Russian IPO Pioneers Jan2006.Pdf

RUSSIA’S IPO PIONEERS

Table of Contents

Introduction 3

Initial Public Offerings Vimpelcom 8 Golden Telecom 10 Mobile TeleSystems 12 Wimm-Bill-Dann 14 RBC Information Systems 16 Pharmacy Chain 36.6 18 Irkut 20 Kalina 22 Mechel 24 Seventh Continent 26 Open Investments 28 Sistema 30 Lebedyansky 32 Khleb Altaya (Pava) 34 Severstal-auto 36 Pyaterochka 38 Evraz Group 40 Rambler Media 42 Novatek 44 Urals Energy 46 Amtel-Vredestein 48 IMS Group 50 Novolipetsk (NLMK) 52

Stock Exchanges LSE 55 NASDAQ 58 NYSE 61 MICEX 63 RTS 65

About the PBN Company 67

The PBN Company

From VimpelCom to NLMK — Growing Russian Issues From Gas to Grain

The PBN Company's Guide to Russia's IPO Pioneers Who would have thought only two years ago that we would see so many Russian companies fea- tured so prominently in the global capital markets? Who would have thought that Sistema and EvrazHolding would become household names in international investment circles? Even Pyaterochka, if only people could pronounce it.

A look at the figures shows just how dramatically Russian equity issues have grown in the last two years — a period in which investors have been inundated with initial public offerings coming out of Russia. A key driver for rising investor demand has been Market conditions were clearly right. With developed a notable desire on the part of investors to diver- equity markets generally in decline, investors became sify their Russia holdings away from politically willing to look further afield for attractive returns. With risky resource stocks and into more dynamic, the Russian economy growing rapidly, politics stabil- rapidly growing consumer companies. It was this ising, and more companies embracing higher stan- voracious appetite for new, liquid stocks offering dards of transparency and corporate governance, exposure to Russian growth which made the Russia seemed like a good bet. Looking at the Sistema IPO such a resounding success, and returns that the majority of the Russia and which paved the way for numerous other con- Eastern Europe-dedicated funds have boasted in sumer-oriented companies — from automotive to the past two years, it becomes even clearer just internet to food & beverage — to make their cap- why investor demand for new Russian issues has ital markets debuts in 2004-2005. been so strong, and why in turn so many companies from the region have decided to go public. Many of the consumer companies which fol- lowed Sistema also found strong investor While raising capital was certainly one of the fac- demand. Although not all achieved the high mul- tors driving Russian IPOs, in many cases the need tiples initially projected. A number of investors to raise equity finance was secondary. The status considered some of the Russian IPOs to be and profile which comes with a public listing (par- priced too aggressively. ticularly on the international exchanges) influenced some companies to list. And there is also the idea While diversification and exposure to consumer that attracting foreign investors gives Russian com- growth describe much of the recent investor panies a degree of political protection at home. interest in Russian equities, it has not all been

about the consumer story. Lest we forget, Russian Equities by Sector resource companies still have the heaviest weighting in the indexes, and many domestic and foreign portfolio investors are still willing to invest in the enticing if less predictable “strategic sectors.” Novatek's recent London IPO at the end of 2005, which was 12 times oversubscribed, bears witness to this. Post-IPO Price Performance

Source: Deutsche UFG, MSCI

The total volume of the new issues is difficult to predict, but clearly there are dozens more Russian IPOs in the pipeline.

It is likely that we will see IPOs from new sectors such as banking, meat processing and pipeline manufacturing. And if investors feel there are not enough steel companies to choose from, the selection should widen in the very near future.

Source: Bloomberg With more retail, more telecoms, more technology on the way as well, investors might be spoiled And there is plenty more appetite left for some of for choice. the more attractive natural resource companies. Not least for Gazprom, as the lifting of the ring And the choice will not be limited to Russian fence appears at long last to be imminent. companies. The overwhelming success of Kazakhstan's Kazakhmys looks set to be fol- The 2004-2005 period was, by and large, a lowed by further international listings of storming success for Russian issuers. But how Kazakh industrial companies. And there are a long can this last? How long will investors be handful of Ukrainian companies waiting in the ready to pay rich multiples for new Russian wings. issues? At least until a market correction occurs, or the Looking Forward 2008 Russian presidential elections come centre The trends we have seen in the past year will contin- stage, investors should brace themselves. The ue in 2006. Some analysts predict another $10 bil- Russian IPO frenzy is set to continue well into the lion in new issues by the end of 2006. new year.

The PBN Company

© Copyright 2005 4 The purpose of this review of Russian IPOs to from their predecessors — Russia's IPO pio- date was to examine the first wave of Russian neers — as they plan their approach to the cap- companies to go public. Which companies ital markets. were most successful? Which companies missed their price targets? How have investor preferences and demand evolved over the 20 December 2005 decade since VimpelCom floated its shares on the NYSE? And how might this evolution con- The PBN Company tinue in 2006? Perhaps most importantly, this Peter B. Necarsulmer Tom Blackwell report will enable future Russian issuers to learn Chairman & CEO Vice President

Selected Announced IPO Initiatives

№ Company Industry Date Expected Issue Size, $ million 1. Arbat Prestige Consumer 2006 50 2. EFKO Consumer 2006 60 3. Kopeika Consumer 2006 150 4. OST Group Consumer 2006 70 5. Planet Management Consumer 2006 80 6. Rusagro Consumer 2006 50 7. Tander (Magnit) Consumer 2006 300 8. Energomash Engineering 2006 130 9. MDM Bank Finance 2006 250 10. Vneshtorgbank Finance 2006 400 11. Acron Industrials 2006 100 12. Ilim Pulp Industrials 2006 350 13. IBS IT / Media 2006 150 14. STS IT / Media 2006 300 15. Inprom Metals & Mining 2006 70 16. MMK Metals & Mining 2006 500 17. Rusal Metals & Mining 2006 600 18. SUAL Metals & Mining 2006 400 19. SUEK Metals & Mining 2006 200 20. TMK Metals & Mining 2006 250 21. VSMPO-AVISMA Metals & Mining 2006 250 22. Rosneft Oil & Gas 2006 1500 23. Megafon Telecoms 2006 500 24. Ruspromavto Transport 2006 200 25. SMARTS Telecoms 2006 80 26. Evroset Consumer 2007 100

