Listing in London
November 2005
November 2005 2
Agenda
The London markets and Russia
Why consider accessing the international capital markets?
Why London’s Main Market?– Range of markets– Flexible regulation– Access to capital– Access to liquidity
AIM – the benefits of accessing the world’s most successful growth companies market
Case studies
Questions?
November 2005 3
Source: London Stock Exchange – September 2005
London Stock Exchange - key statistics
Admitted companies (inc AIM)2,494 domestic companies519 international companies1,311 AIM
Market capitalisation UK listed: US$3,020bn International listed: US$3,786bn AIM: US$88bn
Equity turnover (Jan-Dec 2004) Main Market:
US$4,447bn domestic US$4,614bn international
GDRs: US$109bn
AIM: US$34.8bn
November 2005 4
Companies on the London Stock Exchange: Russian focus
18 Companies traded on the LSE Main Market
In 2004, the total trade volume in Russian DR’s was over US$63.96bn
Privatisation expertise in London
Balanced approach to corporate governance
Gateway to European consumers and investors
Source: London Stock Exchange trade statistics
November 2005 5Source: London Stock Exchange trade statistics
AO TATNEFT GAZPROM
LUKOIL OMZ
EFES Breweries International SISTEMA
PYATEROCHKA EVRAZ Group
NOVATEK
Companies listed in London, Main Market
Companies traded in London, Main Market
AO MOSENERGO
ROSTELEKOM
SIBNEFT
MOBILE TELESYSTEMS OJSC
MMC NORILSK NICKEL
SURGUTNEFTEGAZ
WIMM BILL DANN FOODS
UNIFIED ENERGY SYSTEMS OF RUSSIA
YUKOS
November 2005 6
Companies on AIM with CIS focus -22 companies
Source: London Stock Exchange trade statistics
ARICOM ORIEL RESOURCES
AVOCET MINING PALLADEX
CARDINAL RESOURCES PETER HAMBRO
CELTIC RESOURCES RAMBLER MEDIA
EUREKA MINING RAVEN RUSSIA
FRONTIER MINING REGAL PETROLEUM
HAMBLEDON MINING SIBIR ENERGY
HIGHLAND GOLD TRANS SIBERIAN
KRYSO RESOURCES UKRPRODUCT
NELSON RESOURCES URALS ENERGY
OXUS GOLD VICTORIA OIL
November 2005 7
Case Study: London – a leader in international trading
Source: London Stock Exchange trade statistics
The Exchange’s member firms traded around US$64bn of Russian securities in 2004, representing around 59% of the total trading volume on the IOB for 2004.
Trading Value on Russian DRs
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2001 2002 2003 2004 2005YTD
Date
Val
ue
(mil
lio
n U
SD
)
November 2005 8
Company growth
Growth
Independent Market ExpertiseRecommendations on how to maximise the value of
joining a London market
The LSE supports customers in maximising shareholder value through supporting capital raising and generating liquidity whilst maximising
opportunities from their increased profile
CapitalRaising it
efficiently & effectively when
required
ProfileMaximising
marketing/PR opportunities
LiquidityIncreasing and
maintaining liquidity
November 2005 9
CAPITAL: Case study - Main Market GDRs
Core business activities
Sistema is the largest private sector consumer services company in Russia and the CIS, with over 35 million customers. Founded in 1993, the company reported revenues of US$ 4.1 billion for the first nine months of 2004 and total assets of US$ 7.7 billion.
Transaction Synopsis
Date of Admission : 14 February 2005Market: Main Market Transaction: PlacingMoney raised: $1.56 billionTurnover (first 11 days): $2.54 billionFTSE Classification: Diversified Industrials
“London is a major capital markets center and the choice of the London Stock Exchange
reflects our desire to attract a broad institutional shareholder base, as well our strategic partnerships with leading global
companies based in Europe”.
Vladimir Evtushenkov,
President of Sistema
Sistema is the largest Russian IPO ever and the biggest international IPO on the London Stock Exchange since Orange
in 2001.
