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Conflicts Management

This policy explains the procedures, which St Helen’s Capital Plc (“SHC”) has adopted to manage any conflicts of interest, which may arise in relation to the research we publish. The policy does not affect any contractual obligations owed by SHC to its clients or give rights to any third party. Nor does the policy apply to any personal recommendation, which is tailored to a client’s particular circumstances.
 
SHC does not present its research as objective (i.e. as an impartial assessment of the value or prospects of the investments which are the subject matter of the research).
 
All research will comply with FSA requirements, in particular to be clear, fair and not misleading, and will comply with the following policy:
 
  • Draft research will only be reviewed prior to publication by the company to which the research relates in order to verify factual accuracy
  • Analysts are free to express their own views in research reports free from pressure and control by staff in any other business area (specifically Corporate Finance and Corporate Broking).  Staff in other areas are prohibited from reviewing or approving the content of draft research reports before publication other than:
  • for the purposes of verifying the factual accuracy
  • in the case of Corporate Finance, suggesting reference to specific competitors and other relevant quoted companies
  • checking, in the case of corporate clients, whether there is a case for deferring publication under exceptional circumstances
  • senior staff outside Corporate Finance who have been given responsibility for editing and/or checking compliance with FSA regulations
  • An analyst will not publish research on a company at a time when he has confidential price-sensitive information relating to the company.
  • Analysts’ remuneration is determined solely by the directors of the Firm and is not tied to investment banking transactions performed by SHC or its affiliates.

  • Analysts are physically separated from Corporate Finance staff, and chinese walls are in place between each department to prevent and control the flow of information. 

  • All research will be signed off by the Compliance Department.
  • Favourable research coverage, specific investment conclusions, or specific recommendations will not be offered as consideration or inducement for the receipt of any business or compensation from any source.
  • Those who write research do not report to anybody involved in corporate finance activities.
  • Analysts’ remuneration is never linked to a specific corporate finance transaction, or to recommendations contained in their research.  
  • Decisions on the subject matter and timing of research are normally taken by the analysts themselves, but the senior staff responsible for sign-off are also ultimately responsible for the timing of publication. We will take account of the needs of our investment and corporate finance clients in deciding what to publish and when. In particular, we may produce or procure the production of research on corporate finance or broking clients. Sometimes this will be done in advance of a particular corporate finance transaction. However, quiet periods, during which new research may not be published, will be used as appropriate to ensure that all primary and secondary offerings by corporate finance clients are conducted properly.
  • Research will be distributed to clients in a manner which we consider to be appropriate having regard to each client’s requirements and the service we provide. Not all clients will receive all research. Research will not necessarily be sent to all clients at the same time. In certain circumstances, some clients or groups of clients will be sent research after it has previously been sent to other clients - this will be normal practice where research is principally intended for institutional clients, but may afterwards be made available to other clients.
  • Analysts may provide services and information on an ongoing basis to investment staff, for example in daily meetings. Analysts will not, however, disclose the content or timing of research which is to be published ahead of its publication.
  • Staff are not permitted to deal in the securities of our corporate clients for their personal account.
  • Restrictions on personal account dealing are placed on analysts and other staff. Analysts may not in general trade in a manner contrary to their published recommendation or deal ahead of the publication of any research report.
  • All staff are subject to rules which prohibit them from taking advantage, for the benefit of clients or any other person, of knowledge that research is to be published by SHC, or of the content of that research.

    SHC has a comprehensive Conflicts of Interest Policy which is available upon request and which identifies potential or actual conflicts between the firm and its clients. In summary, policies are in place to ensure that staff act in the best interests of each client and do not have regard to the interests of one client over another. Staff are required to comply with a policy of independence and disregard any interests other than yours when making recommendations to you, or carrying out your transactions. We have procedures in place to prevent any one person from exercising inappropriate influences over the way in which a relevant person carries out services and activities, and to prevent or control the flow of sensitive information between departments (Chinese Walls). We also have policies on gifts and inducements, staff dealing, the production and distribution of research and the supervision and remuneration of analysts, and policies on the handling of client orders.

    All analysts may be involved in developing research and other materials which are used by our corporate finance department to help win new business or retain existing business. In these circumstances, SHC will not publish objective research on the relevant corporate finance client.

