Eastern Chamber of Commerce Challenges faced when going Public September 11, 2013

Challenges faced by family businesses when going Public Section 1Why do family-owned businesses want to IPO? Section 2Listing requirements and investor expectations Section 3The key challenges faced Section 4 What changes can family-owned businesses make? 2

1. Why do family-owned businesses want to IPO? Enhances the business’s profile and reputation Provides an exit route for family members by divestment Provides capital to finance expansion Provides acquisition currency in the form of shares Diversifies the Company’s balance sheet 3 Its important to have a clear rationale for IPO

PwC 28 July 2013 PrivateCo PublicCo Reporting deadlines Information & Disclosure requirements Governance & Transparency Wider stakeholder base Market scrutiny Financial prospects Reputation & Corporate citizenship Corporate history & track record Public valuations The IPO Journey

Free float requirements Shareholder expectations management Independence requirements Good equity story Strong corporate governance “Clean” historical financial track record Strong internal control environment Ability to comply with ongoing reporting requirements Transparency Management compensation linked to performance 5 2. Listing requirements and investor expectations There are a number of external stakeholders once listed

3. The key challenges faced Small stakeholder base with dominance of family members Distinction between onwerhsip and stewardship Change from “instinctive management” Independent challenge at Board level/ Public company corporate governance structures Transparency and disclosure requirements/ concerns Generally weaker financial control Prevalence of related party transactions Lack of transparency 6 Many aspects of public companies don’t fit well with private family-owned businesses.

4. What changes can family-owned businesses make? Focus on responsibilities to a wider stakeholder base Better understand the divide between ownership and stewardship Balance the Board and include independent non- executive directors Implement robust corporate governance structures Enhance reporting and internal control procedures Enhance transparency and disclosure processes Enhance the corporate structure where applicable 7 Early preparation and recognition of a change in corporate culture is key to success

Russell Taylor Deals KSA Leader Russell has been with PricewaterhouseCoopers since 1993 and is a specialised Deals Practioner based in Riyadh, Saudi Arabia, having transferred from PwC London in early Russell has over 19 years experience in the full range of transactional work for corporate and private equity clients, including 3 years in the Tokyo office. He has global deal experience, having undertaken projects in Kingdom of Saudi Arabia, Germany, Italy, Ukraine, US and across Asia Pacific, as well as in the UK. Russell has significant deal experience in a variety of sectors, particularly Construction and Contracting, FMCG, Retail, Distribution, Manufacturing and Industrial, and has led PwC teams undertaking multi disciplinary due diligence on transactions, involving financial, commercial and operational due diligence teams. Russell has led transactions in a variety of industries in KSA, including core M&A, Valuations, Disposals and Strategic reviews Russell led large IPOs in KSA in the construction and contracting, retail, industrial and business service sectors, including the IPO's of eXtra, Al Tayyar, Takween, National Medical Care and General Lighting Company, and is currently leading teams on 4 other IPO’s currently going through the CMA filing process. Russell Taylor PricewaterhouseCoopers M:

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