EZINE > april 2014 inside this issue: update ● Top awards for Equiniti and its clients ● Budget – Brian Please on the Equiniti Annuity Survey ● Budget – What the new ISA will mean for employers ● A review of the changes to Narrative Reporting ● SIP and SAYE savings limits Perspective ● Predicting how shareholders will vote with Quality Investor Analytics 10 minute guide ● The Internet of Things will transform our lives client focus ● A helping hand for Land Securities Group
equiniti EZINE > APRIL 2014
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All of the latest industry news from Equiniti
And the winner is …
Fantastic awards success for Equiniti and clients
wide One Equiniti Icon Awards. Congratulations also go to Marks & Spencer and Tesco who have made the shortlist in the Best Employee Share Schemes category, for plans that Equiniti provides. The winners will be decided in June.
Equiniti were named the Benefits Team of the Year at the recent Pay & Benefits Awards ceremony, which honours individuals and teams for their outstanding achievements in the industry. The Equiniti Flex and Online Benefits team achieved the extremely high standards required by the UK’s largest bank, and launched one of the biggest UK wide Flex schemes. Up against stiff competition from other leading providers, the judges were impressed by the team’s ability to maintain great customer service throughout the upheaval of a new system implementation. The shortlist has also just been announced for the forthcoming Employee Benefits Awards. Equiniti has been selected in the Most Motivational Benefits category for the group-
Pictured: The Pay & Benefits Awards hosts with Nicola Pattimore (centre), (left to right) Sue Clarke, Stuart Bennett and Samantha John
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We are also delighted to announce that Equiniti won the Best Share Registrar award at the UK Stock Market Awards 2014. “Following on from our Best Shareholder Services award and our No. 1 ranking in Capital Analytics, both last year, this completes a tremendous 12 months of recognition for the excellent service we deliver to our clients and their shareholders,” commented Stuart Ellen, Managing Director, Registration Services. “The award is also a fantastic tribute to all of our people right across the business who helped make this happen.”
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equiniti EZINE > april 2014
Budget 2014 - pensions
Further to the overhaul of pensions in last month’s Budget announcement, Brian Please, Business Development Director, discusses the Equiniti Annuity Survey
The recent Budget announcement by the Chancellor took the market by complete surprise and is the most radical change we have ever seen. The issues addressed mirrored those that Equiniti has been highlighting, and feature heavily in our annual Annuity Survey.
or will individuals be encouraged to engage more in making retirement choices due to the increased breadth of choices available? While it’s not yet known what the Government’s plans might be for enhanced annuities, we asked our respondents if all annuities should be underwritten in the future.
These changes affect only defined contribution (DC) schemes in the private sector. We must wait to see what the government may have in store for defined benefit or even public sector schemes. It would seem to me a step too far if members of these schemes are allowed to transfer to a DC arrangement and take it all as cash.
The Chancellor announced the Government’s intention to guarantee everyone with a DC pension free and impartial guidance on their financial choices for retirement, at retirement. We asked our respondents to give us their thoughts on the potential cost of this guidance and whether it will be practical or necessary to provide this guidance face-to-face.
While it’s currently impossible to accurately predict what the Budget’s eventual ramifications may be, market speculation suggests that the annuity market could reduce from £12billion to £4billion as early as 2015. We have asked our Annuity Survey respondents to share their opinions and predictions in order for
us to identify early trends in the pension and annuity industry’s responses to these changes. We’ve also asked our survey respondents if they believe that this is a sign that annuities are no longer fit for purpose at retirement. And if this is the beginning of the end for annuities, how will drawdown products be positioned? Will those in receipt of their pensions savings recklessly spend their money and exhaust their pension pots too early,
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The survey was launched immediately after the Budget announcement, and we expect a particularly strong response this year. The results will be published in early June. If you would like to see a copy of the survey results, please contact brian.please@equiniti.com or pr.equiniti@equiniti.com.
