aim seminar 1/20/15
TRANSCRIPT
Welcome to the Seminar
Denver, 2015
Accessing the Global Markets Through LondonDenver Seminar
20th January 2015
3
London Stock Exchange Group - Depth and Breadth
Source: www.lseg.com
Primary Markets Trading Post Trade & Risk
Management
Information Services & IP
Technology
4
Access to capital to grow the business –both at IPO and further capital raisings
Monetisation route for earlier stage investors
Broaden the shareholder base
Incentivisation of employees
Enhance profile & visibility - with customers & suppliers
Currency to fund business acquisitions & expand into new markets
Keep control of business destiny
What are the Benefits of Listing?
Access to deepest pool of international capital in the world
Proven levels of sustained liquidity
Quality of advisory community and sell-side research coverage
Choice of markets to cater for all sizes and stages of company
Respected and balanced regulatory environment
Enhanced profile and status
Most active European IPO market
Why Consider a Listing? Benefits of London
5
Diverse & deep pool of
capital
Strong support from
institutions
Funding for acquisitions
& expansion to new
markets
Tax benefits
The Benefits of AIM
Access to
capital
Experienced
community
of advisers
Profile
Nominated advisers
Accountants
Lawyers
Banks/Brokers
Analysts
Financial PR / IR
Media
Visibility
Bargaining power with
customers & supplier
Access to incremental research
coverage
Marketability of stock
Global peer group
Balanced
regulatory
approach
Disclosure requirements
tailored to growing
companies
Based on EU FSAP
Directives & UK Prescribed
Market Regime
Local & International
investor confidence in
regulatory framework
6
0
1
2
3
4
5
6
7
8
2009 2010 2011 2012 2013 2014
Mo
ney r
ais
ed
(£b
n)
Further
New
1,104 companies*,
aggregate value of
£71bn (219 Int’l
companies)
A Snapshot of AIM
Source: LSE statistics, December 2014
* 37 companies either suspended or undetermined value
*ICB industry classification
Since 1995 over £89bn
raised in total (£50bn
through further issues)
Profile of AIM Companies Admissions to AIM – 2009 to 2014
Industries Represented – by Number of CompaniesFundraisings on AIM – 2009 to 2014
315
41
134125
175
213
133145
83
£1bn+£500 - 1bn£250 -500m
£100 -250m
£50 - 100m£25 - 50m£10 - 25m£5 - 10m£2 - 5m£0 - 2m
36
102
90
71
99
118
0
20
40
60
80
100
120
2009 2010 2011 2012 2013 2014
Num
ber
of
adm
issio
ns
UK Int'l
Oil & Gas, 130
Basic Materials, 170
Industrials, 184
Consumer Goods, 63Health Care, 78
Consumer Services, 121
Telecommunications, 16
Utilities, 15
Financials, 207
Technology, 120
7
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
£0-25m £25-100m £100-500m £500m+Avg d
aily
valu
e t
raded a
s %
of
mark
et
cap
FTSE AIM All Share FTSE All Small
Liquidity and Investors
Source: Data from Bloomberg (6 month average daily value traded before end of December 2014). Liquidity Analysis shows median within each market cap range. FactSet
for institutional holders
*The FTSE All-Small Index consists of all the companies in the FTSE SmallCap and FTSE Fledging indices
• Deep pool of institutional capital, an active retail
investor base and specialist funds, including
AIM VCTs
• Supported by a dedicated network of market
professionals
• Liquidity is ultimately company specific,
dependent on factors including free float,
diversity of investor base & plans for future
liquidity events
Top Institutional Holders Market Value
Invesco Asset Management £1,640.8m
Hargreave Hale £1,141.3m
Henderson Global Investors £943.1m
Schroder Investment Management £919.6m
BlackRock Investment Management £803.1m
Standard Life Investments £766.1m
M&G Investment Management £601.5m
Barclays Bank Plc £577.6m
Liontrust Investment Partners £574.7m
Woodford Investment Management £522.9m
Number of companies in each index and market cap group
£0-25m £25-100m £100-500m £500m+
FTSE AIM All Share 425 243 140 13
FTSE All Small 31 83 253 23
AIM companies have comparable levels of daily liquidity to their Main Market peers*
70
75
80
85
90
95
100
105
110
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14
FTSE100 FTSE All Share FTSE AIM100 FTSE AIM All Share
8
US LSE Admissions in 2014
Main Market IPO
Money raised: $1.5 billion
Real estate fund
February 2014
AIM IPO
Money raised: $9.6 million
Health services provider
December 2014
Main Market IPO
Money raised: $257 million
Lease & asset finance fund
July 2014
AIM IPO
Money raised: $15.1 million
Human capital management
July 2014
Main Market IPO
Money raised: $199 million
Science & tech development
June 2014
SFM IPO
Money raised: $80 million
CLO investment fund
June 2014
Main Market IPO
Money raised: $58 million
Real estate fund
May 2014
Main Market new share listing
$60 billion share distribution
Global communications firm
February 2014
AIM follow on
Money raised: $10 million
Oil & Gas E&P
July 2014
9
This document has been compiled by the London Stock Exchange plc (the “Exchange”). The Exchange has attempted to ensure that the information in thisdocument is accurate, however the information is provided “AS IS” and on an “AS AVAILABLE” basis and may not be accurate or up to date.
