London Stock Exchange S100 Presentation – May 2010 IPOs in the current market May 2010

2 Raising Finance to grow a business Owners’ capital Equity finance Venture capital Debt finance Friends & family Business Angel

3 Why the London Stock Exchange? Choice: two routes for commercial companies to raise equity capital which are designed to suit different types of companies and their needs: Capital: major global capital market with c. £600bn equity assets under management* Liquidity: one of the world’s most active and liquid markets with a daily average traded value of £4.8bn in the year-to-date Profile: premium brand to further enhance your credibility and profile Note: * represents data sourced from Ipreo as at 31 December 2009 M a i n M a r k e t

4 Employee Commitment Capital for acquisitions Capital for growth Higher profile Valuation & Public market for company’s shares Capital to pay debts Hard reasonsSoft reasons Why do companies go public/quote on a stock exchange?

5 Choice of markets

6 Main Market Supports the capital raising activities of earlier stage companies Supports the capital raising activities of more established companies Exchange regulated market with NOMAD required at all times Regulated by the UKLA with a listing sponsor required 1,253 companies 1,453 companies Note: figures sourced from London Stock Exchange statistics as at 30 April 2010

7 AIM Companies Nominated Advisers (NOMADs) – key roles: Assess suitability of a company Pre-vet the admission documents Advise companies on the AIM Rules AIM Regulation team Regulate the Nomads and keep a close oversight of their operations AIM – Unique Regulatory Framework

8 AIM – Key requirements Key Admission Requirements –Produce an Admission Document, approved by the Nomad –Nomad and Broker required at all times –No trading history record requirement –No minimum free float requirement –IFRS required for UK issuers Ongoing Requirements –Compliance with ‘AIM Rules for Companies’ –Corporate Governance – best practice Eligibility for inclusion in the FTSE AIM Index Series

9 Regulation The UK Listing Authority (UKLA) is responsible for admitting securities to the Official List Admission The London Stock Exchange is responsible for admitting securities to trading Listing Securities become officially listed on the Main Market of the London Stock Exchange Main Market – Regulated by the UKLA

10 Premium Listing (Shares) Level of Disclosure Potentially eligible for the FTSE UK Series Main Market – Premium vs Standard Standard Listing (Shares) Standard Listing (GDRs) Sponsor required Unqualified 3 years of audited financials Control of assets Independent business Sufficient working capital Ongoing - Listing Rules & EU minimum 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 Same as Standard (Shares) except: o no working capital statement; and o ongoing – more basic EU minimum, Key differences

11 Capital raising activity

12 Note: figures sourced from London Stock Exchange statistics Capital raising activity Further issues – AIM and Main Market

13 Main Market – capital raising activity Index02 Jan May 2010Performance % FTSE Small Cap FTSE Fledgling DJIA Hang Seng DAX saw a record £77bn raised on the Main Market including £76bn through further issues including Lloyds (£13.5bn), HSBC (£12.9bn) & Rio Tinto (£7.3bn) Total funds raised 2010 YTD: £4.2bn, £2bn raised via further issues Prudential seeking to raise £14.5bn new record rights issue Note: index performance figures sourced from Bloomberg, all other figures sourced from London Stock Exchange statistics

14 AIM – capital raising activity Index02 Jan May 2010Performance % FTSE AIM All Share FTSE UK NYSE Alternext FTSE SXG Catalist Deutsche Entry Standard saw £5.6bn raised including £4.8bn including five over £100m Funds raised YTD 2010 £1.4bn, 753 further issues totalling £1.1bn including five over £50m Aim companies have operations across the globe in 95 countries Note: index performance figures sourced from Bloomberg, all other figures sourced from London Stock Exchange statistics

15 IPO activity – 2010 YTD DateCompanyMarketSector Mkt cap (£m) Funds raised (£m) 7- May-10Essar Energy PLCMainExploration & Production5,4721,272 7-May-10Avangardco Investments Public LimitedMainFood Producer and Processing Apr-10Fidelity China Special Situations PLCMainEquity Investment Mar-10EMIS Group plcAIMHealthcare Mar-10Metric Property Investments plcMainProperty Mar-10CPP Group plcMainNonlife Insurance Mar-10African Barrick Gold plcMainGold Mining2, Mar-10SuperGroup PlcMainFashion Retailers Mar-10CSF Group PlcAIMSoftware & Computer Services Mar-10Promethean World PlcMainGeneral Retailers Mar-10Sherborne Investors LtdAIMEquity Investment Instrument Mar-10Digital BarriersAIMDigital Security and Surveillance Feb-10Equatorial Palm Oil PlcAIMGeneral Industrials Feb-10Scotgold Resources LimitedAIMGold Mining Feb-10Kea PetroleumAIMOil & Gas Feb-10Oxford Nutrascience Group plcAIMFood Products Feb-10Horizon Acquisition Company plcMainSpecial Purpose Acquisition Company400 Note: table highlights selected IPOs on the LSE 2010 YTD

16 Capital markets & volatility Money raised on AIM and Main Market compared with the VIX Index There is a close historical correlation between IPOs and equity market volatility Equity market volatility has returned to levels which show support for IPOs based on historic trends Investors have recently shown appetite for strong growth stories where gearing is <2.5x and proceeds are not primarily being used for debt repayment Note: money raised figures sourced from London Stock Exchange statistics & the VIX Index from Bloomberg

17 UK IPO cycle next to revive IPO Market shut from H – 2007 Bull market –Significant M+A boom funded predominantly by debt –Equity issuance to also fund growth 2008 – 2009 New world order –Massive balance sheet repair Excluding mining and banks, issues at 2004/2005 levels Issuance story UK IPO cycle poised to revive ?

18 Valuation Market growth potential Business should operate in a market with good visible growth over the medium term Strong competitive positioning Business should have a strong competitive position in order to capture at least its share of the market growth Investors will also want comfort that this market position is sustainable and that the barriers to entry / competition are sufficiently high Strong trading record and earnings visibility Business should be able to demonstrate a track record of revenue and profit growth, as well as free cash flow generation and visibility of future profit growth Proven business model There is a proven business model that generates attractive financial returns, as well as a clear vision for the strategic development of the business through organic or acquisition-led growth Credible management team and robust corporate governance Proven, high quality management team with a track record of operational and strategic success Appropriate framework of corporate governance and systems and controls Clear rationale for IPO Purpose of the IPO must be clear so as to identify the use of IPO proceeds and / or benefits of listing Credible investment proposition at fair value for incoming investors Market / free float Index inclusion and weighting are driven by a combination of market cap and free float A combination of the % of free float and absolute £ free float are important The choice of which market to list on is a variable Valuation – What Institutions look for:

19 Contacts Mark Fahy Senior Manager – UK Small & Mid Cap Companies, Primary Markets London Stock Exchange T: M: E:

20 Appendix

21 Choice of Markets We offer four different routes to raise funds from the capital markets: Premium product Established 1698 Listed and EU regulated market £3.7 trillion combined market capitalisation, 1,453 companies Growth market Established 1995 Regulated by LSE, unlisted and non-EU regulated market £64.5 billion combined market capitalisation, 1,253 companies Specialist investment fund market for non-retail investors Established 2007 EU regulated and unlisted market £750 million combined market capitalisation*, 6 companies Specialist market for non-equity securities, primarily debt Established 2005 Listed, but non-EU regulated market 497 securities admitted M a i n M a r k e t Note: all figures sourced from London Stock Exchange statistics, 30 April 2010

22 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