Being Listed in London: Requirements & Benefits

1. Being Listed in London: Requirements & Benefits September 2010

2. An Intelligent Approach to Regulation Companies Investors Balance Competing Needs Minimise bureaucracy and cost Maximise protection UK Principles based - “comply or explain” Ranked first in corporate governance standards by GMI, Deminor and Davis Global Advisors US Rules based - prescriptive and expensive Increased cost of compliance and risk premium (Financial Executive & Korn Ferry Surveys)

3. Main Market – Premium vs Standard Key differences Potentially eligible for the FTSE UK Series • Sponsor required • Unqualified 3 years of audited financials • Control of assets • Independent business • Sufficient working capital • Ongoing - Listing Rules & EU minimum Premium Listing (Shares) Level of Disclosure • No Sponsor required • 3 years audited financials (or such shorter period since the issuer has been in operation and can be qualified) • Working capital statement required, can be qualified • Ongoing - EU minimum only Standard Listing (Shares) • Same as Standard (Shares) except: • no working capital statement; and • ongoing – more basic EU minimum, Standard Listing (GDRs)

4. A choice of Main Market products Russian and CIS companies have accessed one of the broadest institutional investor pools in the world through both GDR and Share listings. • CIS companies on our markets have raised over $50 billion since 2005 • 55 CIS Companies on Main Market – Russia (39), Kazakhstan (10), Ukraine (5), Georgia (1)‏ • 46 DR issuers, 9 Share Listings • 2 Companies in FTSE 100 (Kazakhmys and ENRC), 3 Companies in FTSE 250 (Ferrexpo, Petropavlovsk and JKX) • 15 Companies included in FTSE Russia IOB Index

5. Current trend: growing IPO market • 44 IPOs since January 2010, raising a total of over £5bn • Significant international transactions: • March 2010: African Barrick Gold, Main Market, raising £581m • April 2010: Bellzone Mining, AIM, raising £33.6m • May 2010: Essar Energy, Main Market, raising £1,273m • May 2010: Avangard, Main Market, raising £123m • Strong pipeline – UK, India, Russia, Middle East, Brazil • Recent listings:

6. The most successful and liquid electronic trading platform for emerging markets securities in the world. • Prior to the introduction of the CCP in March 2009, the IOB was already the most liquid platform for GDR trading, registering $580 billion in trades in 2008. • Total value of IOB bargains in the first 6 months of 2010 exceeded $160 billion. • Easy and cost-effective access to fast-growing emerging markets • 332 international securities, over 70 of which are centrally cleared through the CCP service IOB – The leading emerging markets platform

7. The IOB, the most successful DR platform, was developed in response to market demand for convenient on-exchange access to international companies For Russian companies looking to complement domestic market trading through a GDR programme there is no better platform than IOB, where Russian DRs currently account for 91% of total trading value on the IOB platform Like the launch of the CCP service on IOB, the IOB Russian derivatives service also did much to increase liquidity when it was introduced in Dec. 2006 For the universe of 25 Russian GDRs included in the FTSE Russia IOB Quarterly Index Review, the velocity* on investible market cap is 142%, showing the superior liquidity for emerging markets securities on IOB IOB – An established product for Russian companies *Velocity here is measured by dividing annualized average daily value traded by investible market cap, the market value of the free float

8. Liquidity in FTSE RIOB securities: Bid-Ask Spreads The Russian DRs included in the FTSE RIOB Index have a median bid-ask spread of 0.2%

9. Liquidity in FTSE RIOB Universe: Velocity* The deep and diverse investor base accessing the IOB provides Russian issuers with a uniquely liquid platform which boasts an average velocity* of 142% *Velocity here is measured by dividing annualized average daily value traded by investible market cap, the market value of the free float

10. Choice of Markets / Choice of Investors

11. The UK Listing Review The following changes came into effect on 6 April 2010: • Restructure the regime into two segments, Premium and Standard – Premium indicates the more stringent super-equivalent standards; and– Standard indicates EU minimum standards. • strengthen the corporate governance standards for overseas companies by requiring overseas • companies with a Premium Listing of equity shares to ‘comply or explain’ against the UK Corporate Governance Code and to offer pre-emption rights (transitional provisions apply); • require overseas companies with a Standard Listing of shares or global depository receipts (GDRs) to comply with the EU Company Reporting Directive which requires them, amongst other things, to provide a corporate governance statement and to describe their internal control and risk management systems’ main features

12. Reasons for Review • Review carried out in response to concerns expressed to FSA by market participants that the regime lacked clarity, our view of how global markets had evolved, and the impact of this on the UK’s markets. • In particular, as London attracted more international listings from emerging markets, many stakeholders were unclear as to whether overseas companies enjoying the benefits of a London listing were subject to the same obligations as UK companies. • The revised regime is intended to: be clear and transparent; provide added protection for investors; promote shareholder confidence; and act as a badge of quality for companies with Premium Listed shares. • It also continues to offer companies that comply with EU-minimum listing standards, rather than UK super-equivalent rules, access to a listed market via the standard listing categories.