The Exchange does not guarantee the accuracy, timeliness, completeness, performance or fitness for a particular purpose of the document or any of theinformation in it. The Exchange is not responsible for any third party content which is set out in this document. No responsibility is accepted by or on behalf ofthe Exchange for any errors, omissions, or inaccurate information in the document.
No action should be taken or omitted to be taken in reliance upon information in this document. The Exchange accepts no liability for the results of any actiontaken on the basis of the information in this document.
All implied warranties, including but not limited to the implied warranties of satisfactory quality, fitness for a particular purpose, non-infringement, compatibility,security and accuracy are excluded by the Exchange to the extent that they may be excluded as a matter of law. Further, the Exchange does not warrant thatthe document is error free or that any defects will be corrected.
To the extent permitted by applicable law, the Exchange expressly disclaims all liability howsoever arising whether in contract, tort (or deceit) or otherwise(including, but not limited to, liability for any negligent act or omissions) to any person in respect of any claims or losses of any nature, arising directly orindirectly from: (i) anything done or the consequences of anything done or omitted to be done wholly or partly in reliance upon the whole or any part of thecontents of this document, and (ii) the use of any data or materials in this document.
Information in this document is not offered as advice on any particular matter and must not be treated as a substitute for specific advice. In particularinformation in the document does not constitute professional, financial or investment advice and must not be used as a basis for making investment decisionsand is in no way intended, directly or indirectly, as an attempt to market or sell any type of financial instrument. Advice from a suitably qualified professionalshould always be sought in relation to any particular matter or circumstances.
The contents of this document do not constitute an invitation to invest in shares of the Exchange, or constitute or form a part of any offer for the sale orsubscription of, or any invitation to offer to buy or subscribe for, any securities or other financial instruments, nor should it or any part of it form the basis of, orbe relied upon in any connection with any contract or commitment whatsoever.
London Stock Exchange and the London Stock Exchange coat of arms device are registered trade marks of London Stock Exchange plc. Other logos,organisations and company names referred to may be the trade marks of their respective owners.
© January 2015
London Stock Exchange plc10 Paternoster Square
London EC4M 7LSTelephone +44 (0)20 7797 1000
www.lseg.com
Legal Disclaimer
10
Other Details
Dorsey & Whitney (Europe) LLP
199 Bishopsgate
London EC2M 3UT
Phone: +44 (0)20 7031 3700
Fax: +44 (0)20 7031 3799
Aim Seminar
January 20, 2015
What is Capital 33?
1/20/2015 www.Capital33.net 12
Companies that May Qualify for AIM
• High-growth
• Revenue-producing (generally)
• Have an international component
• Can produce a healthy return
1/20/2015 www.Capital33.net 13
Why AIM Over US Public Markets?
