The “Second Wave of Russian IPOs”: Changing Platform Preferences and Other Trends

1. The “Second Wave of Russian IPOs”: Changing Platform Preferences and Other Trends May 3, 2007 Presentation to the 5th Annual USRCCNE Financial Markets Conference Boston Stephen Polakoff Assistance in preparation by Vladimir Slyshchenkov

2. The First Wave (1996-2002)

3. A Changing Environment (1) • In 2006 LSE IPO Market exceeds NYSE IPO Market; • 2007 IPO pipeline from Russian companies* is expected to reach $28 bln. compared with $20 bln. in 2006; • There are now 642 active funds operating in Russia representing 50% growth since end of 2005; • Total trading on MICEX in 1Q 2007 exceeded $626.2 bln.  1.8 times greater than 1Q 2006; • “We are very concerned about corporate governance, transparency of company financials and protection of minority shareholders and, with a number of Russian companies, these things are called into question”, Mr. Thair, the New York Stock Exchange (April, 2007; www.ft.com); • Number of US listings of Russian companies since 2004: 2 • Mechel (2004) • CTC Media (2006) • Number of LSE/AIM listings of Russian companies greater than $200 mln. during 2005/2006: >17 * For purposes of this presentation, “Russian companies” means either Russian issuers or non-Russian issuers whose main assets/business are Russia focused.

4. A Changing Environment (2) 10,7 bln. Amount Raised, $

5. Why the change in Platform Preference? Listing Considerations • Capital considerations; • Continuing obligations and listing requirements; • Corporate governance; • Costs; and • Liability.

6. Listing Considerations – Capital Considerations • Minimum Value of Shares to be Listed: • LSE GDRs: GBP 700k (value of shares to be listed) • AIM: GBP 700k (value of shares to be listed) • NYSE: $100m (minimum value of publicly held shares) • NASDAQ: Standard 1 - $8m; Standard 2 - $18m; Standard 3 - $20m • Financial Standards: • LSE shares: 75% of applicant’s business supported by revenue earning record for 3 yrs. No such requirement for GDRs • AIM: No minimum size • NYSE: Pre tax earning last 3 yrs: $100m • NASDAQ: Total Revenues and assets: Standard 3 - $75m • Who are your target investors? • Are QIBs enough?; location of investors • The “high tech” exception – CTC Media, others • Experience thus far with 144A tranches: • Informal Survey • Really necessary? • If necessary – the cost analysis (10B-5, SAS72, road show, etc.) • AIM no longer a “LittleIssuer” market: • Increase in number of International Companies (2003-Dec 2006): 7541,634 • Urals Energy (2005): GBP 73,6 m • VolgaGas (2007): $125m • Raven Russia (2005): GBP 153 m • Mirland Development (2006): $270m

7. Listing Considerations – Continuing Obligations and Listing Requirements • Sarbanes Oxley Act (“SOX”): The threshold consideration • Initial and ongoing costs • Ticking those boxes Internal control (Section 404) CEO/CFO Certifications (Section 302/906) Non-GAAP Financial Measures • Other Key considerations: Listing Ongoing* * Post Transparency Directive • London GDR • 3 yr IFRSor US GAAP audited • Long Form Report and Working Capital Report not required • No Sponsor • AIM • 3 yr IFRSor US GAAP audited if available otherwise such shorter period that issuer has been in operation • Long Form Report and Working Capital Report required • NOMAD • London Share • 3 yr IFRSor US GAAP audited • Long Form Report and Working Capital Report not required • Sponsor • New York ADR • 3 yr US GAAP or reconcilable to US GAAP (2yrs if IFRS) • Disclose Compliance with NYSE Corporate Governance requirements • Rigid SEC review process • Long Form Report or Working Capital Report not required • Full year audited (within 6 months), half-year results (within 4 months) and semi-annual reporting) • Not required to disclose extent of compliance with Combined Code for Corporate Governance • Not covered by transparency directive • Full year audited (within 4 months), half- year results (within 2 months) and preliminary statement (optional) • Required to disclose extent of compliance with Combined Code for Corporate Governance • Covered by transparency directive • Annual audited reports (w/in 6 months) • Quarterly not required for foreign issuers if publish semi-annual • SOX Compliance • Expensive Director’s Insurance • Full year audited (within 4 months), no half year • Not required to disclose extent of compliance with Combined Code for Corporate Governance • Covered by transparency directive

8. Listing Considerations – Corporate Governance • NYSE – SOX/NYSE Rules • LSE – UK Combined Code. Governance Metrics International (2005) ranks UK as leading country in terms of Corporate Governance • LSE GDR/London AIM – Combined Code not required but usually insisted by underwriters as “Best Practice”