Sistema
November 2005 10
LIQUIDITY: Case study – Main Market ADR’s Lukoil OAO
Transaction Synopsis
Date of Admission : 7 August 2002Market: Main Market Transaction: PlacingMarket Capitalisation: US$34 billionFTSE Classification: Oil integrated
“We listed ADR’s on the London Stock Exchange in August 2002 and are delighted
with the recent ADR listing and the volume of trading.”
Mr Alekperov, President
The increased level of information transparency and corporate governancehas fuelled the liquidity of Lukoil securities.
Lukoil DR’s are one of the most liquid securities on the London’s IOB.
Monthly traded values of LUKOIL's shares
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05
$ M
illio
ns
Date
November 2005 11
PROFILE: Case study – Main Market ADR’s
Transaction Synopsis
Date of Admission : 30 September 2003Market: Main Market FTSE Sector: Engineering - General
OMZ
“The listing of our DRs on the Official List of the UK Listing Authority is a significant step
in our efforts to increase the transparency of our company for our investors, customers,
employees and partners.”
Kakha Bendookidze, Chief Executive Officer
Core business activities
OMZ (Uralmash - Izhora Group) is one of the largest Russian heavy industry enterprises. The Company has manufacturing and engineering operations in Russia and the Czech Republic and representative offices in India and China.
November 2005 12
London attracts companies raising capital
London dominated the European IPO market in the year 2004 with 79% of all IPOs
Source: London Stock Exchange trade statistics and individual exchange websites
Breakdown of the Western European IPO Market 2004
Deutsche Borse2%
Borsa Italia2%
Scandinavian Exchanges8%
Madrid1%
Euronext7%
Other1%
LSE79%
AIM82%
Main Market18%
November 2005 13
London Stock Exchange: the choice for international companies
• London Stock Exchange - 423 new companies joined in 2004, 293 of which were IPOs, 49 of which were international
• NYSE – 131 IPOs in 2004, 11 companies of which were international
• Nasdaq – 166 IPOs in 2004, 18 of which were international
Source: London Stock Exchange and individual exchange websites
Total num ber of IPOs on the LSE, Nasdaq and NYSE 2000 to 2004
0
50
100
150
200
250
300
350
400
2000 2001 2002 2003 2004
To
tal
No
of
IPO
s
London Stock Exchange
Nasdaq
NYSE
November 2005 14
London Stock Exchange – 16 Intl Companies on the MM in 2005
Source: London Stock Exchange - 2005
Company NameCountry of Origin
Admission Date
Money RaisedUS$m
FRUTAROM INDUSTRIES Israel 08/02/2005 55
KUMHO TIRE CO INC South Korea 16/02/2005 367
SISTEMA JSFC Russia 14/02/2005 1,560
UTI BANK India 22/03/2005 240
NEWS CORP USA 18/04/2005 0
SREI INFRASTRUCTURE FINANCE India 21/04/2005 34
PYATEROCHKA HLDG N.V. Netherlands 11/05/2005 562
AGCERT INTERNATIONAL Eire 08/06/2005 109
EVRAZ GROUP SA Luxembourg 08/06/2005 417
PARTYGAMING Gibraltar 30/06/2005 1,632
BANCO SANTANDER CENTRAL HISPANO Spain 01/07/2005 0
OAO NOVATEK Russia 27/07/2005 966
888.com Gibraltar 04/10/2005 270
BANKMUSCAT Oman 05/10/2005 163
INVESTCOM UAE 11/10/05 700
KHAZAKHMYS Kazakhstan 12/10/05 1,124
November 2005 15
London has the widest choice of proven markets globally
A choice of globally respected markets supported by a wide range of institutional &
retail investors
Main MarketSupports the capital raising
activities of more established companies seeking further
growth.1,702 issuers
Supports the capital raising activities of earlier stage
companies in their initial growth period.