• Less Complexity
• Lower Cost
• No Share limits
• No Min. Market Cap
• Lower Ongoing costs
• For growth stage companies
• Liquidity
• A different league to OTC, NYSE MKT
1/20/2015 www.Capital33.net 14
AIM Business Verticals
• Finance
• Consumer Services
• Energy
• Healthcare
• Technology
• Industrial
1/20/2015 www.Capital33.net 15
The Capital 33 Process
1. Exploration
2. Due Diligence
3. Document & Roadshow Preparation
4. Choosing Professional Service Providers
1/20/2015 www.Capital33.net 16
5. Pre-IPO Process
6. IPO
7. Ongoing PR, IR, Content Support
Other Reasons to Choose AIM
• Designed for Growth
• Secondary Market
• International Focus
• Potential Tax Advantages
1/20/2015 www.Capital33.net 17
Thank You!
James WallPrincipal, Capital 33303-894-3130 ext. [email protected]
Vincent DipasPrincipal, Capital [email protected]
1/20/2015 www.Capital33.net 18
Dorsey & Whitney – Preparing for an AIM IPO
4835-6552-6817
20Dorsey – A Global Business Law Firm
Dorsey is an international firm with over 550 lawyers in North America, Europe and Asia. Some of the world’s most successful
companies count on Dorsey to help them meet legal and business challenges. From technology, life sciences, health and pharma, to
energy, media, financial services and manufacturing, companies turn to us for assistance with legal issues that impact their business.
21Firm – Awards & Recognition
• Dorsey ranked No. 27 among the top 100 largestsecurities practices in the U.S. by Law360.
• 105 Dorsey lawyers representing 57 practice areaswere recognized in the 2014 edition of U.S. News’listing of Best Lawyers.
• Five Dorsey partners are members of the AmericanCollege of Trial Lawyers (ACTL). Membership in theACTL is by invitation only and is limited to only 1% oftotal lawyers per state or Canadian province.
• In 2013, World Trademark Review recognizedDorsey and six of its Trademark lawyers in its annualWorld Trademark Review 1000 - The World’sLeading Trademark Professionals.
• According to Thomson Reuters, Dorsey ranked No. 5for the number of announced Mid-Market M&A dealsin the U.S. in 2013 (#6 for Small-Cap deals). Dorseyranked #6 for the number of completed U.S. deals(any size) and #15 for the number of completed dealsworldwide in 2013.
• M&A Law Firm of the Year in China by Global LawExperts in 2014.
• Dorsey has twice been named “U.S. Mining Law Firmof the Year” by ACQ Magazine in its ACQ FinanceMagazine Country Law Awards. Dorsey was named2011 “Mining Law Firm of the Year” by LawyersWorld Law Awards and 2011 “Law Firm of the Year –Mining” by InterContinental Finance Magazine.
21
• Dorsey consistently ranks in the “BTI Client Service A-
Team” (including in 2014).
• Dorsey is recognized as a “Leading Firm" by Chambers
USA. Chambers USA also recognized 52 attorneys in 21
practices in its 2013 edition.
• Dorsey is an AMLAW 100 firm, according to American
Lawyer Magazine and a Top 100 Most Prestigious Firm
according to Vault.
• Dorsey was ranked in U.S. News 2015 Best Law Firms in
26 national categories and 102 local categories for various
metropolitan areas. 97 Dorsey lawyers were honored as
U.S. News 2015 Best Lawyers.
• Dorsey is the only firm ranked Top 10 by volume for US
M&A for each of the past 20 years (Thomson Reuters)
• Dorsey represents many well known Fortune 1000
companies throughout the US, including:
• UnitedHealth Group
• SUPERVALU
• U.S. Bank
• Hormel Foods
• St. Jude Medical
• Apple
• Procter & Gamble
• Medtronic
• Honeywell
• Delta Air Lines
• ConocoPhillips
• Micron Technology
• Wells Fargo
• The Mosaic Company
• Land O’Lakes
• Ameriprise Financial
• Target
• C.H. Robinson
22London – Overview
Services
Dorsey & Whitney’s London office serves as the backbone
of our European capabilities, providing excellent service to
clients globally.
Opened in 1986, it has grown to more than 30 partners,
associates and counsel. Our lawyers in the London office
have special expertise in the following areas:
• Anti-Corruption
• Construction and Engineering Projects
• Commercial Litigation
• Corporate and M&A
• Corporate Tax
• Emerging Companies and Venture Capital
• Employment
• Fraud and Regulatory Investigations
• International Arbitration
• International Banking and Finance
• International Capital Markets
• Intellectual Property
• Real Estate
Approach
• Our multi-jurisdictional and multi-lingual lawyers offer both
UK and US law capability in order to provide clients with the
most appropriate legal advice and services for their specific
needs.