27. Nevskaya Cosmetics Consumer 2007 50 28. Nidan Foods Consumer 2007 100 29. Perekryostok Consumer 2007 180 30. Razgulay-Ukkros Consumer 2007 50 31. Rosinter Consumer 2007 80 32. Russian Textile Consumer 2007 50 33. Rosno Finance 2007 100 34. Zenit Bank Finance 2007 100 35. Evrokhim Industrials 2007 100 36. Irkutskkabel Industrials 2007 50 37. Sibur Industrials 2007 250 38. Verysell IT / Media 2007 70 39. Belon Metals & Mining 2007 80 40. Magnesit Plant Metals & Mining 2007 50 41. OMK Metals & Mining 2007 200 42. Serveralmaz Metals & Mining 2007 150 43. Protek Pharmaceuticals 2007 100 44. SIA International Pharmaceuticals 2007 100 45. Russian Railways Transport 2007 700 46. Sibir Airlines Transport 2007 80 47. Russian Product Consumer 2008 50 48. Unimilk Consumer 2008 50 49. TVEL Engineering 2008 150 50. Probiznesbank Finance 2008 50 51. Rosbank Finance 2008 150 52. Agromashholding Industrials 2008 70

Source: Renaissance Capital

The PBN Company

VimpelCom

“A piece of the new Russia goes on sale today on the VimpelCom ADSs closed at $29. By the end of New York Stock Exchange. Russia's leading cellular 1996 the stock was up 50% from its offer price. telephone company, Vimpel-Communications A.O., is set The structure of the offer comprised 3.9 million for a roughly $90 million initial public offering as the first ADSs offered to investors in the U.S. and Russian company to be listed on the Big Board. Canada, while 1.5 million ADSs were offered VimpelCom, as the company is known, is also a case overseas. study of leveraging political connections into cash in the Wild West business atmosphere of today's Russia.” "Everyone knows that the cellular business is the most dynamic, so the combination of — The New York Times, November 15, 1996 Russia and telecommunications just hypno- tized investors," said Valery Antonov, a telecommunications analyst with Creditanstalt Grant. IPO profile VimpelCom's listing on the NYSE in November The success of VimpelCom's IPO depended on 1996 was Russia's first ever IPO in any form. The the results of Russian president Boris Yeltsin's company floated at the top of the announced cardiac surgery, which was carried out during price range, which was increased in response to the road show. “Nobody would buy Russian strong demand from $15.75-$18.75 to $19.50- securities in a situation of complete uncertainty $20.50 the day before the IPO. The stock was of the country's further political line,” said one of the most actively traded and its price rose VimpelCom's head of IR Valery Goldin in an by 40% on the first day. Opening at $20.50, the interview with Finance magazine.

Key Data Date of IPO November 15, 1996 Stock exchange NYSE Underwriters Lead managers Donaldson, Lufkin & Jenrette Co-managers Renaissance Capital Form of the offer ADS (each representing three quarters of one share) Number of securities offered 5,400,000 Percentage of share capital offered 17.6% Price range $19.50-20.50 Offer price $20.50 Total capital raised $110.8 million

Source: company info

The PBN Company

Stock Performance (NYSE: VIP) Offer price Opening price 1st day 1st week 1st month Current (15/11/96) (15/11/96) close close close (01/12/05) $ 20.50 — 29.1 29.7 27.0 45.95 change — — +41.4% +44.8% +31.7% +124.1%

Source: Bloomberg Market Сapitalization, $ million Pre IPO (estimated) At IPO (15/11/96) Current (01/12/05) 450 630 9,298

Source: company info, open sources Valuations At IPO (15/11/96) 2005E 2006E VimpelCom, P/E 231 12.04 9.01

Source: Factiva, Renaissance Capital Estimates

Company profile which was acquired in 2004. VimpelCom was VimpelCom is a leading provider of wireless the fastest growing wireless operator in Russia in telecommunications services in Russia, operat- 2004. The company's subscriber base ing under the 'Beeline' brand, which is one of the increased from 11.44 million in 2003 to over most recognized brand names in the country. 25.72 million by the end of 2004. The company's The VimpelCom Group's license portfolio covers major shareholders are Norway's leading approximately 94% of Russia's population (136 telecommunications provider, Telenor, and million people). VimpelCom also operates in Russian financial and industrial conglomerate, Kazakhstan through its subsidiary, KaR-Tel, Alfa Group.

Financials IR contacts 2003 2004 Name Valery P. Goldin Position Vice President, International Revenues, $ million 1,335 2,146 and Investor Relations Net income, $ million 228 350 Phone +7 495 974-5888 Address 10, 8 Marta Street, Source: company info Moscow, 127083, Russia Email [email protected] 1 Based on 1995 earnings Web http://www.vimpelcom.ru

Golden Telecom

“The purpose of doing the IPO was in getting the shares traded sales of $50 million in shares to GTS, the parent publicly, putting a strategic structure around our Russian assets... It's company of Golden Telecom. The issue under- a risk-reward situation. People that want to take the risk of invest- writer exercised an over-allotment option and ing in Russia are doing that directly through this investment. We raised an additional $7.8 million. Among institution- were not selling the company, we were bringing a different face on it al investors who bought in GT were Baring Asset with new shareholders that were dedicated to that part of the world.” Management, Soros Fund Management LLC and the EBRD. GT floated amid plummeting Russian — Brian Thompson, Chairman and Chief Executive, telecoms stocks, ruble depreciation and a falling Global TeleSystems Group Inc. RTS index. The shares were priced at $12, well Bloomberg, October 10, 1999 below the $16-$18.50 indicative range, and dropped about 30% lower on the first day of trad- IPO profile ing. Although the next day the stock rose 24% to Golden Telecom was the first Russia-based com- $10.60. The IPO proceeds were used for the devel- pany since the economic crisis of 1998 to raise opment of network infrastructure and expansion capital through an IPO and the only Russian com- into Russia's regions. Analysts suggested that the pany to date to list on NASDAQ. GT raised a total of offering was a result of Global TeleSystems' interest approximately $144 million through a combination in spinning off its subsidiary because its Western of ordinary stock sales amounting to $55.8 million, European business was not performing well, as strategic investor subscriptions for $30 million, and people associated GTS with its Russian operations. Key Data Date of IPO September 30, 1999 Stock exchange NASDAQ Underwriters Lead managers Deutsche Bank Co-managers Bear, Stearns & Co. Inc., ING Barings Form of the offer Ordinary shares Number of shares offered 4.65 million By the company 4.65 million By existing holders 0 Number of securities subject to the over-allotment option 0.697 million Number of securities subject to strategic investor subscriptions 2.5 million Number of securities purchased by GTS 4.17 million Percentage of the share capital offered 35% Price range $16 – $18.50 Offer price $12 Total capital raised $144.2 million Use of proceeds Acquisitions and business development, development of network infrastructure, and regional expansion. Source: company info The PBN Company