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equiniti EZINE > april 2014
Budget 2014 - the new ISA NISA flexibility makes a more attractive proposition for employers too
Finding the balance between making savings and investments options available to staff and being seen to make a recommendation has often been a concern for employers. Employers cannot and should not be expected to provide financial advice however, as part of their wider commitment to providing a duty of care they may wish to support employees’ financial planning. ISAs have always sat neatly alongside more traditional benefits such as pensions and share plans and the new ISA, the ‘NISA’ announced in the 2014 budget, with its improved flexibility has just become a more interesting proposition. In the budget, announced on 19 March 2014, the Government announced changes to ISAs which give savers and investors greater choice and flexibility about when and where they place their funds, in turn helping to reduce employer concerns about appearing to be directing staff down a certain savings route.
Some key features of the NISA from 1 July 2014 Allowances ■■ From
6 April until 30 June 2014, the new allowance will be £11,880. From 1 July 2014 until 5 April 2015, it will be £15,000. ■■ It will also be possible to split the ISA allowance in any way between a Cash ISA and a Stocks and Shares ISA. Previously, savers had to use all of their ISA allowance in a Stocks and Shares ISA or use a maximum of 50% in a Cash ISA with the remainder in a Stocks and Shares ISA. ■■ The junior ISA limit will be increased to £4,000.
Funds transfers
It will be possible to transfer funds from a Stocks and Shares ISA to a Cash ISA and vice versa from July whereas previously it has only been possible to transfer funds out of a Cash ISA into a Stocks and Shares ISA.
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Tax-free interest in Stocks & Shares ISAs ■■ Interest
earned on cash held in a Stocks and Shares ISA will no longer be taxed. ■■ ISAs in the corporate world have a number of potential benefits for employees: they can provide employees with ongoing protection from tax when a share plan matures, enable them to diversify from a single stock holding to a risk-managed portfolio, to work towards a source of tax-free income in future years* and,
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since income can be taken out at any time, they are less restrictive than a pension. ■■ Cash ISAs are low risk but offer lower returns; Stocks and Shares ISA are higher risk but have the potential for higher returns. With this greater flexibility, the NISA allows employees to choose the savings and investment combination that best suits their needs, and provides the opportunity to make changes throughout the tax year. Their flexibility should give greater comfort to employers who wish to include ISAs in their employee benefits offering. *based on current legislation
ISA allowances
Stocks and Shares ISA limit
Cash ISA limit
If you would like more information Please contact your relationship manager. click here to read this story on the equiniti website
6 April 2014 – 30 June 2014 £11,880 (less any contributions made to a Cash ISA) 1 July 2014 – 5 April 2015 £15,000 (less any contributions made to a Cash ISA)
6 April 2014 – 30 June 2014 £5,940 (less any contributions above £5,940 made to a Stocks and Shares ISA) 1 July 2014 – 5 April 2015 £15,000 (less any contributions made to a Stocks and Shares ISA)
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equiniti EZINE > april 2014
Getting the most out of Narrative Reporting For those who couldn’t make it to the recent discussion forum, here’s a reminder of 2014 Narrative Reporting requirements In recent years, financial reporting has become increasingly complex. Additionally, recent regulatory updates have prompted changes in our Narrative Reporting. From now on, there will be added focus on communicating clear, key messages in Narrative Reports. The Financial Reporting Council (FRC) feels that in recent years Narrative Reports have become complex and compliance driven, and as a result there has been a lack of focus on quality. Outlined below are the changes to narrative reporting; whether it be new content that should be added into your reporting structure or elements that should be removed. We also take a look at the FRC’s guidance for the format your reporting should take.
Strategic Report
In addition to the Director’s Report, companies will now also be required to prepare a Strategic Report. This will be separate from the Director’s Report and will largely mirror the current business review. It will include the following content: ■■ A
description of the company’s business model and strategy ■■ A breakdown of the sex of company directors, senior managers and employees ■■ An outline of social and community issues, as well as human rights issues in relation to the development of the performance of the business.
Directors’ Report
Rather than adding more content into the Director’s Report, items have been removed, which are:
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■■ Information on principal activities ■■ Information on charitable donations ■■ Disclosure of information on acquisition
of own shares (private companies only) ■■ Information on contractual arrangements, which are essential to the business of the company ■■ Asset values ■■ Creditors’ payment policy.