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    Research Recommendations

     

    Definitions

    • Buy: 10% or greater out performance of the FTSE All-Share Index
    • Hold : +/- 5% variation
    • Sell: 10% or greater underperformance

     

    Quarterly Statistics

     

    The table below shows the proportion of our research notes by recommendation in the last quarter, and the proportion of those recommendations that relate to companies to whom we have provided investment banking services in the 12 month period prior to the quarter end.

     Number of research notes produced in the period : 16

    Research Recommendation

    (July - Sep 2008)

    Research by recommendation (%)

    BUY

    87.5% 

    HOLD                                           

    N/A

    SELL                                       

    N/A

    INITIATION                                           

    N/A

    NO RECOMMENDATION              

    12.5%

    TOTAL

    100.00%
       
       

    Research Recommendation

    (July - Sep 2008)

    Recommendations that relate to issuers to whom SHC has provided investment banking services in the last 12 months (%)
    BUY

    64.0% 

    HOLD                                           

    N/A

    SELL                                       

    N/A

    INITIATION                                          

    N/A
    NO RECOMMENDATION

    50.0%

     

    Product Information and Description of Risks

     

     

    Investments include but are not limited to shares, warrants, loan notes, convertibles and options.  Investments put your capital at risk and are affected by a variety of potential risks including those relating to credit, the market, liquidity, interest rate, insolvency, foreign exchange, contingent liabilities, execution venue, legal and tax issues.   Not all investments provide income and some investments are inherently more risky than others.

     

     

    St Helen’s provides research on a number of companies whose securities are tradable through a variety of financial instruments.  Our research normally discusses the ordinary shares of an issuer and therefore our guidance below aims to help you understand the nature and risks associated with this type of investment. 

     

    Shares

    A share is an instrument representing a shareholder’s rights in a company and represents a fraction of a company’s share capital.  Dividend income and an increase in the value of your investment are both possible, but not guaranteed.  Not all shares will provide you with an income and some shares are significantly more risky than others.

     

    Dealing in shares inevitably involves risks, including but not limited to the following:

     

    1.   Company risk:  as a shareholder, you become a co-owner of the company and participate in its development.  With this comes the opportunity for profits or losses on your investment and in an extreme case, if the company were to go bankrupt, you could lose your entire investment.

    2.    Price risk: share prices may undergo unforeseeable price fluctuations causing risks and loss.  Markets tend to operate in cycles, leading to increases or decreases in share prices, and it is not possible to predict the phase or duration of these cycles.  Such general market risk should be distinguished from the specific risk attached to investing in a particular company.

    3.    Dividend risk:  the dividend per share mainly depends on the issuing company’s earnings and its dividend policy.  Dividends may be reduced, or not paid at all, depending on those or other factors.

     

    Shares in smaller AIM or PLUS companies, and Penny shares

     

    Penny shares are defined as shares where the bid – offer spread is 10% or more of the offer price.  For example, a share trading at 90 – 100 would be an example of a 10% spread.  The definition excludes government securities and securities issued by a company with a market capitalisation of £100 million or more (i.e. FTSE 100 stocks).

     

    There is an extra risk of losing money when you invest in smaller companies, for example some AIM or PLUS companies and Penny Shares, where the is a big difference between the buying price (offer) and the selling price (bid), such that if they have to be sold immediately you may get back much less than you paid for them. The price may change quickly and can go down as well as up.

     

    Non-Readily Realisable Investments

     

    The market for some of these investments may be limited or could become so, insofar as it may lack liquidity as there is no certainty that market makers will be prepared to deal in such investments (in an meaningful size) and adequate information for determining the current value of such investments may be unavailable.

     

    Warrants

     

    A warrant is a time-limited right to subscribe for shares, debentures, loan stock or government securities and is exercisable against the original issuer of the underlying securities. A relatively small movement in the price of the underlying security results in a disproportionately large movement, unfavourable or favourable, in the price of the warrant. The prices of warrants can therefore be volatile. It is essential for anyone who is considering purchasing warrants to understand that the right to subscribe which a warrant confers is invariably limited in time with the consequence that if the investor fails to exercise this right within the predetermined timescale the investment becomes worthless. You should not buy a warrant unless you are prepared to sustain a total loss of the money you have invested plus any commission or other transaction charges.

     

    Our research material is general in nature and widely distributed.  It does not constitute a personal recommendation; we are not presenting it as suitable for you and have not considered your circumstances.  You should seek appropriate professional advice before investing.