UKTI-PwC 19/5 - how to access intnal. capital through London's public markets

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UKTI-PwC 19/5 - how to access intnal. capital through London's public markets

  1. 1. Preparing to access the public markets - your key to success Madrid 19 May 2014 www.pwc.co.uk
  2. 2. 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
  3. 3. 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
  4. 4. PwC Going Public: Everything you need to know about doing an IPO 4 Madrid UNCLASSIFIED
  5. 5. PwC Going Public – your roadmap to an IPO Key stages of IPO preparation and execution ExecutionPreparationPlanning 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 ControlsReadiness assessment Roadmap 5 Marketing and pricing Due diligence Settingobjectives Raising capitalMaximising investment valueDeveloping strategy Madrid UNCLASSIFIED
  6. 6. 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 UNCLASSIFIED
  7. 7. 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 UNCLASSIFIED
  8. 8. 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
  9. 9. 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. FinancialDiligence Madrid UNCLASSIFIED
  10. 10. 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
  11. 11. 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
  12. 12. PwC Current IPO market outlook 12 Madrid UNCLASSIFIED
  13. 13. PwC 0 5 10 15 20 25 30 35 40 - 2 4 6 8 10 12 14 16 VSTOXXindex Moneyraised(€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 %changesince1Jan2013 Historical performance of major market indices since January 2013 CAC 40 DAX 30 FTSE 100 Source: Thomson Reuters Madrid UNCLASSIFIED
  14. 14. 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
  15. 15. 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
  16. 16. Thank you © 2014 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

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