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update Remuneration Report
For your 2014 AGM, you will need to produce a directors’ remuneration report in the new format. The remuneration policy and implementation policy will also need to be put to your shareholders. All companies must have successfully sought approval for remuneration policy no later than the start of the second financial year to begin after the new legislation comes into force. This report will be subject to a binding vote through an ordinary resolution and where it is not passed, the directors will need to retain the previous policy. The Director’s Remuneration Report should contain: ■■ A statement by the Chairman of the remuneration committee ■■ A Remuneration Policy, which takes into account current and future remuneration policy, to be produced at least once every three years ■■ An Implementation Report, which will contain details of how the Remuneration Policy was implemented in the previous year. This should be updated annually and is subject to an advisory vote.
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Reporting Format
In order to improve the quality of Narrative Reporting, the Financial Reporting Council (FRC) published a report in October 2012, outlining guidance for improved reporting measures. Companies are encouraged to prepare their report and accounts with these principles and sentiments in mind, with a particular focus on the annual report as a key communication tool that needs to be clear and consistent. The guidance sets out the following suggestions to improve Narrative Reporting: ■■ Relevant
information that meets the needs of shareholders is presented in the Strategic Report ■■ Companies should be innovative in how they draft their annual reports, presenting narrative in a way that enables them to best tell their story, whilst remaining within the regulatory framework ■■ Promote greater cohesiveness in the annual report through improved linkage between information within the strategic report and in the rest of the annual report.
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If you would like more information Please contact Doug Armour, Equiniti David Venus on 01372 465330 or your relationship manager.
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equiniti EZINE > april 2014
And the limits are... A round-up of the latest changes to SIP and SAYE savings limits, ISAs and employee schemes SAYE and SIP
In February, we held a discussion forum about the change to SIP and SAYE savings limits. The slides used at the event are here. Since then, things have moved forward: 6 April 2014 SAYE prospectus has now been issued and a number of SAYE launches are in planning, giving employees the opportunity to save up to the new monthly savings limit of £500.
NISA and CGT
The government announced in the 2014 Budget that from 1 July 2014, ISAs will be simplified and a ‘New ISA’ (NISA) will be introduced. The annual limit will be raised to £15,000 – the biggest ever increase to ISA limits. HM Treasury have
produced a helpful factsheet about the NISA. As share prices rise and increasing numbers of SAYE schemes are above water, employees will be able to transfer more exercised shares into an NISA and protect gains from Capital Gains Tax. The table shows the new limits:
■■ The
■■ Instructions can now be taken for employees wishing to increase their SIP Partnership deductions from April. We have already changed some of our clients’ SIP plan parameters where they have communicated the limit increase to employees. ES Portal and telephony services have been updated to apply the limits as appropriate.
Individual Savings Account (ISA)
Tax year 2013 – 2014
6 April 2014 – 30 June 2014
Cash value of ISA limit
£11,520, up to £5,760 of which can be saved in cash
£11,880, up to £5,940 of which can be saved in cash
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1 July 2014 – 5 April 2015
£15,000
From 1 July 2014, the overall annual NISA limit for tax year 2014 – 2015 is £15,00000
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equiniti EZINE > april 2014
The new tax year exemption for Capital Gains Tax is: Capital Gains Tax
Tax year 2013 – 2014
Tax year 2014 – 2015
Annual exempt amount for individuals
£10,900
£11,000
Registration of employee schemes
HMRC has been sending letters to companies about registering new and existing share schemes online. If you look after your company’s employee share plans, you should be speaking with the team who manages your PAYE Online. HMRC ERS bulletins 13 and 14 outline the timelines and how to access the online service. Existing schemes will need to be registered online by 6 July 2015. The 2014 – 2015 annual share scheme returns will need to be filed online.