Stock Performance (NASDAQ: GLDN)

NASDAQ: Offer price Opening price 1st day 1st week 1st month Current GLDN (30/09/99) close close close (01/12/05) $ 12 8.56 10.62 10.18 9.12 26.93 change — -28.6% –11.5% –15.2% –24% +124.4%

Source: Factiva Market Сapitalization, $ million Pre IPO (estimated) At IPO (30/09/99) Current (01/12/05) 550 411 986.9

Source: company info, open sources Valuations 2004E 2005E 2006E Golden Telecom, P/E 13.75 14.61 19.47

Source: Renaissance Capital estimates

Company profile to Wi-Fi for businesses. The company is also Golden Telecom is a leading facilities-based preparing to offer long distance services after the provider of integrated telecommunications and liberalization of the long distance market. In Internet services in major cities throughout Russia September 2005, the company received long and the CIS. Golden Telecom was incorporated in distance and international licenses for Ukraine. Delaware as a subsidiary of Global TeleSystems Group, a U.S.-based company backed by billion- Current shareholders of Golden Telecom repre- aire George Soros. The Golden Telecom group of sent a balanced mixture of strategic and finan- companies provides the majority of its services in cial, as well as Russian and international Russia through its wholly owned Moscow-based investors. The main shareholders are Alfa subsidiary LLC EDN Sovintel. Telecom (30%), Telenor (20%), Rostelecom (11%) and EBRD (8%). In 2005 Golden Telecom announced plans to refocus from consumer dial-up Internet services

Financials IR contacts 2003 2004 Name Anna Chin Go Pin Position Corporate Relations and PR Director Revenues, $ million 360.5 584 Phone +7 495 797 9300 Net income, $ million 55.4 64.8 Address 12, Krasnokazarmennaya st., Moscow, Russia Source: company info Email [email protected] Web www.goldentelecom.ru

Mobile TeleSystems

“The IPO was very helpful for MTS. The proceeds IPO profile were invested in network development and have created a MTS decided to go public in 1997, inspired by the basis for future success. Without that money the compa- performance of the shares of its rival VimpelCom, ny would not be worth nearly $12 billion now.” which floated on the NYSE in 1996. However, the Russian stock market dropped sharply following — Alexey Buyanov, First Vice President of Sistema the August 1998 financial crisis, and MTS's IPO in an interview with Finance, 2004 was postponed until 2000. The offer was five to six times oversubscribed, raising $305 million, which increased to $371 million after the underwriters exercised an over-allotment option. The stock was placed in the middle of the projected price range and opened at a 14 percent premium to the offer price. The substantial interest in the company likely came from emerging markets funds, hedge funds and technology and wireless funds. At present, the Company's ADRs are also traded on the London Stock Exchange, Frankfurt Stock Exchange, Berlin Stock Exchange and Munich Stock Exchange. Key Data Date of IPO June 30, 2000 Stock exchange NYSE Underwriters Lead managers Deutsche Bank AG London, ING Barings Ltd Co-managers J.P. Morgan Form of the offer ADS (each representing 20 common shares) Number of shares offered 15 million By the company 15 million By existing holders 0 Number of shares subject to the over-allotment option 2.25 million Percentage of the share capital offered 15.4% Price range $19–25 Offer price $21.5 Total capital raised $353 million Use of proceeds Improvement of service base in Moscow, investment in new technology and expansion within Russia.

Source: company info

The PBN Company

Stock Performance (NYSE: MBT) Offer price Opening price 1st day 1st week 1st month Current (30/06/00) close close close (01/12/05) $ 21.5 24.5 22.38 21.64 21.24 35.81 change — +13.9% +4% +1% -1% +66.6%

Source: open sources Market Сapitalization, $ million Pre IPO (estimated) At IPO (30/06/00) Current (01/12/05) 2,000 2,100 14,141

Source: company info, open sources Valuations At IPO (30/06/00) 2005E 2006E MTS, P/E 23.31 10.2 8.96

Source: Factiva, Renaissance Capital Estimates

Company profile consumer services company in Russia and the MTS is Russia's leading provider of GSM- CIS, and T-Mobile, a wholly owned subsidiary based mobile cellular communications servic- of Deutsche Telekom. es. The company was formed in 1993 after the merger of four Russian telecommunications Standard & Poor's recognized MTS as the organizations. Together with its subsidiaries, most transparent Russian company in 2005. MTS provides its services to over 44.1 million customers in a service area covering 87 out of 89 regions in Russia. MTS's largest shareholders include Sistema, the largest private sector

Financials IR contacts 2003 2004 Name Andrei Terebenin Revenues, $ million 2,546 3,886 Position Vice-president of communications Phone 7 495 911 6553 Net income, $ million 517 987 Address 5/1, Vorontsovskaya st., 109147, Moscow, Russia Source: company info Email ir@mts.ru Web www.mts.ru 1 Based on the 2000 earnings

Wimm-Bill-Dann

“This is a landmark IPO. It's the first major listing of a linked to organized crime. The issue, which placed fast- growing consumer staples company in Russia." in the middle of the announced price range, was five times oversubscribed. The stock price rose — Peter Grace, Analyst, Gartmore Investment, 15.8% on the first day of trading in light of the news Bloomberg, February 8, 2002 that Danone SA bought 4% of WBD through the IPO. Among other investors who bought in WBD were large international investment funds and investment banks. The substantial interest from IPO profile U.S. investors in WBD's IPO was partly due to the WBD's IPO was awarded Best European Equity fact that Templeton Strategic Emerging Markets Deal of 2002 by EuroWeek and Institutional Fund bought about 1.48% in the company earlier Investor magazines. Investors striving to gain in 2002. exposure to the first ever offering of a Russian consumer goods company were not frightened by “We are the first Russian consumer goods compa- the information disclosed in the IPO prospectus ny to list on the NYSE. In addition to raising capital about the criminal past of the company's biggest to help fund our development, this IPO will shareholder, Gavriil Yushvaev, and about the enhance our transparency and demonstrate our involvement of other shareholders and directors commitment to becoming an international player,” with Trinity Holding, which Russian media have said David Iakobashvili, Chairman of the Board1. Key Data Date of IPO February 8, 2002 Stock exchange NYSE Underwriters Lead managers ING Barings Co-managers Alfa Bank, Troika Dialog Form of the offer ADS (each ADS represents a share) Number of shares offered 10,620,001 By the company 7,480,000 By existing holders 3,140,001 Number of securities subject to the over-allotment option 1,593,000 Percentage of the share capital offered 27.7% Price range $18.50-21.50 Offer price $19.50 Total capital raised $207 million Use of proceeds Capital expenditures, including the purchase of dairy and juice equipment and acquisitions of additional plants; debt restructuring.