• Lawyers in London regularly work in conjunction with
lawyers in the firm’s US and Asia offices on international
matters of finance, trade and commerce.
• The firm has developed a specialty in advising Norwegian,
Danish and Swedish companies on their entry into the
international capital markets and in working with global
companies accessing Scandinavian finance.
• The London office’s fraud and regulatory specialists
combine with US counterparts to provide an internal fraud
investigations service for clients with trans-Atlantic
interests.
• Dorsey’s London office prides itself on operating as a
stand-alone mid-market City practice with a cost-effective
offering.
23London – Awards & Recognition 23
• Firm and individuals ranked across multiple core practice areas by Legal 500 and by Chambers UK
• Corporate INTLMagazine Global Award named Dorsey’s London office:
o 2014 - Cross-Border M&A Law Firm of the Year (England) and Securities & Capital Markets Law Firm of
the Year (UK)
o 2013 and 2014 - Litigation Law Firm of the Year in England
o 2013 - Anti-Corruption Law Firm of the Year in England
o 2012 - UK Litigation Firm of the Year
• No. 1 underwriter counsel and No. 2 issuer counsel for AIM IPOs by deal volume in 2011 by Bloomberg.
• UK Capital Markets Law Firm of the Year for 2011 and 2012 by Lawyer Monthly.
• M&A Law Firm of the Year (UK) for 2014 by Finance Monthly.
• India Deal of the Year award in 2010, 2009 and 2007 by India Business Law Journal
24
Liberty Global plc
$422m private placement and resale
shelf registration
Keywords Studios plc
£49m AIM IPO and £6m secondary
fundraise – advised Numis
Securities Limited as nominated
adviser and broker
Oxford BioMedica plc
£21.6m firm placing, subscription
and open offer – advised Charles
Stanley & Co. Limited and WG
Partners LLP
Velocys Group plc
£52m secondary fundraise –
advised Numis Securities Limited
as nominated adviser and broker
London – Capital Markets Transactions
Rightster Group plc
£70m AIM IPO and £42m secondary
fundraise – advised Cenkos
Securities plc as nominated adviser
and broker
Primary Health Properties plc
£82.5m convertible bond issue –
advised ISM Capital as lead
manager
Heritage Bank Ltd
$100m convertible bond issue –
advised 46 Parallel Ltd as
cornerstone investor
AudioBoom Group plc
Reverse takeover and AIM
readmission – advised Arden
Partners plc as nominated adviser
Monitise plc
£100m placing – advised
Canaccord Genuity Limited as
nominated adviser and broker
Quindell plc
£200m institutional placing
JKX Oil & Gas plc
$48m convertible bond issue:
placing and open offer
Digital Barriers plc
£25m AIM IPO and £30m follow-on
placing – advised Investec as
nominated adviser and broker
Bio City Development Company
$200m convertible bond issue –
advised ISM Capital as lead
manager
ClearStar Inc.
£20m AIM IPO and placing –
advised Cenkos Securites plc as
nominated adviser and broker
SKIL Ports & Logistics Ltd
£110m AIM IPO and Rule 144A
offering
Corero Network Security Plc
Strategic investment into AIM-listed
Corero Plc – and subsequent
placing and acquisition / reverse
takeover of Top Layer Networks Inc
25Advisers and their roles
Nominated
adviser
- Key role in judging whether the company is appropriate for listing and
advising on ongoing basis of company’s obligations
Nominated
broker
- Responsible for any fundraising at IPO and ensuring successful after
market in company’s shares. Usually same firm as Nomad
Reporting
accountants
- Reviews company’s financial results and reporting processes, prepares
accountants report on historic financial information, reviews company’s
working capital projections and reports on company’s financial systems
and controls
Lawyer - Advises on legal aspects of preparing a company for IPO, the duties and
responsibilities of directors of an AIM listed company and verification
process
PR advisers - Generate positive press interest in the company in advance of
fundraising roadshow
26Key work streams for AIM IPO
Financial, commercial and legal analysis of businessDue Diligence
Process
Independent research prepared and marketed by investment bank’s analystPre-IPO Research
Short presentation on investment case marketed by the companyInvestor Presentation
Full description of business including accountants’ report and legal reporting
obligationsAdmission Document
Investment bank’s placing and underwriting obligations and director lock-insPlacing/
Underwriting Agreement
27Potential issues to consider
Planned re-financings or disposals
Pre-IPO reorganisation
Corporate governance and other UK investor requirements
Directors service agreements/board composition
Any existing shareholders to remain significant shareholders on IPO
Management and major shareholders likely to be locked-in
Share option schemes/stock plans
28Biographies
Kate FrancisPartner
+44 (0)20 7031 3746
Kate specialises in equity capital markets transactions and public and private mergers and
acquisitions. Kate has broad transactional experience in IPOs on AIM and the main market of the
London Stock Exchange (advising both companies (including non English domiciled companies)
and banks), secondary offerings, public takeovers (including public to private transactions), private
company acquisitions and disposals (both UK domestic and cross border), reorganisations, joint
ventures, capital reductions (both court approved and under the Companies Act procedure),
corporate governance, private equity and general corporate law matters.