If you would like more information Please contact your relationship manager. click here to read this story on the equiniti website
perspective
equiniti EZINE > april 2014
Quality Investor Analytics could be the key to finding out how your shareholders are going to vote
Tracking voting behaviour Recent changes to remuneration reporting, whereby the proposed Directors pay policy has to be approved by shareholders, means that it’s more important than ever to have an accurate perception of shareholder support, in order to avoid being blindsided. Investor Analytics is a service that a number of Equiniti’s clients take advantage of, giving clients insight into how their shareholders are going to vote ahead of the AGM. “The proxy solicitation and vote matching service can make a huge difference to our clients,” says Rob Hemming, Head of Relationship and Business Development, Equiniti Investor Analytics. “It can provide the client with key information, from identifying potential shareholders, identifying who follows which proxy advisor and finding out how shareholders intend to vote ahead of the AGM, which is essential, especially if it looks like
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perspective there is the risk of a substantial ‘no’ vote. This significantly increases a client’s visibility of shareholders’ voting intentions,” Rob explains. Equiniti partners with Orient Capital to deliver this service: “There are several aspects to the service: from vote matching to a full proxy solicitation campaign,” says Rob. Vote matching is very much a realtime analysis, marrying the information established through shareholder analysis against the votes cast at Equiniti. For example, if a company’s vote is split 80% For to 20% Against, it can reveal which underlying institutional investors voted in each direction, which can be really useful, especially when you have large blocks of votes Against.
Vote matching is very much a real-time analysis, marrying the information established through shareholder analysis against the votes cast at Equiniti.
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In comparison, Proxy Solicitation entails contacting shareholders ahead of the AGM to ascertain how they are going to vote. “This process starts up to three weeks before the meeting, contacting shareholders to glean voting intentions,” Rob says. “We can then inform the client of anticipated voting behaviour if it does appear that there are going to be votes against particular resolutions. This enables the client to enter into a dialogue with those shareholders in advance.” “It is now more important than ever that clients are made aware of this service,” says Alison Owers, UK CEO of Orient Capital. “Combining a regular, transparent and rigorous review of shareholders, in addition to their voting behaviour over time, is an incredibly beneficial way to consider the engagement on matters of governance, and critical for companies to understand the feedback from investors early on. Done well, this can become an important part of the ongoing strategy for the rest of the year,” Alison says. “It provides organisations with a really rigorous share analytics solution; a regular and transparent review of shareholders
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and their behaviour over time is incredibly beneficial. And it is critical for companies to understand the feedback from investors early on,” Alison says. “We have recently had instances where our clients have asked for the service very close to the AGM, as they have realised the value in it,” Rob says. “The growth that we have seen over the last few years is testament to the strength of the service. It also shows that many of our clients now see it as a really vital part of their AGM planning, and providing transparency to the board on potential AGM outcomes is invaluable.”
If you would like more information Please contact your relationship manager or Rob Hemming by email at Robert.Hemming@Equiniti.com or by telephone on 020 7469 1884.
10
MINUTE guide
equiniti EZINE > april 2014
The Internet of Things Last month, David Cameron announced an extra ÂŁ45m in funding for the development of the Internet of Things. Here we tell you everything you need to know about the online technology that has the potential to transform our everyday lives. What is it?
The Internet of Things (IoT) refers to a network of objects, linked by sensors, which can transmit information to each other without the need for human interaction. Objects like an everyday fridge can be fitted with an IP address and sensor and then linked up to your Internet shopping account. Therefore, when you run out of milk, your fridge will tell your Tesco account and hey presto, new milk will be delivered without you lifting a finger.
How does it work?
Objects are fitted with a sensor, which can cost as little as ÂŁ1 to buy and fit. This sensor
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10 Minute Guide has an IP address and connects information that it gathers to a remote server. In this way information is passed from device to device. The sensors can be very small and hidden out of the way; nobody need ever know that your appliances are wirelessly talking to each other.
When is this going to happen?
It has already started. A primitive version of the fridge sensor is on sale for £2,000 and Nike is selling trainers which can monitor your performance and automatically upload the results online. However, most of the terminology is focused on the future and the IoT is still in its relatively early stages. Although there are currently more than 10 billion wirelessly connected devices, and it is estimated that this will increase to over 30 billion in the next six years, not all of these devices know how to talk to each other yet. Cars don’t have a way to talk to tollbooths, for example. This means that we’re still a while away from everything being connected although the IoT has begun to take shape.
How did it all start?
The idea of the IoT has been around since the early 1980s. A coke machine at an American university was linked up to the Internet and programmers could check if their drink was in
equiniti EZINE > april 2014
The Equiniti View Stuart Ellen, Managing Director, Registration Services
“Equiniti holds vast amounts of data in respect of clients, shareholders and employees. We are naturally reviewing opportunities this technology might provide for the future. The Internet celebrated its 25th birthday recently, and it has come a very long way in such a short space of time. The Internet of Things is yet another exciting technological development for the web and it has real power to transform our working lives. The fact that the government is investing so much money in
stock before visiting the machine. The advent of smartphones with apps that track elements of our daily lives has sped up the process and the number of connected devices has increased year by year. It is now estimated that there are at least two connected devices for every human on earth.