Source: company info 1 Source: WBD's press-release, February 8, 2002.

The PBN Company

Stock Performance (NYSE: WBD) Offer price Opening price 1st day 1st week 1st month Current (08/02/02) (08/02/02) close close close (01/12/05) $ 19.5 22.0 22.6 21.45 23.34 19.75 change — +12.8% +15.8% +10% +19.6% +1.3%

Source: Factiva, NYSE Market Сapitalization, $ million Pre IPO (estimated) At IPO (08/02/02) Current (01/12/05) 814 - 946 828.4 862.4

Source: company info, Renaissance Capital estimates Valuations At IPO (08/02/02) 2005E 2006E WBD, P/E 262 25.94 20.04

Source: Factiva, Renaissance Capital estimates

Company profile portfolio of brands, including the most well WBD is Russia's largest food company with a known juice brand in Russia — J7. In 2005, 37% share of the dairy food market and 27% of WBD faced stagnating juice sales due to the juice market in terms of volume. increasing competition in the industry and a Established in 1992, WBD has grown from a lack of success in the company's marketing leased production line at the Lianozovsky efforts. The largest shareholder in the compa- Dairy Plant to a publicly listed food conglomer- ny is Gavriil Yushvaev with an 18.8% stake. ate, employing more than 18,000 people. Groupe Danone holds 8.32% in the form of Currently, WBD has 25 manufacturing facilities ADS. Morgan Stanley Investment Management in Russia and the CIS, as well as distribution controls 6.3% of WBD. Other principal share- centers in 26 cities in Russia and abroad. The holders are the company's members of the company has an extensive and well-balanced board.

Financials IR contacts 2002 2003 2004 Name Marina Kagan Revenues, $ million 824.7 938.5 1,189 Position Head of IR Phone +7 495 105 5805 Net income, $ million 35.7 21.1 22.9 Address Solyanka ul. 13, building 2, Moscow, Russia, 109028 Source: company info Email [email protected] Web www.wbd.ru 2 Based on the 2001 earnings

RBC Information Systems

"This represents a landmark transaction for the develop- offered near the top of the target price range, ment of capital markets in Russia. For the first time a valuing the company at $83 million, which some Russian company will raise capital using the domestic mar- analysts considered overvalued given that RBC's ket rather than relying on foreign markets." sales in 2001 were less than $20 million. Some market observers said that the entire offering was — Peter Halloran, Executive Chairman, Aton Capital simply a good PR campaign. EuroWeek, April, 2002 “Obviously the underwriters overvalued the com- IPO profile pany. Additionally, the RBC free float is quite RBC made history with the first ever domestic small. However, if market players are ready to pay IPO in April 2002. According to preliminary bid- such a price for RBC stock, it means that the ders applications, the issue was five times over- company and its underwriters did a good job with subscribed. The IPO enabled RBC to raise the IPO and proves that the interest in non-extrac- $13.28 million. Russian and foreign institutional tive sectors is very strong,” said Denis Rodionov and corporate investors, including of Brunswick UBS1. The offer comprised a public Probusinessbank, Petrokommerz bank, Yamal offering of ordinary shares in Russia and a private fund, regional EBRD funds and the National placement of pre-IPO convertible bonds in Insurance Group, were among the investors. Germany, Sweden, Switzerland and the UK. In RBC placed 10.5 million shares on MICEX, and June 2004, RBC placed 15 million new shares at the remaining 5.5 million on RTS. The stock was $1.90 per share.

Key Data Date of IPO April 18, 2002 Stock exchange RTS, MICEX Underwriters Lead managers Aton Capital Co-managers Alfa Bank Form of the offer Ordinary shares Number of shares offered 16 million By the company 16 million By existing holders 0 Percentage of the share capital offered 16% Price range $0.75-0.85 Offer price $0.83 Total capital raised $13.28 million Use of proceeds Development of media and IT business, particularly the launch of RBC-TV.

Source: company info 1 Source: Kommersant, April 19, 2002

The PBN Company

Stock Performance (RTS: RBCI) Offer price Opening price 1st day 1st week 1st month Current (18/04/02) (06/05/02) close close close (01/12/05) $ 0.83 0.94 0.92 0.95 0.77 6.3 change — +13% +10.8% +14.4% -7.2% +654.03%

Source: RTS Market Сapitalization, $ million Pre IPO (estimated) At IPO (18/04/02) Current (01/12/05) 75-85 83 730.3

Source: company info, Renaissance Capital estimates Valuations At IPO (18/04/02) 2005E 2006E RBC, P/E 132 15.09 10.75

Source: Renaissance Capital estimates

Company profile Internet-based information media, advertising RBC's core business commenced in 1993 with and research reports, analytical reviews and the establishment of ZAO RosBusiness- consulting. The IT business includes turnkey Consulting in Moscow, Russia as a domestic solutions, general programming, system inte- financial news media business. The company's gration, research and development, and IT main Internet resource www.rbc.ru was one of consulting. In 2003, RBC launched Russia's the first Russian Internet media outlets to pro- first and only business TV channel, RBC TV. vide real-time business and financial informa- The unlisted stake in the company is held by its tion. RBC's media business consists of management.

Financials IR contacts 2003 2004 Name Natalia Makeeva Revenues, $ million 46.6 74.1 Position Investor relations officer Phone +7 495 363 1111 Net income, $ million 3.6 10.8 Address 78, Profsoyusnaya st., 117393, Moscow, Russia Source: company info, Renaissance Capital estimates Email [email protected] Web www.rbcinfosystems.com 2 Based on 2001 earnings

Pharmacy Chain 36.6

“The IPO strengthened our competitive advantages on the ever, suggested that the delay was due to the capital market and within the industry. As a result of overestimated price coupled with investors' con- the offering we were able to decrease the cost of borrowing cerns about the structure of the company's and to get access to new opportunities for growth.” assets, significant amount of debt, and lack of transparency (for example, 36.6. did not provide — Andrey Slivchenko, Director of Corporate Finance full-year audited financial results). As a result, and Investor Relations, Pharmacy Chain 36.6 36.6 sold 20% of its shares at an 18% discount Finance, June 2004 to the bottom of the announced range, and raised $14.4 million, half of the planned amount. The company, however, was happy with the results of the offering as it raised funds for debt IPO profile restructuring and for financing the opening of Pharmacy Chain 36.6 is the only Russian public new stores. The stock traded initially at a P/E company in the retail health & beauty market and ratio of 69, more than two times the average of the second company to list on a domestic emerging markets pharmacies — 27.71. 36.6 exchange. 36.6 postponed its IPO for a week. shares were listed on the RTS and MICEX in According to the company, this was due to unfa- December 2004. In August 2005, 36.6 launched vorable market conditions. Some analysts, how- a GDR program for 20% of its ordinary shares.