Max BeazleyPartner
+44 (0)20 7031 3704
Max’ primary practice focus is on cross-border mergers and acquisitions and equity capital markets
transactions. Max has extensive experience of UK and cross border private and public
acquisitions and disposals. Max represents banks and issuers on IPOs and secondary issues, both
on AIM and the main market of the London Stock Exchange. In addition to advising a number of
UK and US clients on commercial contracts, private equity, venture capital and angel investments,
Max also advises on the UK and EU securities law elements of cross border fundraising by foreign
and domestic companies, on UK corporate governance matters, and on banking and finance
transactions (advising both lenders and borrowers).
29Other Details
Dorsey & Whitney (Europe) LLP
199 Bishopsgate
London EC2M 3UT
Phone: +44 (0)20 7031 3700
Fax: +44 (0)20 7031 3799
Copyright © 2015 Moye White LLP. All rights reserved.30
AIMLegal Brief
John W. KelloggMoye White
303 292 7935
Presented by
Copyright © 2015 Moye White LLP. All rights reserved.31
Summary
Unique Players
Unique Requirements
U.S. Interplay - Securities Law
U.S. Interplay – Private Placement
Continuing Obligations
Copyright © 2015 Moye White LLP. All rights reserved.32
Unique Players
NOMAD - Nominated Adviser
Approved by the Exchange
Assesses and advises the Company
Acts as the primary regulator while listed on AIM
Industry Experts
Oil and Gas
Mining
Copyright © 2015 Moye White LLP. All rights reserved.33
Unique Requirements
NOMAD
Admission Document
US Speak – Prospectus
Not reviewed by AIM
Financial Statements
3 years’ audited accounts with auditor’s statement; or
Accountants’ report on issuer’s accounts for last 3 years including ‘true and fair view’ opinion; and
Update if more than 9 months have elapsed
If in business for less than 3 years, information for that lesser period can be given
Copyright © 2015 Moye White LLP. All rights reserved.34
Unique Requirements
Working Capital
Sufficient for 12 months post-admission
Adequate Financial Reporting Procedures
Monthly reports within three weeks
Compliance with AIM reporting requirements
Corporate Governance
Nothing specific – generally “good practices” with NOMAD/Legal input
Should have two independent directors (i.e. balanced board)
If a ‘start-up’ business (i.e. less than two years’ history) then a statement re. lock-ins for Directors, certain employees and substantial shareholders
Copyright © 2015 Moye White LLP. All rights reserved.35
Unique Requirements
Articles (By-laws)
Shares must be freely transferable (except where local law etc. restricts)
Electronic settlement (e.g. CREST)
Shareholder approval required for reverse merger / significant transactions – similar to US Corporate legal requirements
Copyright © 2015 Moye White LLP. All rights reserved.36
U.S. Interplay - Securities Law
IPO View
AIM Offering incorrectly considered as a “backdoor IPO”
AIM subjects issuers to anti-fraud requirements
AIM issuers subjected to ongoing reporting obligations
US Public Company Threshold
Total assets in excess of $10 million, and
Either 2, 000 shareholders of record or 500 shareholders of record who are not “accredited investors.”