13. Listing Categories • There are three listing categories in the Premium segment for different types of equity issuers and five in the Standard segment, covering both equity and non-equity obligations. These, together with the relevant chapter of the Listing Rules (in parenthesis), are: • Premium Listing (equity shares) commercial company (6) closed-ended investment fund (15) open-ended investment company (16) • Standard Listing shares (14) debt and debt-like instruments (17) certificates representing certain securities (18) securitised derivatives (19) miscellaneous securities (20)

14. Main Market – Premium Listing requirements • Key Admission Requirements • Produce a prospectus for approval by UKLA • Sponsor required (at admission only) • 3yr trading record normally required, covering at least 75% of the business • Clean annual report covering at least 3 yrs • Min 25% of shares must be in public hands • Ongoing Requirements • Compliance with the UKLA Listing Rules (e.g. class tests, related party rules, Model & Combined Code) • Compliance with EU Directives (e.g. financial reporting, disclosure of >3% shareholdings) • Eligibility for inclusion in the FTSE UK Index Series

15. What new rules will apply to GDR issuers? A GDR issuer will, under the new rules, have to, amongst other things, include in its annual report and accounts details of the corporate governance code that applies to it and/or all relevant information about corporate governance practices applied beyond the requirements of national law. If an issuer of GDRs publishes details of its corporate governance code it must also comply or explain against it. If an issuer of GDRs does not apply any provisions of a corporate governance code it must explain its reasons for not doing so. This extends the corporate governance statement requirements of the Company Reporting Directive to GDR issuers.

16. Comparison of admission requirements

17. Continuing obligation requirements *overseas issuers need to explain any major differences ¹Only applies to overseas issuers for financial years beginning after 31 December 2009

18. Moving between listing categories • Standard to Premium • notify UKLA >20 business days ahead of publication of announcement • shareholder approval not required under Listing Rules • eligibility letter required • announcement required providing >20 business days notice and must be pre-approved by the UKLA • also applies where moving within Premium (i.e. from commercial company to investment company or vice versa) • Does not apply to Standard Listings of GDRs • Premium to Standard • notify UKLA >20 business days ahead of publication of circular / announcement • >75% shareholder approval required • circular and announcement must be approved by UKLA

19. Regulatory News – Share Issuer

20. RNS information feeds to media include:

21. Disclosure via website

22. Website Best Practices AIM Rule 26 - an overview • In February 2007 AIM Rule 26 was introduced, that stated each AIM company must from admission maintain a website on which the following information should be available to view free of charge: • A description of its business and, where it is an investing company, its investing strategy • The names of its directors and brief biographical details of each, as would normally be included in an admission document • A description of the responsibilities of the members of the board of directors and details of any committees of the board of directors and their responsibilities • Its country of incorporation and main country of operation • Where the AIM company is not incorporated in the UK, a statement that the rights of shareholders may be different from the rights of shareholders in a UK incorporated company • Its current constitutional documents (e.g. its articles of association) • Details of any other exchanges or trading platforms on which the AIM company has applied or agreed to have any of its securities (including its AIM securities) admitted or traded • The number of AIM securities in issue (noting any held as treasury shares) and, insofar as it is aware, the percentage of AIM securities that is not in public hands together with the identity and percentage holdings of its significant shareholders. This information should be updated at least every 6 months. • Details of any restrictions on the transfer of its AIM securities • Its most recent annual report published pursuant to rule 19 and all half-yearly, quarterly or similar reports published since the last annual report pursuant to rule 18 • All notifications the AIM company has made in the past 12 months • Its most recent admission document together with any circulars or similar publications sent to shareholders within the past 12 months • Details of its nominated adviser and other key advisers (as might normally be found in an admission document)

23. FTSE Index inclusion - a key benefit

24. FTSE indices • A Premium Listing on the Main Market is one of the prerequisites for inclusion in FTSE UK Series of indices, giving companies exposure to a wider investor base. FTSE Russia IOB 15 DRs traded on the Exchange Currency: USD, GBP and EUR further details: www.ftse.com

25. FTSE Index inclusion Key indicators which govern company eligibility for FTSE UK series indices: • Market capitalisation • Free Float • Liquidity • Nationality • Most companies are classified according to country of incorporation and listing. Where these do not coincide priority is given to country of premium listing • Overseas issuers wishing to gain access to FTSE UK Series must adhere to Pre-emption Rights, Combined Code, City Code (takeovers). No controlling shareholder if incorporated outside UK • FTSE Nationality Committee which decides on nationality allocation for specific companies meets quarterly • Companies incorporated in an emerging country (as classified by FTSE) will not be eligible for allocation to a developed country