Key Data Date of IPO January 29, 2003 Stock exchange MICEX, RTS Underwriters Lead managers ING Group NV Co-managers MDM-Bank Form of offer Ordinary shares Number of securities offered 1.6 million By the company 0 By existing holders 1.6 million Number of securities subject to the over-allotment option 0.4 million Percentage of share capital offered 20% Price range $11–16 Offer price $9 Total capital raised $14.4 million Use of proceeds Debt restructuring, retail chain expansion.

Source: company info 1 Renaissance Capital

The PBN Company

Stock Performance (RTS: APTK) Offer price Opening price 1st day 1st week 1st month Current (29/01/03) close close close (01/12/05) $ 9 N/A N/A N/A N/A 26.5 change — N/A N/A N/A N/A +194.47

Source: RTS Market Сapitalization, $ million Pre IPO (estimated) At IPO (29/01/03) Current (01/12/05) 88 72 204

Source: company info, Renaissance Capital estimates Valuations At IPO (29/01/03) 2005E 2006E 36.6, P/E 692 24.2 10.9

Source: company info, Renaissance Capital estimates

Company profile space among domestic pharmacies and the Pharmacy Chain 36.6 is a leading pharmaceu- highest brand awareness among other retail- tical and health and beauty retailer in Russia in ers. The company has a production unit, terms of turnover with a chain of 350 pharma- Veropharm, of which it sold 19.99% to Troika cies in 8 regions. Pharmacy Chain 36.6 was Dialog, investing the money it raised into the the first pharmaceutical retailer to introduce a regional development of its retail chain. modern retail format. The chain has the highest Seventy-six percent of the company's stock is sales per store and per square meter of selling held by management.

Financials IR contacts 2003 2004 Name Andrei Slivchenko Revenues, $ million 147 291 Position Director of Corporate Finance and IR Phone 7 495 792 5207 Net income, $ million 1.04 0.72 Address 36, Bolshaya Pochtovaya st., 105082, Moscow, Russia Source: company info Email [email protected] Web www.pharmacychain366.com 2 Based on the 2003 earnings

Irkut

shares placed though the IPO, 10% were initial "We have demonstrated that to raise $100 million you don't ly oversubscribed. According to industry issued shares and 13.3% were existing shares necessarily have to go to London or New York. You can do sources, the majority of the stock was taken sold by management. Through such an IPO it at home. It's a breakthrough that opens the door for by foreign aircraft building companies. Forty- scheme, Irkut avoided a 45-day delay before other companies." three percent of the offered share capital was beginning the trading of newly issued shares, borrowed by the underwriters from sharehold- which is imposed by Russian regulatory — Mikhail Leshchenko, Deputy Head of Corporate Finance ers and 57% was sold by the management. requirements. at MDM Bank, The Moscow Times, March 29, 2004 Through such an IPO scheme, Irkut avoided a 45-day delay before beginning the trading of Industry analysts were skeptical that some 90% newly issued shares, which is imposed by the of the company's portfolio at the end of 2003 Russian regulatory authorities. consisted of Su-30 jet fighters. In line with Industry analysts were skeptical that some 90% announced plans to develop new planes to IPO profile of the company's portfolio consisted of Su-30 jet "We haveIrkut demonstrated Corporation that has to been raise $100the only million company you don't in diversify from Sukhois, Irkut used IPO proceeds fighters. In line with announced plans to develop necessarilythe Russian have to godefense to London sector or New to list York. its sharesYou can ondo for acquisition of 75.46% of Yakovlev Design new planes to diversify from Sukhois, Irkut used the stock exchange. Irkut raised $127 million in Bureau, which has considerable expertise in IPO profile IPO proceeds for the acquisition of 75.46% of what at that time was the largest flotation on the developing combat trainer (Yak-130) and civil Irkut Corporation is the only company in the the Yakovlev Design Bureau, which has consid- Russian market. The offer, priced in the middle aircraft, as well as for production of Be_200 Russian defense sector to have listed its erable expertise in developing combat (Yak-130) of announced price range, was significantly amphibious firefighters. In December 2004, shares on the stock exchange. Despite losses and civil aircraft, as well as for the production of oversubscribed. According to industry sources, Irkut issued level one ADRs, becoming the first in 2003, Irkut raised $127 million in what at Be-200 amphibious firefighters. In December the majority of the stock was purchased by pri- company in the Russian military-industrial com- that time was the largest flotation on the 2004, Irkut issued level one ADRs, becoming the vate and institutional investors. Of the 23.3% of plex whose shares are traded abroad. Russian market. The offer, priced in the middle first company in the Russian military-industrial of the announced price range, was significant- complex whose shares are traded abroad.

Key Data Date of IPO March 26, 2004 Stock exchange RTS, MICEX Underwriters CSFB, MDM Bank Form of the offer Ordinary shares Number of shares offered 205 million By the company 88 million (new share issue) By existing holders 117 million Percentage of the share capital offered 23.3% Price range $0.54—0.68 Offer price $0.62 Total capital raised $127 million Use of proceeds Diversification of production; acquisition of Yakovlev Design Bureau. Key Data Source:Date companyof IPO info March 26, 2004

Source:Stock company exchange info RTS, MICEX The PBN Company

IPO Stock Performance (RTS: IRKT) IPO offer 1st day 1st week 1st month Current (26/03/04) close close close (01/12/05) $ 0.62 0.66 0.65 0.62 0.65 change -- +6.4% +4.8% 0% +4.8%

Source: RTS Market Сapitalization, $ million Pre IPO (estimated) At IPO (26/03/04) Current (01/12/05) 500 522 566

Source: open sources, Renaissance Capital estimates Valuations At IPO (26/03/04) 2005E 2006E Irkut, P/E 7.6 1 8.74 7.58

Source: Renaissance Capital estimates

Company profile fighter, cargo aircrafts, and civil aircraft com- Irkut Corporation is a vertically integrated hold- ponents. Irkut cooperates with EADS on the ing dealing with production, R&D, marketing marketing of amphibious planes and produc- and sales of aircraft. Irkut is a major manufac- ing aircraft components for A318, it is in talks turer of the Sukhoi fighter family (30K/Su- with Airbus on production of parts for the A350 30MK), with 10% of Russia's defense exports also. Irkut's order portfolio at the end of 2004 and major customers in Southeast Asia and was $3.9 billion. The major shareholders in the North Africa. Irkut is currently increasing its company are its management (44%), Sukhoi civil aviation share in total production volume, Aviation Holding Company (12%) and the and it is developing production of Be-200 European Aeronautic Defence and Space amphibious aircraft, Yak-130 combat trainer Company (EADS) (10%).