Regulatory Goal
Avoid “flow-back” of securities to the U.S. market
Copyright © 2015 Moye White LLP. All rights reserved.37
U.S. Interplay – Regulation S
Regulation S Exemption from U.S. Registration Requirements for “offshore transactions” Assume US Issuers are “Category 3” non-reporting equity issuer Requires compliance during initial offer and for 12 months following initial
offer (“Distribution Compliance Period”)
Requirements – Initial Offer Offshore Transaction – no offer to a person in the U.S. and the buyer is
physically located outside the U.S. and No Directed Selling Efforts – activities that condition the U.S. market (fact
specific,
Legend prospectus to indicate limitation on “U.S. persons” participating in initial issuance and subsequent resales
Investors must certify they are not “U.S. persons”
Limitations on resale to “U.S. persons” for one year
Requires certificated shares for one year, then participation in CREST system
Copyright © 2015 Moye White LLP. All rights reserved.38
U.S. Interplay – Regulation S
Requirements – Resales During Distribution Compliance Period Offshore Transaction – no offer to a person in the U.S. and either (i) the
buyer is physically located outside the U.S. or (ii) transaction executed in, on or through a “designated offshore securities market” and
No Directed Selling Efforts – activities that condition the U.S. market (fact specific,
Neither the seller or any person acting on seller’s behalf knows that the transaction has been pre-arranged with a buyer in the U.S.
The AIM is a “designated offshore securities market”
Allows the offshore development of a trading market
Copyright © 2015 Moye White LLP. All rights reserved.39
U.S. Interplay – Private Placement
A Regulation S Offering will not be integrated with a Section 4(a)(2) Private Placement,
Best Practice – Private Placement under Rule 506 of Regulation D solely to “accredited investors” to avoid more detailed Reg. D information requirements
U.S Purchasers in a Reg. D private placement may resell on the AIM in compliance with Regulation S.
Copyright © 2015 Moye White LLP. All rights reserved.40
Questions
www.croweclarkwhitehill.co.uk
The Role of the Reporting AccountantCrowe Clarke Whitehill LLPPaul Blythe, London
42Audit | Tax | Advisory © 2015 Crowe Clark Whitehill LLP
Contents
Introduction
Our role within the AIM adviser team
Financial information required for admission
Public information
Private information
Post admission filing requirements
Annual filings
Interims
Tax structuring
43Audit | Tax | Advisory © 2015 Crowe Clark Whitehill LLP
Introduction – Crowe Horwath International (global footprint)
Crowe Horwath International
Statistics*
Member Firms &
Business Associates
191
Countries 118
Offices 684
Partners 3,352
Partners & Staff 29,414
Revenue US$ 3,168.2M
* As of December 2013
9th largest global network of independent audit and advisory services firms in
the world
International Accounting Bulletin (IAB)
44Audit | Tax | Advisory © 2015 Crowe Clark Whitehill LLP
Introduction – Crowe Clark Whitehill LLP (UK footprint)
Crowe Clark Whitehill LLP
Offices 8
Partners Over 70
Partners & Staff Over 500
45Audit | Tax | Advisory © 2015 Crowe Clark Whitehill LLP
Introduction – AIM footprint
The AIM Adviser Rankings Guide, published quarterly, rank Crowe Clark
Whitehill as the 8th largest auditor to companies listed on AIM (October 2014)
Rank Auditor Number of
clients
1 BDO 155
2 Grant Thornton UK 147
3 KPMG 146
4 PwC 114
5 Deloitte 85
6 EY 68
7 Baker Tilly 55
8 Crowe Clark Whitehill 40
9 UHY Hacker Young 32
10 Nexia Smith & Williamson 25
46Audit | Tax | Advisory © 2015 Crowe Clark Whitehill LLP
Our role within the AIM adviser team
Nominated Adviser
Reporting Accountant UK & US Lawyers
Company
Auditor
AIM team
47Audit | Tax | Advisory © 2015 Crowe Clark Whitehill LLP
Financial information required for admission
(public information) On a new holding company
Short Form Report
Audited
IFRS or USGAAP?
What period included?
On the US trading group/company
Short Form Report
Audited
IFRS or USGAAP?
What period included?
Requirement for interims?
