Conflicts management policy

The purpose of this document is to summarise the firm's policies and procedures for managing the conflicts of interest involved when we prepare and distribute research.

Seymour Pierce does not meet all of the FSA standards for managing conflicts of interest, as a result our research should not be regarded as an impartial or objective assessment of the value or prospects of its subject matter, though of course we will always ensure that it remains clear, fair and not misleading.

Under FSA rules we are required to ensure that all communications with our customers, including our research, are clear, fair and not misleading. We are also bound by the provisions of the FSA Principles for Business, and in particular Principle 8: "A firm must manage conflicts of interests fairly, both between itself and its customers and between a customer and another client."

Our research is produced by investment analysts in our research department, and the particular analyst or analysts responsible for each research recommendation are clearly identified on it. Our analysts could be subject to pressures that could compromise either their ability to offer unbiased opinions on investments, or the timing of publication of research. The policies and procedures set out below are designed to identify, minimise, manage and monitor such potential conflicts.

Conflicts arising from corporate finance business

Seymour Pierce's main activity and principal source of income is the provision of corporate finance advice and related services to small and medium-sized UK companies, including raising funds for these companies by issuing securities. If the advice is on a confidential matter it will not be possible to disclose the relationship publicly. Otherwise, the fact that a company is a corporate client of Seymour Pierce is prominently disclosed in our research material and on our website at www.seymourpierce.com. If we have raised funds for a corporate client in either a primary or secondary issue of securities within the past 12 months this will be explicitly disclosed on the research recommendation.

Our corporate finance and corporate broking staff are separated from the rest of the firm by formal Chinese Wall arrangements which prevent the flow of confidential information to the rest of the firm. These arrangements include physical segregation of the department and policies and procedures governing the security of documents and electronic data. If confidential information about a company is held by corporate finance or corporate broking staff behind the Chinese Wall, our investment analysts will be entirely unaware of this information and may continue to publish research recommendations without taking this information into account.

From time-to-time investment analysts may be brought over the Chinese Wall to advise the Corporate Finance or Corporate Broking departments; this is a controlled and fully documented process requiring the prior approval of Management and Compliance. Analysts brought over the Wall in this way may not publish research nor advise clients on the relevant securities until such time as they are formally taken back over the Wall and the confidential information they have been given has either been made public or has otherwise ceased to be price-sensitive.

Conflicts arising from trading activities

The firm or its associates may have a position or may have undertaken or may undertake a transaction on its own account in a security referred to in a research recommendation. Such positions or transactions may arise from the firm's market making activity or may derive from the firm's corporate finance activity. All shareholdings (other than those arising in the normal course of market making) which amount to 5% or more of the relevant class of securities are disclosed on our website at www.seymourpierce.com. The website also provides a list of all the companies in whose securities we are a market maker or liquidity provider.

To ensure that the firm and its associates do not deal ahead of publication of research and until our clients have had a reasonable opportunity to act on the research, the research department is physically separated from the market making department and the market making department cannot know the contents of planned research, nor of the intention to publish research, until the research has been formally issued to clients.

Supervision and remuneration of investment analysts

Seymour Pierce is a small firm. Our investment analysts are supervised by our Head of Research, but it is impossible for us to ensure that this responsibility is completely segregated from influence by individuals with conflicting responsibilities. The Head of Research reports to the Head of Equities, who is also responsible for the Sales team. The Head of Equities reports to the Managing Director, who is responsible for the corporate finance function. The recruitment and remuneration of analysts is primarily the responsibility of the Head of Research, but the Head of Equities and the Managing Director may be involved in such decisions.

Our investment analysts are remunerated by a combination of salaries and discretionary bonuses. The level of any analyst's bonus for any given period is based on the general profitability of the firm and on management perception of his or her individual performance. Analysts do not receive, direct or indirectly, remuneration in exchange for expressing any opinions or recommendations in their reports. However, it must be recognised that the overall profitability of the firm, on which analysts' remuneration depends in the same way as for all other employees, is principally dependent on the revenue generated by corporate finance activities. However, neither the Managing Director, nor the corporate finance department, nor any corporate client, may influence the content of any investment research other than checking the factual accuracy of the material.

Analysts' involvement in other activities

In addition to preparing and distributing research recommendations, our investment analysts may be involved in other activities on behalf of the firm, including promoting the firm's services to potential corporate clients and advising the corporate finance department on the viability of proposed transactions. However, when preparing research and giving their opinions investment analysts will always use their professional judgment to state unbiased opinions of a company and its prospects. The firm operates a policy of independence and under this analysts giving advice on or making a recommendation about a security are formally required to disregard any relationship, arrangement or interest of their own, or of the firm or its affiliates, which might influence the advice or recommendation.

Inducements

Seymour Pierce does not offer or agree to provide favourable investment research on any company or security, nor to make or change any particular recommendation, in order to obtain corporate finance business. Our analysts are prohibited from soliciting or accepting any inducement to publish or change any opinion or recommendation. They are permitted to accept nominal gifts and ordinary business entertainment in accordance with the firm's formal policies on the receipt of gifts and entertainment. A company covered by an analyst may offer to pay reasonable expenses for a visit to its business premises and offer reasonable hospitality during such a visit; this will not be regarded as an inducement.

Editorial control

Responsibility for the content of research recommendations rests primarily with the investment analysts named as having produced them. We do not cede effective editorial control to anyone whose role or interests might reasonably be considered to conflict with the interests of the clients to whom the research is to be published or distributed and our research remains at all times the property and views of Seymour Pierce alone. In particular, all valuations and forecasts included in research material are derived independently of the company concerned.

All research material is reviewed by a director of research before being published, and research recommendations relating to corporate clients, or published in advance of the flotation of a company, is also reviewed by our Compliance department before publication.

From time to time the company which is the subject of research may be given sight of draft research before publication to check the facts within it. No forecasts or recommendations may be included in draft research shown to a company in this way. If comments on draft research are received from the company they are reviewed by a director of research who decides whether Seymour Pierce will agree to make the suggested amendments.

Timing and manner of distribution

The timing of publication of research is controlled by the Head of Research, except when it is necessary to delay publication for specific Compliance reasons, such as withholding publication of research during the period of an offering of new securities. When an analyst has been taken over the Chinese Wall and become privy to unpublished price-sensitive information he will be unable to comment on the matter in question until such time as the information is either time-expired or has been made public.

To resolve the potential conflicts involved in selective disclosure of research, when analysts have formed an intention to write a piece of research and have started to form ideas about the content of the research they must not discuss this intention nor the potential content of the research with anyone outside the research department except for the purpose of checking factual accuracy as set out above, until such time as either the research has been distributed to all relevant clients by email; or a "Research Flash" email has been issued to announce that a research recommendation is being prepared.

Personal account dealing

Our investment analysts are permitted to invest on their own account in securities in relation to which they prepare research - whether on that particular investment, its issuer, or on related investments and issuers. However, they are not permitted to buy or sell relevant securities during the period when they know that research affecting those securities is being prepared for publication, nor for a period of 24 hours after publication of the research. In addition, they may only deal in relevant securities if the deal is not contrary to their published recommendation or to realise cash to meet pressing unrelated financial obligations.

If investment analysts or their associates have a personal holding of the investment concerned, this is specifically disclosed in the research recommendation.

Monitoring

The effectiveness of these policies and procedures is monitored by the Compliance department as part of the firm's regular compliance monitoring programme.