© 2007 RCS Deloitte and Touche

Don’t Go to London Without Deloitte.

Chris WestonPartner, Deloitte

Maintaining your value, post-IPO

IPO preparationstage Tackling the obstacles

Tax and Legal: Structuring

Legal and tax structuring incomplete, unclear about the entity going for IPO

FAS: Transaction support, DD, valuation

IPO decision not yet made, just looking for funds. Possibly too small for IPO.

Consulting: Corporate strategyFinancial Advisory (FAS): Funding strategy, valuation

Consulting: Financial Reporting Procedures

No capacity for IFRS reporting, low standards of corporate governance

Enterprise Risk Services (ERS): Corporate Governance

Audit: 3 years IFRS audit, taking them to IPOLooking for an auditor for IPO

When: Up to 3 Years Before

• Inadequate resources

• Low quality documentation

• Lack of local legal expertise

• Inadequate financial reporting procedures

• Inadequate corporate governance structures

• Opacity of the group holding structure

Obstacles to a successful IPO

What did real estate companies say?

– 40% of companies said introducing financial reporting procedures had been the most challenging part

– Strengthening internal communication channels for IPO was also hard

“previously, all informational flows served operational needs, not those of the environment and investors”

– Once listed, companies said improving their corporate governance arrangements paid off in the end

“We [now] have the status of a transparent public company... It makes the process of additional fundraising easier.”

– Many companies had to restructure their legal and tax entities pre-IPO

“We restructured and we got rid of our non-core businesses.”

Over 100 CIS business leaders discussed life before and after IPO in the largest survey of its kind, in December 2007.

© 2007 RCS Deloitte and Touche

IPO Concerns shared by all industries

–Transforming corporate governance (20%)

–Implementing new financial reporting standards (26%)

–Managing the IPO process (26%)

–The cost of listing and compliance

–Sharing power with minority shareholdersChanging corporate mentality

Q. What was the biggest obstacle you faced when preparing for IPO?

Maximizing your value with IPO preparation

Meeting the basic listing & reporting requirements

High standards of corporate governance in place

Time IPO

Value

Up to a 37% premium is paid by international investors for a Russian company that demonstrates good governance*

*As noted by a McKinsey & Co. study

good

governance

x

Value Premium

Variations in post-IPO performance amongreal estate companies

International IPOs 2007

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Dragon UkranianProperties &

Development PLC06/07

RTM 05/07

TMM Real Estate05/07

PIK Group 06/07

Aisi Realty Public08/07

KazakhstanKagazy

07/07

LSR Group 11/07

Chagala 02/07

AFI Development05/07

Gro

wth

sin

ce I

PO

As of December’07 As of January’08

Maintaining your attractiveness to investors

Shareholders

• Managing the relationship with minority shareholders

• Related party transactions

• Managing the relationship with minority shareholders

• Related party transactions

The Board

• Adapting the Board to working with committees

• Benefits & Incentive plans for Executives

• Being investor friendly and making time for IR

• Adapting the Board to working with committees

• Benefits & Incentive plans for Executives

• Being investor friendly and making time for IR

Ongoing requirements and reporting

• Taking ownership of financial reporting within the finance dept

• External reporting – fast close

• Independent property valuations required (twice a year)

• Taking ownership of financial reporting within the finance dept

• External reporting – fast close

• Independent property valuations required (twice a year)

Maintaining your attractiveness to investors (2)

Information flows

• External: being investor friendly and being responsive- In house IR specialists or outsourced investor relations?- Coordinating the crisis management procedure

• Ensuring internal information flows – keeping the Board fully informed

• External: being investor friendly and being responsive- In house IR specialists or outsourced investor relations?- Coordinating the crisis management procedure

• Ensuring internal information flows – keeping the Board fully informed

What we offer: Traditional services tailored to IPO and post IPO

ERSCorporate governance and disclosure

ERSA functioning Board

ConsultingRemuneration for Directors

Tax and LegalSimplified legal and tax structure and ongoing reorganization

ERSRisk management systems

ERSInternal controls

ConsultingFinancial reporting procedures / Fast close

AuditIntroducing IFRS and ongoing audit

Our IPO clientsThe following are some of our clients that have successfully held IPOs or which are actively preparing for an IPO or a bond issue on American, British and Russian capital markets:

Member ofDeloitte Touche Tohmatsu