Financials IR contacts 2003 2004 Name Alexey Chernushkin Revenues, $ million 522 622 Position Head of IR Department Phone +7 495 777 2101 2 Net income, $ million 2 68.4 Address Bld. 1, 68, Leningradsky prospekt, Moscow, Russia, 125315 Source: company info Email [email protected] Web www.irkut.com 1 Based on 2004 earnings

2 In 2003 Irkut decided to switch from US GAAP to IFRS, which enables the company to treat R&D as investments influencing its profitability indicators. According to US GAAP, net losses in 2003 were $14.4 million. According to IFRS, net profit in the same period comprised $2 million.

Kalina

“An IPO is a logical move in Kalina's development strategy. According to the underwriter, approximately 45 of We are striving to be an etalon company — public, rapidly the 70 investors that bought into Kalina were for- growing.” eign investment funds. Kalina sold existing shares of the management and EBRD as well as — Alexander Petrov, CFO, Kalina additionally issued shares at $19 each, which Expert, May 10, 2004 was in the middle of the announced price range. Some industry analysts said that the offer was ini- tiated by EBRD in order to exit its investment, although the bank retained a minority interest in the company of 5.7%. IPO proceeds were used for the development of current brands and acqui- IPO profile sition of new ones, including brands of the The offering of the country's largest cosmetics German cosmetics producer, Dr. Scheller and for producer, known as the Russian Procter & the expansion of the distribution network and the Gamble, drew huge demand from domestic and upgrade of production facilities. In late 2004, foreign investors and was completed in one day Kalina launched an ADR level 1 (OTC) program instead of the three that had been planned. for 20% of its existing shares.

Key Data Date of IPO April 28, 2004 Stock exchange MICEX, RTS Underwriters Lead managers Renaissance Capital Co-managers Troika Dialog, Alfa Bank Form of the offer Ordinary shares Number of shares offered 2.77 million By the company 1.38 million By existing holders 1.38 million Number of securities subject to the over-allotment option Not anticipated Percentage of the share capital offered 33 Price range $18.41-20.46 Offer price $19 Total capital raised $26 million Use of proceeds Development of existing brands, acquisitions of new brands; expansion of distribution chain; modernization of production facilities.

Source: company info

The PBN Company

Stock Performance (RTS: KLNA) Offer price Opening 1st day 1st week 1st month Current (28/04/04) price close close close (01/12/05) $ 19 19 19 19.35 19.8 37.8 change — 0% 0% +1.8% +4.2% +98.9%

Source: RTS Market Сapitalization, $ million Pre IPO (estimated) At IPO (28/04/04) Current (01/12/05) 150-170 160 373.5

Source: company info, open sources Valuations At IPO (28/04/04) 2005E 2006E Kalina, P/E 9.81 10.86 9.72

Source: company info, Renaissance Capital estimates

Company profile brand names. In 2005, Kalina acquired 58.4% Kalina is the leading Russian producer of cos- of German cosmetics manufacturer, Dr. metics, household and personal care products Scheller, which will improve Kalina's brand with a total market share of 2.8% in value terms portfolio and provide an entrance to high in 2004. The company controls 23% of the value-added markets for color cosmetics and Russian market for skin care products and premium skin care and oral care products. In 13% of the oral care segment. Kalina has a December 2005 the company's CEO, Timur strong portfolio of well-recognized brands, Gorayev, controled a 30.03% stake. including Black Pearl, Mia and Clear Line

Financials IR contacts 2003 2004 Name Dmitry A. Argunov Revenues, $ million 157 182.6 Position Head of corporate finance department Phone +7 343 262 26 85 Net income, $ million 10.8 19 Address 620138, 80 Komsomolskaya Str., Ekaterinburg, Russia Source: company info Email [email protected] Web www.kalina.org 1 Based on the 2004 earnings

Mechel

"There is a big, wide investor base that can't access the steel IPO profile sector. These shares are a good way to get access to an Mechel's IPO made it the first Russian company in under-represented sector and diversify a Russia portfolio” more than two years to list shares in the U.S. as well as Russia's first metals firm to list on the NYSE. The — Anton Khmelnitsky, Brunswick Asset Management offering came amid growing world steel prices, Bloomberg, October 29, 2004 which helped Mechel to place the stock at the top of the expected price range and to raise $291 million. About 20% of the offered ADRs represented existing shares and 80% — new shares. A month later, the lead underwriter of the offering, UBS Limited, exercised its option for an additional 1.5% stake. According to UBS, 90% of the offering was taken by foreign investment funds, mainly from the United States. Mechel planned to use the proceeds to take part in an auction for a 17.8% stake in MMK but later decided not to bid, choosing instead to sell its own stake in MMK to the plant's current management. It will invest the proceeds into developing its coal capacity as well as modernization of its steel facilities. Key Data Date of IPO October 29, 2004 Stock exchange NYSE Underwriters Lead managers UBS Limited Co-managers JP Morgan, Troika Dialog, Morgan Stanley Form of offer ADS (each ADS represents 3 common shares) Number of securities offered 13.88 million By the company 11.1 million By existing holders 2.77 million Number of securities subject to the over-allotment option 2.08 million Percentage of the share capital offered 11.5% Price range $19—$21 Offer price $21 Total capital raised $335 million Use of proceeds Capital expenditures, including equipment purchases and modernization of facilities; acquisition of additional operations and subsoil licenses.