1,311 issuers
No other Exchange globally can offer the same choice ofmarkets with the same breadth and depth of investors
Source: London Stock Exchange – September 2005
November 2005 16
Key differences between our markets
Pre-vetting of admission documents by the UKLA Compliance required with the rules of the UKLA Normally a three-year trading record required Minimum of 25% shares in public hands Prior shareholders approval for certain transactions Sponsors needed for certain transactions
Regulation by the LSE No trading record required No minimum amount of shares to be in public hands In most cases, no prior shareholder approval required
for transactions Normally, admission documents not pre-vetted by
Exchange or UKLA but by nominated adviser Nominated adviser required at all times
AIM and Main Market are structured differently to assist different types of companies
Main Market
November 2005 17
AIM: the international market for smaller and growing companies
• AIM companies: 1,311
• Overseas AIM companies: 185
• New companies on AIM in 2004: 355 - 294 UK
- 61 overseas
• Capital raised since 1995: US$35bn
• Capital raised in 2004: US$8.8bn- US$ 7.8bn UK companies- US$ 1.02bn overseas companies
AIM Key statistics
Source: London Stock Exchange trade statistics – September 2005
November 2005 18
AIM – since launch
YTD 2005, there were 389 admissions to AIM, the largest number since launch.
Source: London Stock Exchange trade statistics – September 2005
Number of AIM Admissions 1995 to September 2005
123145
10775
102
277
177160 162
355
389
0
50
100
150
200
250
300
350
400
450
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
YEAR
AD
MIS
SIO
NS
November 2005 19
All companies must appoint a Nomad at all times
Advisers such as accountants and lawyers are brought on board to assist with the floatation
AIM companies normally work alongside an Investor Relations Company. The Nomad will advise on this.
The Nomad will draft and prepare the AIM admission documentation and carryout the due diligence required.
A 10 day announcement is required by all AIM applicants giving notification of your intention to join the market
AIM – Admission Process
November 2005 20
AIM - Continuing Obligations
AIM companies are subject to the AIM Rules which outline the continuing obligations of being on a public market. Some of the key continuing obligations are:
AIM companies must have a Nomad at all times, otherwise they will be suspended from the market
AIM companies must disclose all price sensitive information in a timely manner including substantial transactions, related party transaction,
reverse takeovers and other miscellaneous transactions
All directors accept full responsibility, collectively and individually for the AIM Rules
Half Yearly and Annual Report and accounts required in adherence with deadlines
Restrictions on deals for directors and applicable employees on AIM securities during close periods
November 2005 21
AIM companies by market capitalisation
79% of companies on AIM have a market capitalisation under $50million.
27 companies on AIM are capitalised above $440million. Source: London Stock Exchange trade statistics – September 2005
Distribution of AIM Companies by market valueSeptember 2005
145
203 199
275
214
129
87
27
0
50
100
150
200
250
300
less than$3.5m
$3.5m to$8.8m
$8.8m to$17.6m
$17.6m to$44m
$44m to$88m
$88m to$176m
$176m to$440m
more than$440m
Market Value Range ($m)
Nu
mb
er o
f co
mp
anie
s
November 2005 22
AIM: a diverse market
Source: London Stock Exchange trade statistics – September 2005
AIM – a diverse market, with 33 sectors represented.
Top 10 AIM sectors by market capitalization and no of companies for September 2005
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Oil
& G
as
Min
ing
Spe
cial
ity &
Oth
er F
inan
ce
Sup
port
Ser
vice
s
Sof
twar
e &
Com
pute
rS
ervi
ces
Leis
ure
& H
otel
s
Med
ia &
Ent
erta
inm
ent
Pha
rmac
eutic
als
& B
iote
chno
logy
Rea
l Est
ate
Gen
eral
Ret
aile
rs
Mar
ket
cap
ital
izat
ion
($m
)
0
50
100
150
200
250
No
of
com
pan
ies
Market Capitalisation ($m)
No. of Companies
November 2005 23
Secondary markets
Average daily turnover = £72million
6,600 average bargains per day during 2004
Market is price driven – prices quoted and liquidity provided by 33 market makers
One AIM Index at present – FTSE AIM Index - which comprises all AIM companies
Liquidity varies across the market
Source: Teather & Greenwood, Institutional Investors in AIM
November 2005 24
Investment in AIM
All but one of the main UK institutions invests in AIM
Value of Institutional holdings = £10billion
Top 3 by value: CDS & Co, Fidelity, Artemis, Chase, Foreign & Colonial
Top 5 by number of investments: Foreign & Colonial, Artemis, Fidelity, Framlington, Gartmore
80% of secondary market bargains are retail
Source: Teather & Greenwood, Institutional Investors in AIM
November 2005 25
Case study – Russian AIM Company, Celtic Resources Hldgs
Celtic ResourcesCore business activitiesThe ownership and operation of gold mines in Russia and Kazakhstan, two of which are already in production. The Group is also exploring and developing other base metal and hydrocarbon prospects in the Former Soviet Union, and holds minor oil and gas interests in the UK.
