1. Capital Raising Forum
Achieving a Successful IPO – the success factors and on-going requirements
May 2011
Audit | Tax | Advisory

2. Crowe Clark Whitehill 2
Contents
• Introduction
• The IPO Process – An overview
• Illustrative timetable
• What are investors looking for?
• How to become investor ready？
• How will investors value your business?
• Valuation methodologies
• The role of the reporting accountant
• Corporate Governance issues
• On-going accounting requirements – market comparisons
• Key factors of post IPO success
• Case studies
• Conclusions
• Crowe Horwath International
• Our capital markets track record
• Principal contacts

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Introduction
• Moving a privately owned company to a public market will take time, detailed planning is required
• Accounting compliance requirements are not onerous on admission and continuing obligations are
reasonable
• In accounting terms the key elements for success are:
• sound and effective financial controls
• timely and accurate management reporting
• an experienced CFO
• IFRS, US or suitable national GAAP compliant audited financial statements
• realistic and supportable financial projections
• Taxation planning will be required at an early stage for the company and shareholders

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The IPO Process – An overview
The AIM IPO process can be broken down into the following phases:
Phase 1 Phase 2 Phase 3 Phase 4
Due Broker’s
Planning Diligence Research Drafting
Phase 5 Phase 6 Phase 7
Placing &
Marketing Impact &
Placing
Admission
Agreement

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Note: The pre-IPO period can take 12 – 24 months
Illustrative timetable
Indicative IPO Timetable Intensive work
Preparation / follow-up work
Month 1 Month 2 Month 3 Month 4
Phase Week 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Phase 1 : Planning
Decision to proceed
- Sponsor / financial advisor appointed
- Broker appointed
Phase 2 : Due diligence
Financial
- Long form report
- Short form report
- Working capital review
Legal
Phase 3 : Research
- Prepare flotation research
Phase 4 : Drafting
- Prospectus
- Presentation
- Verification
Phase 5 : Marketing
- Broker pre marketing
- Pathfinder published / Road show commences
Phase 6 : Placing and Placing agreement
Phase 7 : Admission
- Pricing / Dealings commence

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What are investors looking for?
• A growing business operating in an expanding markets
• International exposure or potential to expand overseas
• Sustainable competitive position
• Visibility of earnings
• Quality of earnings
• A committed and experienced management team
• A commitment to strong corporate governance procedures
• Sector approach based on macroeconomic factors

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How to become investor ready ？
Improve the “quality” of your profits by:
• A strong and complete management team with clear succession planning
• A scalable business model, growing organically or by acquisition
• A move to higher value and higher margin products
• Build barriers to entry based on technical excellence, market knowledge or scale
• Robust and reliable accounting and management information system
• Enhance corporate governance and appoint non-executive directors
• Capital restructuring or reorganisation, consider share incentives, regulatory approvals
• Defendable rights over intellectual property

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How to become investor ready？(cont’d)
• Dispose of non-core activities and assets
• Identify strategic acquisitions and mergers
• Adopt International Financial Reporting Standards or local equivalent
• International Audit Standards Compliance
• Tax review of compliance and planning issues, national and international
• Reduce dependence on particular customers, products or staff
• Review terms of trade and strengthen credit management
• Appoint experienced advisers

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How will investors value your business?
Estimated valuation
Market and customer
Projected revenue Market and customer
growth potential
growth growth potential
市场和客户的潜在发展
Revenue visibility
Exploitation of proven
business model
Corporate governance
Scalability and
Competitive landscape
margin potential
Management
Acquisition/development New markets and
Strategy & use of proceeds channels
Business Financial Market
Fundamentals Outlook conditions
Company

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Valuation methodologies
Method Comment
 Investor familiarity, particularly in small/mid cap
Forward P/E markets
 Includes all charges against profits
 Not distorted by differences in capital structure and
Forward EV/EBITDA tax
 Facilitates international comparison
Multiples
 Often applied where lack of profits
Forward EV/Sales  Used to review valuation levels across the cycle
 Significant sensitivity to a number of assumptions
Discounted
 Overly dependent on terminal value
cash flow
DCF analysis
 Often used as a “sanity check”

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The Role of the reporting accountant
• Pre IPO planning
• Long Form Accountants’ Report
• Short Form Accountants’ Report
• Working Capital Review
• Financial Reporting Board Memorandum
• Pro-forma Financial Information
• Other Financial Information, Consent and Comfort Letters
• Taxation Advice

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Corporate governance issues
• The key relationship:
Governance = confidence = quality = investor interest = liquidity = Value
• The Quoted Company Alliance (UK) Guidelines:
• Schedule of matters reserved for the board
• Timely provision of information to the board
• Annual review of all material internal controls and risk management systems
• Separate independent Chairman and CEO
• 2 independent non-executive directors
• Independent audit, remuneration and nomination committees
• Annual published corporate governance statement
• UK Listing Rules – The Model Code
• Comply or explain any non-compliance and provide a statement of differences

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On-going accounting requirements – market comparisons
AIM PLUS ACE
6 months 5 months 6 months
Annual results announced within (months)
Half yearly Half yearly Quarterly
Interim results frequency
Interim results announced within (months) 3 months 3 months 2 months
IFRS/USGAAP UKGAAP/IFRS/ UKGAAP/IFRS/
Accounting policies USGAAP USGAAP/AUSGAAP