Source: company info

The PBN Company

Stock Performance (NYSE: MTL) Offer price Opening price 1st day 1st week 1st month Current (29/10/04) (29/10/04) close close close (01/12/05) $ 21 21.5 20.5 21.6 20.2 29.6 change -- +2.3% -2.3% +2.8% -3.8% +41%

Source: Factiva, NYSE Market Сapitalization, $ million Pre IPO (estimated) At IPO (29/10/04) Current (01/12/05) 2,700 2,900 3,999

Source: company info, Renaissance Capital estimates Valuations 2004 2005E 2006E Mechel, P/E 5.5 4.84 11.13

Source: Renaissance Capital estimates

Company profile cialty steel output. In the first quarter of 2005, Mechel is one of Russia's leading mining and almost 90% of Mechel's net income came from metals companies. It produces coking coal in mining. The major shareholders of the compa- Russia, with a 12% market share in 2004. It is ny are its founders Igor Zyuzin, Chairman of the Russia's largest exporter of coking coal con- Board, and Vladimir Iorich, CEO. J.P. Morgan centrate. It is the largest and most comprehen- Investment holds 1.62% of the company. sive producer of specialty steels and alloys in Russia, producing 39% of total Russian spe-

Financials IR contacts 2003 2004 Name Irina Ostryakova Revenues, $ million 2,028 3,635 Position Director of External Communications Net income, $ million 143 1,342 Phone +7 495 258 1828 Address 12, Krasnopresnenskaya Nab., World Trade Source: company info Center Office Building, №1002, Moscow, 123610, Russia Email [email protected] Web www.mechel.com

The PBN Company

Seventh Continent

“The company that goes public first usually gets maximum valua- ing Russian retail market. The issue was 3.5 times tions. Those that follow Seventh Continent will most likely be oversubscribed. valued lower.” Since the IPO, Seventh Continent shares have con- — Alexey Yazykov, Consumer Goods tinued to grow, reaching $21 in October 2005, a and Retail Analyst at Aton 120% increase from the offer price. In H2 2005 Sekret Firmy, November 22, 2004 Seventh Continent outperformed the RTS and all other Russian consumer stocks. The company's IPO profile capitalization increased 2.5 times in less than a year Seventh Continent's debut on the RTS in and amounted to over $1.558 billion in October November 2004 was Russia's first retail flotation, 2005. providing investors an opportunity to diversify their Russian portfolios away from the natural resources IPO proceeds were invested into the expansion of sector. The company sold 13% of its shares for the company's retail chain, including the construc- $80.7 million. At the time of the IPO, the company tion of its first hypermarket. In September 2005, the rented a number of its stores from a separate company raised $90 million in long-term debt and company, Stolichniye Gostronomi, at competitive plans to sell new shares in Q2 2006. "We are inter- rates. After the IPO, Seventh Continent's manage- ested in having a larger free float, to be a real pub- ment decided to acquire stores under its own name. lic company," said one of the company owners, The underwriters successfully marketed the compa- Vladimir Gruzdev1. Seventh Continent is also imple- ny to foreign portfolio investors, marketing the com- menting a program of stock options for the compa- pany as the only way to gain exposure to the boom- ny's managers.

Key Data Date of IPO November 12, 2004 Stock exchange RTS, MICEX Underwriters Lead managers Deutsche UFG Form of offer Ordinary shares Number of shares offered 8.4 million By the company 8.4 million By existing holders 0 Percentage of the share capital offered 13% Price range $9.20-10.25 Offer price $9.59 Total capital raised $80.7 million Use of proceeds Development of existing retail formats and launch of hypermarkets.

Source: company info, open sources 1 Source: Bloomberg, August 5, 2005

The PBN Company

Stock Performance (RTS: SCON) Offer price Opening price 1st day 1st week 1st month Current (12/11/04) close close close (01/12/05) $ 9.59 9.59 9.59 10 9.96 26 change — 0% 0% +5.3% +4.9% +171.1%

Source: RTS Market Сapitalization, $ million Pre IPO (estimated) At IPO (12/11/04) Current (01/12/05) 595-660 621 1,710

Source: company info, Renaissance Capital estimates Valuations At IPO (12/11/04) 2005E 2006E Seventh Continent, P/E 22.92 17.36 15.56

Source: company info, Renaissance Capital estimates

Company profile new stores and showed a revenue increase of Founded in 1994, Seventh Continent was one 45.6% y-o-y. In July, Seventh Continent of the first domestic supermarket chains. In the opened its first hypermarket in Moscow and Moscow and St. Petersburg areas, the chain acquired a Kaliningrad-based chain of 12 currently operates over 100 stores using four supermarkets. 87% of the company’s shares different retail formats: deluxe stores, super- are controlled by CJSC “7K-Invest-Holding.” markets, convenience stores, and hypermarkets. In H1 2005, Seventh Continent opened 12

Financials IR contacts 2003 2004 Name Dmitry Popov Revenues, $ million 342 496 Position Press Secretary Phone +7 495 933 4363 ext. 349 Net income, $ million 8.7 27.1 Address 18, bld.2, Miklukho-Maklaya str., Moscow, Russia, 117437 Source: company info Email [email protected] Web www.7cont.ru 2 Based on the 2004 earnings

Open Investments

“We welcome Open Investments’ IPO, as it will give debt alone, which led to the decision to tap the institutional and private investors access to the growing equity markets. Russian property market.” The company raised over $68 million, while the — ATON Research shares were floated at close to the top of the price range at $49.75. Approximately 50% of shares were allocated to UK investors, while IPO profile the remaining 50% went to investors from Open Investments was the first real estate Russia, Austria, Switzerland and Germany. development, management and investment group to go public. Having already raised a This strong interest from foreign investors bore significant amount of money in debt capital, witness to the ever growing appetite for the the company took a decision that it would not “Russian consumer play”, and the desire to be able to absorb all the investment opportuni- diversify away from the more politically sensi- ties in the Russian property market through tive resource stocks.

Key Data Date of IPO November 16, 2004 Stock exchange RTS Underwriters Lead Manager and Sole Book-Runner ING Investment Banking Senior Co-Lead Manager Rosbank Co-Lead Manager Troika Dialog Form of offer Ordinary shares and Global Depositary Number of securities offered 1,383,358 Percentage of share capital offered 38.5% Price range $42.75 — $52.25 Offer price $49.75 Total capital raised $68.8 million Use of proceeds Investments into property development projects.