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the technology attests to how influential it could become. David Cameron calls it a ‘new revolution’ and believes that it could boost productivity, reduce energy needs and tackle climate change. There are concerns over security and managing the wealth of data that the IoT will bring, but if those problems are solved, who knows where it could take us? Gartner, a US research firm, predicts that there could be 26 billion devices connected to the IoT by 2020. I’m looking forward to seeing how it will develop in the coming years.”
How will this affect everyday life?
Companies who have invested a lot of time and money into the IoT claim that our lives will be transformed for the better by it. In theory, manufacturers will no longer run out of stock or have excess stock as their product levels will be monitored automatically by sensors.
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10 Minute Guide Green campaigners say it will decrease carbon emissions through the collation of information and communication technology. Those in the healthcare sector also say that people’s health and well-being will improve as medical healthcare and medication will become connected.
How will it affect our business?
With more and more objects connected to the web, the IoT is expected to produce huge volumes of data. Every piece of equipment, and even employees, can be linked to a network by a sensor with info continually sent to a smartphone or browser. This will present huge challenges in managing the data collected but, if analysed correctly, the data could provide information on how to improve processes and highlight new business opportunities. The IoT will also allow businesses to target their customers more effectively as more data will be available about their individual lives.
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What other challenges does the IoT present?
The government has committed ÂŁ73m in total to UK technology firms who are working on devices that can communicate over the Internet. The IoT is also seen as largely positive by businesses and technology firms. However, there have been concerns over privacy, with many people questioning where all the data gathered from the appliances in their lives will end up and how it will be used. Security is another key issue as the connected devices and their data could potentially be susceptible to hacking.
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Client Focus
equiniti EZINE > april 2014
Land Securities Group PLC turns to Equiniti David Venus when it needs an extra pair of hands
Help when you need it most As the UK’s largest commercial property company, Land Securities Group PLC has a subsidiary list of 400 companies, is a member of the FTSE100 and has a premium listing on the London Stock Exchange. With a company of this size, having reliable support on hand is essential, and in the case of Land Securities Group, it turns to Equiniti David Venus when it needs a little extra support. “Equiniti David Venus has been excellent in supporting us,” says Lucy Turner, Assistant Company Secretary at Land Securities Group PLC. “They are reliable, always available to help out at short notice and deliver on time and on budget,” Lucy says. One of the key tasks that Equiniti David Venus supports Land Securities Group with is the filling of Annual Returns: “Equiniti David Venus files all of our Annual Returns, making sure all 400 are filed by the deadline,” Lucy says.
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Client focus Equiniti David Venus doesn’t just support Land Securities Group with its Annual Returns. As a leading firm of Chartered Secretaries, it is able to provide professional and dedicated Company Secretarial support to any organisation – large or small. “Since supporting Land Securities with its Annual Returns, we have been requested to provide our expertise to assist in other areas,” says Marla Balicao, Director at Equiniti David Venus. “We have maintained a strong relationship with Land Securities since we started working with them and believe that the increase in work is down to the quality of our services and getting ad-hoc work completed at short notice.” “When we have really busy periods, Equiniti David Venus support us with our more routine workload: accounts approvals, capital reductions and share transfers. These are all things we can trust them to do well,” says Lucy. “They are also handling a oneoff project for us; selling or share gifting numerous low-value shareholdings held by a subsidiary company. This will enable us to strike off the company. As there are a large amount of shares involved, having Equiniti David Venus’ help has proved very useful and it has freed up my time to do more value-add work for the business.
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“Overall, Equiniti David Venus has been a great help. Knowing that we can outsource to them and they will deliver gives us real confidence,” Lucy says.
If you would like more information If you would like to find out more about the services that Equiniti David Venus offers, please contact your relationship manager or Marla Balicao by email, marla. balicao@davidvenus.com, or by telephone on 01372 465330.
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