Unaudited pro forma statement of net assets
48Audit | Tax | Advisory © 2015 Crowe Clark Whitehill LLP
Financial information required for admission
(private information) Long Form Report
Financial due diligence on any new holding company and the US trading
group/company
A 3-year track record to match the Short Form Report
Review of current trading
Suitability of accounting policies
Internal controls and procedures
Working Capital Report
Consolidated cash flow, profit & loss and balance sheet projections
Prepared on a monthly basis
To cover at least 18 months from date of admission
Financial Position and Prospects Board Memorandum
Sets out and summarises the Company’s internal financial controls and corporate
governance
49Audit | Tax | Advisory © 2015 Crowe Clark Whitehill LLP
Post-admission filing requirements
Annual filings
Audited
To be announced within 6 months of the year end
Interim filings
6-month interims
Can be audited, reviewed or unaudited
To be announced within 3 months of the year end
50Audit | Tax | Advisory © 2015 Crowe Clark Whitehill LLP
Tax Structuring
Will a new holding company be required…
…for tax planning purposes?
…for marketing purposes?
…for corporate governance purposes?
If so, issues likely to arise will include…
…US inversion rules
…location of central management and control
…intra–group funding and “thin capitalisation”
…expatriate tax issue for group employees
51Audit | Tax | Advisory © 2015 Crowe Clark Whitehill LLP
For more information, contact:
Paul Blythe, Partner, Corporate Finance
Direct +44 20 7842 7231
Mobile +44 7876 282 728
Visit www.crowehorwath.net/uk
Visit www.crowehorwath.net
Crowe Clark Whitehill LLP is a member of Crowe Horwath International, a Swiss verein (Crowe Horwath). Each member firm of Crowe Horwath is a separate and independent legal entity. Crowe Clark Whitehill LLP and its affiliates are not
responsible or liable for any acts or omissions of Crowe Horwath or any other member of Crowe Horwath and specifically disclaim any and all responsibility or liability for acts or omissions of Crowe Horwath or any other Crowe Horwath member.
© 2015 Crowe Clark Whitehill LLP
Crowe Clark Whitehill LLP is registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales and is authorised and regulated by the Financial Conduct Authority.
www.croweclarkwhitehill.co.uk
Thank you!
Raising Capital on the London Stock Exchange:The AIM Exchange From an Energy PerspectiveJON HUGHES
PETRIE PARTNERS
JANUARY 20, 2015
DENVER, CO
Introduction
Commodity Price Environment Overview
Comparative Equity Market Performance
Energy Equity Activity on AIM vs. U.S. Exchanges
Pros and Cons of AIM Listing for Energy Companies
Conclusions
54
Discussion MaterialsTOPICS FOR DISCUSSION
Recent downturn in the energy markets is prompting energy companies of all sizes to explore creative solutions to continue to grow
Increased market volatility has made the successful execution of energy equity offerings more challenging and, in some cases, stalled them completely
Capital intensive nature of the industry likely to present significant challenges to smaller companies whose access to capital has tightened
Capital structure management will become a focal point for energy companies as margins decrease and fundraising flexibility is diminished across the industry
55
Discussion MaterialsINTRODUCTION
$30.00
$45.00
$60.00
$75.00
$90.00
$105.00
$120.00
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Consensus Estimates
Historical Spot/Futures
$1.50
$2.50
$3.50
$4.50
$5.50
$6.50
$7.50
$8.50
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Consenus Estimates
Historical Spot/Futures
Current Spot $3.09
Historical WTI Spot Pricing ($ / Bbl) Forward Curve vs. Spot Pricing ($ / Bbl)
Forward Curve vs. Spot Pricing ($ / MMBtu)
56
Discussion Materials
Historical HHUB Spot Pricing ($ / MMBtu)
COMMODITY PRICE ENVIRONMENT OVERVIEW
Note: Pricing per Bloomberg as of January 16, 2015. Consensus estimates based on Wall Street consensus per FactSet as of January 16, 2015.