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On-going accounting requirements – market comparisons
Bursa Malaysia SGX Catalist
Annual results announced within (months) 6 months 60days 60days
Interim results frequency Half yearly Quarterly/Half- Quarterly/Half-
yearlya yearlyb
Interim results announced within (months) 2 months 45days 45 days
UKGAAP/IFRS/ Sing FRS/IFRS/ Sing FRS/IFRS/
Accounting policies USGAAP/AUSGAAP USGAAP USGAAP
a Depending on market capitalisation
b Catalist companies are listed based on the Catalist Sponsor‘s assessment that they are suitable. No minimum quantitative entry criteria are set, but Sponsors will
use their own deal selection criteria

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Key Issues of post IPO success
Realistic valuation Do not over value the value of the business on IPO is less important than
the value 12 months later
Strategy Admission to market is the start of the process, not the end
Communication A continuous process – Invest time and effort in the market and the market
will invest in you
Expectations Keep the market informed, under-promise and over-achieve if possible
Financial Control working capital, maintain and display strong corporate governance
Flexibility Consider secondary or two-stage listings e.g.:
• Asian Citrus
• RC Group
• West China Cement

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Case Studies
Property development company, operating in Malaysia and Vietnam. April
2007, joined LSE Main Market and raised US$162m at IPO
Malaysia-based, provides data centre facilities and services in SE Asia.
Joined AIM in March 2010 and raised £28m
Provision of healthcare support services. Malaysia HQ and operating in SE
Asia. November 2008, Joined AIM and raised £2 million
Beijing-based software and content management company. AIM
admission in June 2006, 3 further secondary fundraisings
Orange plantation and producer in China, joined AIM in July 2005 and
raised £12m, raised a further £20m in March 2007. Dual listing on HKSE in
November 2009 by introduction, placing of HK$1.55b in November 2010

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Conclusions
• Moving a privately owned company to a public market will take time, detailed planning is required
• Increasing the “Quality” of profits will increase the value of your business
• Preparing for external investment at an early stage will significantly increase your chance of
success – Plan early!
• The value of the business on IPO is less important than the value 12 months later, do not over
value
• Admission to a market is the start of a process, not the end
• Liquidity and valuations must be developed - Invest time and effort in the market and the market
will invest in you

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Crowe Horwath International
• Global professional services alliance with more than 150 independent member firms
• Services provided include: audit and assurance, taxation, accountancy, corporate finance, consultancy,
financial planning
• Our corporate finance services include pre-IPO planning, reporting accountant services, due diligence, M&A ,
company disposals, raising finance and MBO’s
• Based on integrated and high quality service delivery and common core values
• 640 offices in over 100 different countries, annual revenues $2.8 billion and approximately 28,000 professional
staff
• Ranked 5th in Asia Pacific with over 8,500 staff. Strong coverage in Kuala Lumpur, Jakarta and Singapore
• 31 offices throughout China including Beijing, Shanghai, Hong Kong, Guangzhou and Shenzhen
• In the UK a leading accountancy firm established in 1843, strong international client base

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Asia Pacific Ranking (in m US Dollars)
Asia Pacific: top 10 accounting networks
Rank Network Revenues Staff
($m)
1 PricewaterhouseCoopers 3,803 39,585
2 Deloitte 3,400 34,154
3 Ernst & Young 3,157 34,222
4 KPMG 3,007 30,932
5 Crowe Horwath 651 8,656
International
6 BDO 448 8,844
AccountancyAsia Survey:
5th in Asia Pacific 7 Grant Thornton 389 5,921
International
Relayed in the IAB 8 RSM Asia-Pacific 353 6,423
Leading accounting networks 2009: fee data 9 Nexia International 328 5,034
10 Baker Tilly International 325 6,442

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Our Team Members’ Capital Markets Track Record Includes…

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Our Team Members’ Capital Markets Track Record Includes…

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Principal Contacts – Capital Markets
United Kingdom
Robin Stevens Direct line: +44 (0) 20 7353 7282 email: robin.stevens@crowecw.co.uk Mobile: +44 (0) 7787 112 059
Marty Lau Direct line: +44 (0) 20 7842 7240 email: marty.lau@crowecw.co.uk Mobile: +44 (0) 7899 070 609
Peter Varley Direct line: +44 (0) 20 7842 7353 email: peter.varley@crowecw.co.uk Mobile: +44 (0) 7775 502 776
Stephen Bullock Direct line: +44 (0) 20 7842 7166 email: stephen.bullock@crowecw.co.uk Mobile: +44 (0) 7714 700 657
Linda Jin Direct line: +44 (0) 20 7842 7208 email: linda.jin@crowecw.co.uk Mobile: +44 (0) 7887 600 766
Paul Blythe Direct line: +44 (0) 20 7842 7231 email: paul.blythe@crowecw.co.uk Mobile: +44 (0) 7876 282 728
Chulanga Jayawardana Direct line: +44 (0) 20 7842 7173 email: chulanga.jayawardana@crowecw.co.uk Mobile: +44 (0) 7880 818 386
Mitesh Timpani Direct line: +44 (0) 20 7842 7305 email: mitesh.timpani@crowecw.co.uk Mobile: +44 (0) 7500 048 069
Kuala Lumpur Kien Hoe Onn email: kienhoe.onn@crowehorwath.com.my
Jakarta Munir Ali email: munirali@cbbcconsulting.co.id
Singapore Catherine Cheng email: catherine.cheng@ssfirst-trust.com
Beijing Wo Xiao Ning email: woxiaoning@chcncpa.com
Shanghai Xu Li Ying (Amendar) email: xuliying@wanlonggroup.com.cn
Hong Kong Delores Teh email: delores.teh@crowehorwath.hk