9. Listing Considerations – Costs • NYSE v. LSE: • SOX – initially approximately USD 5m and then significant annual costs depending on size of issuer • Directors Insurance –significantly higher for NYSE listing • Underwriting Fees – 2003 Average: LSE 3-6% ; NYSE 7%. • Accountants – increased fees for US GAAP reconciliation for NYSE listing; SAS 72 • Legal costs – 10B-5 • 144A: • SOX costs not incurred • 10B-5 required • SAS 72

10. Listing Considerations – Liability • Reach and Consequences of Prospectus Liability with DRs • US – liability attaches to directors, officers and company; 144A still attracts heightened liability even though not a “public” offering • UK – company responsible for prospectus, not directors as in main listing under prospectus rules; civil law liability • Other Key Systemic Differences: • Class Action and Derivative Suits • Contingent Fee basis • Adverse Costs Rule in England • Juries/ Punitive Damages

11. Other Developments • SEC Deregistration: • Ownership test: 300 Record Holders on worldwide basis or who are US residents • Trading volume test: average daily trading Volume (ADTV) ofa class of securities during a 12-month period in the US<5% of worldwide ADTV • The Steps • The “talk” in Moscow • RDRs • Old rule: No non-Russian issuers unless international treaties or agreement between securities and report on offeringprospectus filed with FSFM. Result: De Facto «no» and FSM “displeasure” with offshore listing by HoldCos • New Regime; Issues • -Depositary • - Currency control • - Other problems • Thereality • Revival of Russian Primary Offerings and “New” Breed of Russian Issuer: • New Legislation • Changes to Russian Issuers: less “oligarch” companies; Western Managers; more independent boards • More Funds coming in at Pre IPO Stage • Changes in approach to Disclosure

12. Takeaway Points • Trends: • What happened to US listings? • The remaining US question: to do or not to do 144A tranches • AIM and LSE the dominant foreign platforms • The rise of the Russian offering (with 144A but no foreign listing??) • What to expect with Russian issuer listing DRs on LSE: • Transparency Directive Obligations • Best Practice: Disclosure level, corporate governance • IFRS • Compliance with Russian standards

13. What does Russian Law Provide?

14. Integra IPO case studyFactors of a successful placement Integra IPOStatistics • Total placement $760 mln, of which $600 mln raised by the Company in February, 2007 • LSE GDR Listing • Secondary component only 22%, management was not selling • Books were oversubscribed • Major interest from institutional investors (given formal listing) • Additional demand from existing pre- IPO shareholder base • Decision was made that 144A tranche was not necessary to fill books • Strong after-market demand from the US Post IPO shareholder base (fully diluted) • No major “oligarch” shareholder. Largest single shareholder currently holds 12% • Placement was welcomed by the market as it did not look like a cash-out opportunity • Currently equity is split roughly equally between management, pre-IPO venture capital and institutional investors

15. Integra: Corporate governance Board of Directors • Chairman • John B. Fitzgibbons • Primarily non-executive but a very involved Board Of Directors • Although not legally required, the Company adheres to both the combined code on corporate governance and the model code • Founder and former CEO, Khanty Mansiysk Oil Corporation (KMOC) • Founder and President, J Fitzgibbons LLC and Brookline Partners LLC Non-executive director Felix Lubashevsky, CEO • Iosif Bakaleinik • First VP of SUAL • Former first VP of TNK, head of economy and finance block • John W. Kennedy • Chairman, Vetco Int. and Wellstream Int. Ltd • Former Executive VP, Halliburton • Neil Gaskell • Former Group Treasurer, Shell • Former Executive Director, Shell International • Former Executive VP Oilfield services and Supply Chain Management, TNK-BP Non-executive director Non-executive director Non-executive director Executive director Corporate committees Board Level • Governance conducted by a number of committees covering key areas of the business • Compliance committee formed following the IPO overlooking disclosure requirements as well as shareholder and investor relations Compensation Committee Iosif Bakaleynik Audit Committee Neil Gaskell Company Level Executive Committee Financial Committee A.Polevoy Operational Committee F.Lubashevsky Investment Committee E.Shevchenko Contract Control Committee D.Shulman Compliance Committee S.Polakoff Source: Company data

16. Questions • About this presentation: Stephen Polakoff General Counsel, member of the management board spolakoff@integra.ru +7 495 933 0621 • Investor Relations: Andrey Machanskis amachanskis@integra.ru +7 495 933 0621