Actual Futures
Actual Futures
$6.11
$7.51
$4.92
$3.77
$4.52
$7.92
$3.29$3.94
$4.36
$4.00
$2.76 $3.74
$4.31
$3.03
$1.88
$3.18$2.83
$1.82
$3.13
$2.75$2.89
$1.50
$2.50
$3.50
$4.50
$5.50
$6.50
$7.50
$8.50
2009 2010 2011 2012 2013 2014 2015YTD
High
Average
Low
$81.04
$91.49
$113.93$109.49 $110.53
$107.62
$53.27$61.99
$79.51
$95.04 $94.07 $97.98 $93.00
$48.76
$33.98
$65.96
$75.67$77.69
$86.68
$53.27
$45.89
$30.00
$45.00
$60.00
$75.00
$90.00
$105.00
$120.00
2009 2010 2011 2012 2013 2014 2015YTD
High
Average
Low
Current Spot $48.69
57
Discussion MaterialsINDEXED PERFORMANCE (2014 – 2015 YTD)
Source: FactSet as of January 16, 2015.
40%
60%
80%
100%
120%
Jan-14 Apr-14 Jul-14 Oct-14 Jan-15
Ind
ex
ed
Pe
rfo
rm
an
ce
(%
)
S&P 500 – 9%
FTSE AIM All Share – (18%)
S&P Small Cap Energy – (41%)
WTI Crude Oil – (51%)AIM Energy Index – (51%)
AIM Exchange – Energy Sector Volume ($Bn) U.S. Exchanges – Energy Sector Volume ($Bn)
U.S. Exchanges – Energy Sector Offerings (#)
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Discussion Materials
AIM Exchange – Energy Sector Offerings (#)
ENERGY EQUITY OFFERINGS – MARKET CAP LESS THAN $1 BN (2008 – 2014)
$0.4 $0.2 $0.3 $0.2 $0.1 $0.1
$1.0
$2.6
$1.4
$0.5 $0.5 $0.5
$1.4
$2.3
$2.8
$1.7
$0.7 $0.6 $0.6
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
2008 2009 2010 2011 2012 2013 2014
Follow-On
IPO
53
8790
67
54
4440
46
86
62
5238
38
7 4 5 2 6 20
20
40
60
80
100
2008 2009 2010 2011 2012 2013 2014
$0.8$0.4
$0.9$0.4
$1.1 $1.3
$0.9 $1.4
$2.2
$1.9
$3.4
$1.3$1.7
$3.1
$1.8
$3.2
$2.4
$4.4
$2.6
0
1
2
3
4
5
2008 2009 2010 2011 2012 2013 2014
Follow-On
IPO
12
37
18
25
15
29
18
9 1619
14
2512
3 2 6 4 60
20
40
60
80
100
2008 2009 2010 2011 2012 2013 2014
Source: FactSet as of January 16, 2015.
59
Discussion MaterialsASSET PROFILES OF AIM ENERGY COMPANIES VS. SMALL CAP US ENERGY COMPANIES
Source: FactSet and company filings.(1) Based on the AIM FTSE All-Share Energy index.(2) Based on the S&P small Cap 600 Energy index.
85%
20%
0%
25%
50%
75%
100%
AIM Listed Energy Companieswith Non-U.S. Assets
U.S. Listed Small-Cap Energy Companieswith Non-U.S. Assets
(1) (2)
Small-cap energy companies with non-U.S. assets have shown a clear preference to list publicly on AIM versus U.S. exchanges
BENEFITS AND CONSIDERATIONS FOR AIM-LISTED ENERGY COMPANIES
60
Discussion Materials
Opportunity to access a diversified investor base
High number of recent small-cap energy offerings vs. U.S. exchanges
Pragmatic regulatory approach
Listing requirements and issuance costs favorable to smaller companies
Strong visibility with premier institutions
Better acceptance and typically better valuation for companies with non-U.S. assets
Institutional appetite for riskier small-cap energy stocks in current environment
Broader market uncertainty and volatility within the Eurozone
Underperformance of AIM listed stocks vs. U.S. equity market indices
Recent decline in number and volume of energy offerings on AIM
Benefits Considerations
Despite uncertainty and volatility in the broader market, energy companies will still seek to secure financing to prosecute their (reduced) capital programs – creative alternatives may drive successful execution
Continued commodity market headwinds may dampen investor appetite for high-risk equity within a volatile sector of the market
AIM offers favorable listing requirements and issuance fees among the lowest of all exchanges, potentially attracting a broader pool of small-cap issuers
AIM has been a preferred market for listing small capitalization energy companies with non-U.S. assets
61
Discussion MaterialsCONCLUSIONS