26. Advantages of UK Index Inclusion • If a company pursues FTSE index inclusion, it will have access to a significant amount of captive demand, further adding to demand tension • Allows access to a significant pool of indexed investor demand for the IPO • Effectively accessing forced buyers • Index funds do not employ fund managers to pick stocks and will normally follow index weighting • Similarly, on a net basis, many UK active funds are likely to behave en masse in an indexed fashion • Many will buy the IPO, even if “neutral” on the company given they are benchmarked against the UK index • As they are benchmarked against the index, if they are neutral from an investment perspective on any company in the index they will generally hold a “neutral” weighting • This will match their general ownership of the overall market • Additional investor demand generated will help to achieve your IPO objectives • As a FTSE 100 company there are profile benefits post-IPO including • Greater research coverage • Higher media attention • UK indexation is viewed as desirable, especially in a weaker market sentiment • De-risking the transaction by accessing incremental demand for the IPO • Will help to maximise valuation potential

27. This column shows what percentage of the whole index each fund holds This column shows the weighting of investors in company – it is actual holding over market holding Index funds are big investors and holdings are very near 100 on a market weighting basis. Holdings and weghting would be lower if the free float was less than 100% A typical (hypothetical) FTSE 100 company share register Market Weight Type Holder % Market M&G are overweight, quite a bullish position Hedge funds holding typically show up as market maker holdings Classic positions of so-called “active” investor which very often hold a market position. In this case Morley has a holding worth US$2b even though it may have no view, or a neutral view As a foreign investor, ALL of the Norges holding is overweight even though they have 0.48% of the whole UK market Schroder have 0.43% of the company but are actually taking quite a big NEGATIVE gamble for their investors For benchmarking purposes, Norges is 0.78% overweight. Morley, even though it owns more, is zero overweight and is therefore less positive on the company than Norges

28. A number of “foreign” companies have listed in London. Many have taken advantage of mentioned index and were structured appropriately to comply with the incorporation rules Nationality Issues - Comparable Companies Source: Company Prospectuses.

29. Specific UK Eligibility Rule examples • Shire – FTSE 100 Moved from UK to Jersey incorporation, Irish tax resident, UK listed, Free Float 100%, Mkt Cap US$ 7.5bn • Royal Dutch Shell (A & B shares) – FTSE 100 UK incorporated, UK listed, Free Float 100%, Mkt Cap US$150bn (Netherlands tax resident, dual Netherlands listing) • Kazakhmys – FTSE 100 UK incorporated, UK listed, Free Float 40%, Mkt Cap US$6bn • Fresnillo – FTSE 100 UK incorporated, UK listed, Free Float 25%, Mkt Cap US$6bn • New World Resources – ineligible Netherlands incorporated, UK listed, Free Float 40% - Controlling shareholder – Mkt Cap US$3.5bn

30. Approximately 20% of the UK market is either indexed or quasi indexed. This amounts to over US$500bn1 – too important a pool of investor demand to ignore. FTSE Index Inclusion Indexation Considerations FTSE “Decision Tree” • London premium listing + UK incorporation and domicile will secure FTSE UK Index inclusion • FTSE has been particularly insistent on this requirement • Recommend setting up preliminary discussion with FTSE on this issue as early as possible • Company should consider a UK domiciled Listco to ensure FTSE index inclusion London Premium Listing Must Comply With • UK Corporate Governance Code • Pre emption • Takeover Code UK incorporation Non-UK* YES Sole London Listing LSE and Other Listings Likely London most liquid Other most liquid Majority Insider Holding NO Possible NO Examples of companies with offshore incorporation that are included in the FTSE UK Index Series are: Aquarius Platinum (Bermuda), Randgold (Jersey), Party Gaming (Gibraltar), COLT (Luxembourg), Catlin (Bermuda), Mapeley (Guernsey), 888 (Gibraltar) 1 FTSE350 market capUS$2.6trn

31. Summary • The London Stock Exchanges offers Russian companies a choice of highly liquid platforms for trading – IOB and SETS. • The IOB platform (Standard Listing) is the most liquid trading platform for Depositary Receipts; product innovations such as the EDX Russian Derivatives Service and the CCP platform have further strengthened this offering. • The London Stock Exchange investment pool is significantly greater than its European peers • The London Stock Exchange offers Russian companies tested products accepted by a large and diverse group of market participants.

32. Contact us Jon Edwards Head of Primary Markets – Russia & CIS Tel: +44 20 7797 1599 Mobile: +44 7708 790 543 Email： jedwards@londonstockexchange.com Maria Aleksandrova Business Development Executive Russia & CIS Tel: +44 20 7797 1444 Mobile: +44 7785 397 087 Email: maleksandrova@londonstockexchange.com Ayuna Nechaeva Analyst – Russia & CIS Tel: +44(0)20 7797 4386 Mobile: +44(0)77 4700 7241 Email: anechaeva@londonstockexchange.com Visit our website:www.RussianIPO.com