PLUS MARKETS

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PLUS MARKETS

• The Role of the Corporate Adviser
• and Reporting Accountant
• Jonathan Williams
• Corporate Finance Partner

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Contents

• The role of the Corporate Adviser
• What is a Corporate Adviser?
• What does a Corporate Adviser do?
• The flotation process
• Timetable
• The Reporting Accountants role
• Reports required from Accountants
• Taxation and structuring

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What is a Corporate Adviser?

• The Corporate Adviser is.
• A PLUS member firm which has been approved by
  PLUS to act in the capacity of a corporate
  adviser and has been admitted to the register of
  such advisers
• (PLUS Markets Rules for Issuers)

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What does the Corporate Adviser do?

• The role of the Corporate Adviser is to
• Undertake extensive due diligence to ensure a
  company is suitable for PLUS
• Guide the directors through the flotation process
• Collate the application documents and financial
  statements
• Act as referee for the directors throughout
  their time on PLUS
• Assist directors with compliance with PLUS market
  and other rules and regulations

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Summary of work required for a PLUS flotation
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Summary of work required for a PLUS flotation
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Application documents

• For all admissions
• Admission agreement
• Confirmation that securities are freely
  transferable and are eligible for electronic
  settlement
• Confirmation from at least one market-maker that
  it has agreed to register in the issuers
  securities
• Announcement from the issuer that it has applied
  for admission of its securities to the market
• Confirmation from the issuer or its Corporate
  Adviser that the PLUS admission requirements have
  been complied with
• A cheque for the application fee (6k to 25k,
  depending)

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Application documents (2)

• A Prospectus or Admission Document
• Or
• Signed and completed Company Information
  Questionnaire
• Directors declaration for each director
• 3 years consolidated audited accounts
• Copy of any previously issued Prospectus or
  private placing memorandum
• A Working Capital Statement (new enterprise or
  company doing private placing of shares)
• Confirmation of Directors and connected parties
  lock-in agreements (new enterprise)

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Timetable
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Reporting Accountant

• Financial due diligence / Long Form Report
• Working Capital Report
• Short Form Report
• Review the companys Financial and Management
  controls and systems
• Advise on accounting and taxation issues in
  relation to the flotation and proposed structure

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Long form report

• Also known as financial due diligence
• Purpose is to provide a detailed summary of the
  company, its business activities, its management
  and adequacy of financial systems and controls
• Used to provide comfort to the Corporate Adviser
  and other advisers and to provide information
  that will assist in drafting of the Admission
  Document

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Long-form report contents

• Executive summary
• History and nature of the business
• Organisational structure, management and
  personnel
• Financial control environment
• Accounting policies
• Historical trading results
• Historical balance sheets
• Future trading and financial projections
• Taxation
• Other matters

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Working Capital Report

• A detailed review of the companys financial
  projections and funding facilities
• The directors must state
• The directors are of the opinion that, having
  made due and careful enquiry and after taking
  into account the placing proceeds, the company
  has sufficient working capital for its present
  requirements, that is for at least 12 months from
  the date of admission of its securities.
• Its purpose is to provide comfort to the
  directors and its advisers that, following
  flotation, the company will have sufficient
  working capital available to support its trading
  activities for a period of at least 18 months
• Accountant will take particular note of the
  accuracy of the companys previous financial
  forecasts and also historical working capital
  requirements, in particular in respect of debt
  collection.

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Short-form report

• A report summarising the companys audited
  financial results for the three years prior to
  admission (or from incorporation if shorter)
• The report is included within the Admission
  Document
• Underlying financial information must be audited
  to International Auditing Standards
• Flexible as to Reporting Regime UK GAAP / US
  GAAP / IFRS or other standard agreed with PLUS
  (Note that AIM insists on IFRS)

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Taxation and structuring

• PLUS-quoted unlisted market
• Qualify for investment under EIS / VCT and CVS
  schemes
• Retains IHT exemptions (Business Property Relief)
• Shares qualify for SIPPs
• Investors and market operators fairly relaxed
  about residency can be offshore etc
• PLUS-listed Recognised Investment Exchange
• Loses IHT exemptions
• Eligible market for REITs
• Qualifying market for ISA and PEP investment

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Once listed

• Full audit and consolidated accounts
• No modified / abbreviated accounts
• Short reporting timetable (5 mths FY / 3 mths
  interim)
• Ongoing market compliance obligations
• Need to retain Corporate Adviser and Registrar
• Must have non-executive director (market
  requirement)
• Must engage RIS provider
• Ought to retain
• Broker
• Financial PR

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Contact details

• Jonathan Williams, Partner
• Email jwilliams_at_bishopfleming.co.uk
• Office 0117 910 0250
• Mobile [phone]

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• Disclaimer
• This presentation and the printed handouts were
  prepared exclusively for the Plus Markets seminar
  and do not carry any right of publication or
  disclosure to any other party. The handouts are
  incomplete without reference to and should be
  viewed solely in conjunction with the oral
  briefing provided by Bishop Fleming. Neither the
  handouts nor its contents may be used for any
  other purpose without prior written consent of
  Bishop Fleming.
• This information in this discussion paper is
  based upon publicly available information and
  reflects prevailing conditions and our views as
  of this date, all of which are accordingly
  subject to change. In preparing this discussion
  paper, we have relied upon and assumed, without
  independent verification, the accuracy and
  completeness of any information available from
  public sources.
• Bishop Fleming on behalf of itself and all
  partners, staff and agents thereof, does not
  accept responsibility for any information
  contained herein and disclaims all liability to
  any person or entity arising out of or in
  connection with such information.
• Bishop Fleming is authorised and regulated by the
  Financial Services Authority for investment
  business