Transaction SynopsisDate of Admission : 14 October 2002Market: AIMTransaction: PlacingMarket Cap. at admission: US$68m Capital raised: US$9.4mMkt. Cap. as of 06 Sept 2005:US$244mFTSE Classification: Gold Mining
Celtic Resources Hldgs Turnover
0
50
100
150
200
250
Jul-04
Aug-04
Sep-04
Oct-04
Nov-04
Dec-04
Jan-05
Feb-05
Mar-05
Apr-05
May-05
Jun-05
Jul-05
Date
To
tal
Mo
nth
ly V
alu
e $m
0
5
10
15
20
25
To
tal
no
. o
f sh
ares
(m
)
TOTAL Mnthly Value US$ Total Shares
November 2005 26
Case study – Russian AIM Company, Peter Hambro Mining Plc
PETER HAMBRO MINING
Core business activities
Peter Hambro Mining Plc has 10 gold sites, two of which, Pokrovskiy and Pioneer are in production. Pokrovskiy is where Peter Hambro Mining Plc started mining and produced its first gold in 1999. It is approximately 320 km north-northwest of the regional capital, Blagoveschensk, and 50 km north of the border with China. Pioneer entered production this year and is located approximately 40 km from Pokrovskiy.
Peter Hambro Mining Plc is involved in the mining of gold ore and the production of dor bars which are sent for refining into London Good Delivery bars of gold and silver at a refinery in Krasnoyarsk. Most of the gold is currently sold to Sberbank in Moscow and the silver is sold to other banks in Russia. Under Russian law, the group has the right to export its product, once refined, to be sold for hard currencies.
Transaction SynopsisDate of Admission : 29 April 2002Market: AIMTransaction: PlacingMarket Cap. at admission: US$67m Capital raised initially: US$20.3mMkt. Cap. as of 6 Sept.2005: US$1.09bnFTSE Classification: Gold Mining
Peter Hambro Mining Plc Turnover
0
50
100
150
200
250
300
350
Jul-04
Aug-04
Sep-04
Oct-04
Nov-04
Dec-04
Jan-05
Feb-05
Mar-05
Apr-05
May-05
Jun-05
Jul-05
Date
To
tal
Mo
nth
ly V
alu
e $m
0
5
10
15
20
25
30
To
tal
no
. o
f sh
ares
(m
)
TOTAL Mnthly Value US$
Total Shares
November 2005 27
Case study –Ukrproduct (UPG)- First Ukrainian group on AIM
Ukrproduct Group Ltd
Core business activitiesUkrproduct Group (UPG) is one of Ukraine's leading producers of branded foods, the company's main business focuses on the production and distribution of branded food products, namely packaged butter and processed cheese, to wholesale and retail outlets in Ukraine through its own distribution network. UPG also produces dried-milk powder for export to countries across Europe as well as the Far East.
