Preparing to access the public markets - your key to success

Madrid 19 May 2014

www.pwc.co.uk

PwC 2

Introductions

Partner, Capital Markets Head of Global IPO Centre

Clifford Tompsett

E mail: clifford.tompsett@uk.pwc.com Tel.: +44 (0) 20 7804 4703 Mob.: +44 (0) 7802 918877

Madrid

UNCLASSIFIED

PwC

Going Public - Key decisions

Strategy and equity story, which businesses/assets to float

Tax and legal structuring, holding company location

Choice of market and timing

People and resources, key management

Appointment of advisors

Financial reporting and track record audit requirements

Management information systems

Transparency and corporate governance

Board composition

Start of preparation

IPO launch

3

Madrid

UNCLASSIFIED

PwC

Going Public: Everything you need to know about doing an IPO

4

Madrid

UNCLASSIFIED

PwC

Going Public – your roadmap to an IPO Key stages of IPO preparation and execution

Execution Preparation Planning

Valuation and offer structure

Prospectus and

regulatory review

People matters

Structuring and taxation

Operational effectiveness

Equity story and business plan

Management information and reporting

Historical track record

Budgeting, forecasting, working capital

Corporate Governance and Internal Controls

Readiness assessment

Roadmap

5

Marketing and pricing

Due diligence

Se

ttin

g o

bje

cti

ve

s

Raising capital Maximising investment value Developing strategy

Madrid

UNCLASSIFIED

PwC

What are investors looking for?

6

Corporate governance

Robust capital structure

Strong management

Strong market position

Cash generation

Sustainable and visible growth

• Reasonable leverage levels at IPO

• Capacity to fund organic growth in the business

• Selective M&A headroom (on the basis of proven track record)

• Sustainable growth drivers: attractive end market dynamic with secular growth trends

• Earnings visibility: quality and breadth of customer relationships

• Established track record of growth across economic cycles

• Margin growth

• Strong and/or growing return on invested capital

• Management focus on optimising cash generation

• Board composition and balance

• Effective risk management and internal controls

• Transparency of decision making

• Dynamic, ambitious, focused team

• Experience in the sector

• Management interests aligned with shareholders

• Leadership positions in core markets

• Established brand within the industry – clear ‘go to’ position

• Quality and breadth of customer relationships

Madrid

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PwC

Key components of Corporate Governance

Independence

Delegation of authority

Corporate secretary

Size and composition of the Board

Balance of Executive

directors and INEDs

Matters reserved

to the Board

Risk management and internal

control

Corporate functions,

including IR

Ownership structure and

influence

Transparency and

information disclosure

Board committees

Relationship agreement

7

Madrid

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PwC

Historical financial information Key considerations

8

Financial history considerations

Are the historic accounts suitable for listing?

Is consolidated IFRS financial information available for 3 years and at the level of the issuer?

Will interim audited or unaudited financial information (including comparatives) be needed?

Is carve-out financial information needed? Does the company intend to float part of the business?

Have there been significant acquisitions or disposals in the last 3 years?

Can segment information be easily prepared and aligned with prospectus?

IPO window

FCA review

2015

1 Jan 30 Jun 31 Dec

Early March

15 May

144A 135 day rule - 31 Dec financials go stale

At 30 June the 31 Dec financials go stale under UK premium listing rules

Audited accounts produced

List using 31 December 2014 audited financial

statements

Madrid

UNCLASSIFIED

PwC

Listing requirements – overview

Eligibility conditions in London Premium Standard AIM

Appointment of a sponsor/nominated advisor x

Clean three year IFRS track record (>75% of business) x

If exists, must present 3 years

x

If exists, must present 3 years

Control of the majority of assets (>50%) x x

Audited numbers must not be more than 6 months old x x

Reviewed interims if document dated > 9 months after end of last audited year

n/a

Adequate controls to meet continuing obligations

Adequate financial reporting procedures declaration x (a)

Sufficient working capital for at least 12 months from date of prospectus - shares x – GDRs (a)

Reporting Accountant’s due diligence reports x (a)

At least 25% shares in public hands x

Shareholder approval of significant and related party transactions x x

(a) Market practice in London currently evolving, FRP and working capital reports sometimes requested for GDRs. For standard share listing, level of diligence similar to premium listing expected.

