext messaging technology for the first time intheir history, successfully using 1,700 handsetsprovided by IML, a Computershare company.

On arrival, each attendee was given a handsetthat they could use to vote instantly on ‘hottopics’ such as “Should we ban marketing tochildren?” and “Should we raise the tax onairline fuel if it means that the cost of cheapflights will go up?”

The text messaging function on IML’sinteractive handsets ensured that everyaudience member was given an equalopportunity to submit their opinion. Votingresults and text messages from the audienceappeared instantly on a big screen at the frontof the conference, allowing each member toview the full range of opinions �


said:

“ Electronic voting and interactive messagingensured that the Tories appeared to be atransparent, progressive and modern partywith controversial issues and commentstackled immediately by presenters.”



News: continued

The scene

IRISH CLIENT WINSTOP AWARDFrom a competitivepool of 24 companyfinalists, Ann Heraty,founder and ChiefExecutive of CPLResources Plc wasnamed as the 2006

Ernst & Young Entrepreneur of the Year. She was announced as the winner of theinternational category before receiving thecoveted overall title. Both were presented at agala ceremony by Micheal Martin TD, Ministerfor Enterprise, Trade and Employment and thechairman of the judging panel, Denis O’Brien.

CPL Resources plc has been a client ofComputershare Investor Services (Ireland)Limited since 1999 and we are delighted withtheir win. We would like to congratulate CPLand Ann on this achievement �

SENIORCOMPLIANCEOFFICER RECEIVESTWO PRESTIGIOUSAWARDSFor most people,receiving aprestigious awardwould be a

fantastic achievement and a moment tosavour. For Lorraine Tromans, receiving twosuch awards in the space of just one weekwas simply sensational.

Lorraine is Senior Compliance Officer andMoney Laundering Reporting Officer (MLRO)at Computershare. On 17th November,Lorraine received her Compliance InstituteFellowship – of which there are only 10 in thecountry – and then on 23rd November wasawarded the OStCaR (Outstanding Service toCompliance and Regulations) in a ceremonyheld at the Dorchester Hotel in London.

Lorraine was naturally delighted with her twoawards. “Computershare takes complianceand all the related issues very seriously –receiving the OStCaR was a greatendorsement of that fact. It also made mefeel like a film star – and I got a kiss fromRory Bremner!” �

CONTENTSPREVIOUS<


NOT JUST A PRINT SHOP Computershare Communication Services (CCS)recently announced a change of name fromComputershare Document Services (CDS).CCS is a leading global provider of specialisedone-to-one communication solutions thatintegrate print and mail with e-commerce andother e-delivery channels.

Andrew Heard, UK Director of CCS, explains,“The change was made to reflect the fact thatthe department is no longer simply a print andmail resource, it now includes electronicarchiving and retrieval, online distribution viaemail, and enabling bill payment online.Essentially we offer complete communicationsolutions to our clients” �

We hope you have enjoyed this winter editionof Insight. Please forward any comments,queries or suggestions for future articles [email protected] �



Documents

Computershare’s client magazine