Transaction SynopsisDate of Admission : 11 February 2005Market: AIMTransaction: PlacingMarket Cap. at admission: US$41m Capital raised initially: US$11mMkt. Cap. as of 06 Sept.2005: US$45FTSE Classification: Food Processors
The funds raised will be utilised to invest in:
•New plant & equipment in core sectors
•Expansion of distribution network
•Provide additional working capital for the group
November 2005 28
Case study – Nelson Resources – Among the largest placings on AIM
NELSON RESOURCES
Core business activities
Nelson Resources is a fast-expanding Bermuda-registered, Toronto-listed independent, which over the past two years has picked up several oil production projects in Kazakhstan and which recently made its debut on the London Stock Exchange's AIM market
Transaction SynopsisDate of Admission : 19 July 2004Market: AIMTransaction: PlacingMarket Cap. at admission: US$886m Capital raised: US$120mFTSE Classification: Oil & GasNominated Advisor: Canaccord Capital LimitedBroker: Hoare Govett Limited
Top 6 Individual money raisings
CompanyDate of issue
Money raised (£m)
Issue type
NORTHUMBRIAN WATER GROUP PLC 23-May-03 389.0 New Issue
CENTER PARCS(UK)GROUP 11-Dec-03 245.0 New Issue
MELROSE 26-May-05 202.0 New Issue
TRADING EMISSIONS 21-Apr-05 135.0 New Issue
CENTAUR HOLDINGS 10-Mar-04 134.2 New Issue
PRI GROUP 26-Jun-02 130.8 New Issue
November 2005 29
Case study – Russian AIM Company, Urals Energy Public Company Limited
URALS ENERGYCore business activities
Urals Energy is an independent exploration and production company with its principal assets and operations in Sakhalin Island, Timan Pechora and the Republic of Udmurtia, Russia.
Transaction SynopsisDate of Admission : 09 August 2005
Market: AIMTransaction: PlacingMarket Cap. at admission: US$389m
Capital raised initially: US$138mFTSE Classification: Oil & Gas – Exploration &
Production
“We are delighted that our IPO has been so positively received by investors. The
offering will allow us to continue with our exploration and development
program in Russia and provide flexibility to our capital structure. Becoming a
public company has been an important milestone for us.”
William Thomas, Chief Executive Officer of Urals Energy
November 2005 30
Case study – Russian AIM Company, Rambler Media Ltd
RAMBLER MEDIACore business activities
Rambler Media is an integrated and diversified Russian language media, entertainment, services and content delivery company with three main segments: internet services, mobile value added services and television broadcasting. Rambler.ru, Rambler media’s portal, is one of the most popular portals and search engines with the global Russian speaking community.
Transaction SynopsisDate of Admission : 15 June 2005Market: AIMTransaction: PlacingMarket Cap. at admission: US$m158 Capital raised initially: US$m46FTSE Classification: Publishing & Printing
“We are very pleased to be admitted to trading on AIM and would like to
thank investors for their strong support and interest in our business.”
Irina Gofman, CEO of Rambler Media
November 2005 31
AIM: Top 10 IPOs by money raised in 2005
Source: London Stock Exchange trade statistics – 2005
Company Admission date
Country of Origin
Money raised at admission£m
Sub sector
MELROSE 26/05/2005 UK 201.99 Other Financial
RAVEN RUSSIA 29/07/2005 UK (CIS focused) 153.00 Real Estate Holding & Development
DAWNAY DAY CARPATHIAN
26/07/2005 UK (CEE focused) 140.00 Real Estate Holding & Development
TRADING EMISSIONS 21/04/2005 UK 135.00 Other Financial
EMPIRE ONLINE 15/06/2005 British Virgin Island 123.47 Media Agencies
BILLING SERVICES GROUP 15/06/2005 Bermuda 84.13 Transaction and Payroll Services
URALS ENERGY 09/08/2005 Cyprus (CIS focused)
74.00 Oil & Gas- Exploration & Production
IBS OPENSYSTEMS 23/03/2005 UK 56.00 Software
UTILICO EMERGING MARKETS UTILITIES
20/07/2005 Bermuda 52.50 Investment Companies
BLACK SEA PROPERTY FUND (THE)
14/03/2005 UK (CEE focused) 50.14 Real Estate Holding & Development
November 2005 32
Russian/CIS website www.londonstockexchange.com/ru
www.londonstockexchange.com/ru/AIM
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