Fin

an

cial

Dilig

en

ce

Madrid

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PwC

Prospectus – financial information

Three years of clean audited accounts (not older than 6 months) prepared in

accordance with IFRS as adopted by the EU. The last 2 years must be restated

to the basis to be applied in the issuer’s next annual accounts.

Required if published or if latest audited accounts are 9 months old. Must

include comparatives.

Required to illustrate the impact of the transaction(s) on the issuer’s business

as if it had taken place at the start of the last reported period.

Optional and rare, but must be reported on by an accountant if included in the

prospectus.

• Significant change

• Extraction of financial information

• Capitalisation and indebtedness

• Tax comfort

Historical financial

information

Interim financial

information

Pro forma financial

information

Profit forecast financial

information

Comfort letters

10

Madrid

UNCLASSIFIED

PwC

Due diligence by the Reporting Accountant

The long form report is a due diligence style report that will cover the

operational and financial performance of the group over the same

period as the financial track record period.

A prospectus must contain a statement by the issuer that the working

capital is sufficient for its present requirements (at least the next 12

months from the date of the prospectus). The sponsor is also required

to report to the UKLA that it is satisfied that the directors can make

such statement.

Accountants provide a factual description of the financial reporting

procedures in place. The report is to support the sponsor’s statement to

the FCA under the Listing Rules that the issuer has established

adequate FPP procedures.

Long form report

Working capital report

Financial position and

prospects report

11

Madrid

UNCLASSIFIED

PwC

Current IPO market outlook

12

Madrid

UNCLASSIFIED

PwC

0

5

10

15

20

25

30

35

40

-

2

4

6

8

10

12

14

16

VS

TO

XX

in

de

x

Mo

ne

y r

ais

ed

(€

bn

)

Volatility compared to IPO proceeds

Money raised (€bn) VSTOXX

IPO of Talanx, Telefónica Deutschland and Direct line

IPO of MegaFon, Alior Bank and Kcell

IPO OF Ziggo and DKSH Holdings\

Greek and Spanish bailouts and downturn in global economic growth

IPO of bpost and Partnership Assurance

IPO of Royal Mail, Riverstone Energy, and TCS Group

IPO of ISS, Pets at Home, Poundland and Hispania Activos Inmobiliarios

Volatility has remained low and market indices have continued to

strengthen despite events such as the geopolitical turmoil in Ukraine

13

-10%

0%

10%

20%

30%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar % c

ha

ng

e s

ince

1 J

an

20

13

Historical performance of major market indices since January 2013

CAC 40 DAX 30 FTSE 100

Source: Thomson Reuters

Madrid

UNCLASSIFIED

PwC

IPO activity in the three top Global Financial Centres 2010 to 2013

Hong Kong London

14

USA

0

50

100

150

200

250

300

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

2010 2011 2012 2013

Money raised ($m) Number of IPOs

0

50

100

150

200

250

300

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

2010 2011 2012 2013

Money raised ($m) Number of IPOs

0

50

100

150

200

250

300

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

2010 2011 2012 2013

Money raised ($m) Number of IPOs

Source: Dealogic, included deals >$5m Madrid

UNCLASSIFIED

PwC

IPO activity in the three top Global Financial Centres Q1 - 2010 to 2013

USA Hong Kong London

15

S&P 500: +28.0% since 2013 Shenzhen +18.5%, Hang Seng -5.0 % since 2013

FTSE 100: +9.5% since 2013

$18

$8

$16

$13

0

15

30

45

60

75

$0

$4

$8

$12

$16

$20

Q1 2011 Q1 2012 Q1 2013 Q1 2014

Money raised ($m) Number of IPOs

$2 $1 $1

$6

0

15

30

45

60

75

$0

$4

$8

$12

$16

$20

Q1 2011 Q1 2012 Q1 2013 Q1 2014

Money raised ($m) Number of IPOs

$2 $1

$3

$9

0

15

30

45

60

75

$0

$4

$8

$12

$16

$20

Q1 2011 Q1 2012 Q1 2013 Q1 2014

Money raised ($m) Number of IPOs

80%

90%

100%

110%

120%

130%

80%

90%

100%

110%

120%

130%

Shenzhen Composite Index

Hang Seng Index

80%

90%

100%

110%

120%

130%

Madrid

UNCLASSIFIED

Thank you

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