Source: company info, open sources

The PBN Company

Stock Performance (RTS: OIVS) Offer price Opening price 1st day 1st week 1st month Current (16/11/04) close close close (01/12/05) $ 49.75 55 55 63 61 100.00 change — +10.5% +10.5% +26.6% +22.6% +101%

Source: RTS Market Сapitalization, $ million Pre IPO (estimated) At IPO (16/11/04) Current (01/12/05) — 178.6 341.1

Source: company info Valuations At IPO (16/11/04) 2005E 2006E Open Investments, P/E — 18.8 9.1

Source: ING

Company profile ment complexes and hotels). Open Open Investments is a Moscow-based real Investments was established in September estate development, management and invest- 2002 by the Interros Group, one of Russia's ment group with a business focus on develop- largest financial and industrial groups. ing investment grade, Class A office buildings, luxury residential housing, and commercial real estate (primarily large retail and entertain-

Financials IR contacts 2003 2004 Name Natalia Goncharova Revenues, $ million 14.49 36.74 Position Head of Capital Markets & IR Phone + 7 495 363 1457/58 Net income, $ million 8.3 13.99 Fax +7 495 363 1457/58 Email [email protected] Source: company info, open sources Web www.open-investments.com

Sistema

“Sistema represents an alternative investment to MTS, a offering, lead underwriters Morgan Stanley and low risk bet on liberalisation and privatisation of the fixed Credit Suisse exercised the over-allotment option line sector and an option on exposure to growing consumer for additional shares of existing shareholders, spending on insurance, banking and real estate services.” raising Sistema's free float to 19%. In total, Sistema's shareholders received about $240 mil- Renaissance Capital lion. The market capitalization of Sistema was “AFK Sistema: A Consumer Story, or Just estimated at $8.2 billion based on its IPO price, Another Telecom Stock”. April 6, 2005 significantly less than the capitalization of its main asset, MTS, which was valued at about $13 billion on the day of Sistema's IPO. The main moti- IPO profile vation for Sistema to go public was the upcoming Sistema conducted Russia's largest IPO to date privatization of state-owned telecommunication and the biggest London float by a non-UK com- holding Svyazinvest, in which Sistema planned to pany since 2001. The company raised $1.56 bil- participate. While it remains unclear when the lion, more than all previous Russian IPO’s com- Svyazinvest privatization will take place, Sistema bined. The offer, priced at the middle of the has used part of its IPO proceeds to fund other announced $15-$19.5 range, was 2.5 times over- acquisitions. In October 2005, Sistema subscribed. Sistema's GDRs, representing main- announced the acquisition of minority stakes in ly new shares, rose 5.5% by the end of the first six Bashkir energy companies, which it plans to day of trading in London. Two days after the develop and then sell off to a strategic investor. Key Data Date of IPO February 9, 2005 Stock exchange LSE Underwriters Lead managers Morgan Stanley, CSFB Co-managers ING Financial Markets, Renaissance Capital Group, Troika Dialog, Deutsche Bank Form of the offer GDRs (50 GDRs per 1 share) Number of shares offered 1,831,563 By the company 1,550,000 By existing holders 42,663 Number of securities subject to the over-allotment option 238,900 shares of existing holders Percentage of the share capital offered 19% Price range $15—$19.5 Offer price $17 Total capital raised $1,560 million Use of proceeds Development of existing non-telecommunications businesses; Acquisitions in the telecommunications industry, particularly possible privatizations of Svyazinvest, Ukrtelecom and Kazakhtelecom.

The PBN Company

Stock Performance (LSE: SSA) Offer price Opening price 1st day 1st week 1st month Current (09/02/05) (14/02/05) close close close (01/12/05) $ 17 17.8 17.94 17.8 16.65 22.5 change — +4.7% +5.5% +4.7% -2% +30.3%

Source: Factiva, LSE Market Сapitalization, $ million Pre IPO (estimated) At IPO (09/02/05) Current (01/12/05) 9,400 8,200 10,591

Source: company info, Factiva Valuations At IPO (09/02/05) 2005E 2006E Sistema, P/E 19.91 8.5 6.6

Source: Factiva, Renaissance Capital estimates

Company profile of expanding its presence in strategic areas as Sistema is the largest Russian non-resource well as exercising investment opportunities in based financial-industrial group, which manages other industries. Among Sistema's recent acqui- and develops businesses in consumer service sitions are a controlling stake in a regional cable related industries. Sistema holds a 50.5% stake operator, minority shareholdings in six energy in MTS, Russia’s largest mobile telecommunica- companies in Bashkortostan, as well as addition- tions provider, which was listed on NYSE in 2000. al stakes in its subsidiaries Telmos, MTT and MTS accounts for about 80% of Sistema's rev- MBRD. Sistema is also looking for opportunities enues. Sistema owns 49% in ROSNO, the fourth to expand into the Indian mobile telecommunica- largest non-life insurer in Russia, which is run tions market. The major shareholder in the com- jointly with Germany’s Allianz. Sistema's other pany is its founder and president Evgeny businesses include fixed line telecoms, real Yevtushenkov with a 63.1% stake, while its ten estate, retail, technology, banking, and media. top-managers hold 18% of Sistema's shares. Sistema is pursuing an active investment policy

Financials IR contacts 2003 2004 Name Alexey Kurach Revenues, $ million 3,760 5,711 Position Head of IR Phone +7 495 629 2747 Net income, $ million 387 411 Address 10 Leontievsky Pereulok, 125009 Moscow, Russia Source: company info Email [email protected]

1 Based on 2004 earnings Web www.sistema.ru, www.sistema.com

The PBN Company

Lebedyansky

“Investors were excited with the opportunity to buy market capitalization reached $800 million shares of juice producer Lebedyansky. After the IPO overtaking its main rival, juice and dairy pro- the company surpassed Wimm-Bill-Dann in terms of ducer Wimm-Bill-Dann, which has three times market capitalisation.” Lebedyansky's sales. The success of Lebedyansky's IPO exemplifies investors' huge — Vedomosti, March 14, 2005 interest in Russian consumer markets, where per capita juice consumption levels are presently significantly lower than those in other emerging and developed markets. More than 100 investors bought in Lebedyansky, about 75% of which were international organizations. IPO profile Prior to the IPO, Lebedyansky announced that Lebedyansky raised $151 million on RTS in it plans to launch production of mineral water, March 2005, representing the largest domestic and industry experts expect the company to IPO to date. In response to considerable enter the dairy market in the near future as demand the company decided to increase the well. The selling shareholders, however, did amount of the offer from a 16.4% to 19.9% not specify how they plan to use the IPO pro- stake, representing shares of existing holders. ceeds. The offer was priced near the top of the announced range, and valued the company at $760 million. Following the IPO, Lebedyansky's

Key Data Date of IPO March 11, 2005 Stock exchange RTS Underwriters Lead managers Deutsche UFG Form of the offer Ordinary shares Percentage of the share capital offered 19.9% Price range $34.78-$38.46 Offer price $37.23 Total capital raised $151 million Use of proceeds —

Source: company info

The PBN Company

Stock Performance (RTS: LEKZ) Offer price Opening price 1st day 1st week 1st month Current (10/03/05) (11/03/05) close close close (01/12/05) $ 37.23 38.25 39 39.30 38.37 62 change — +2.7% +4.7% +5.6% +3% +66.5%

Source: RTS Market Сapitalization, $ million Pre IPO (estimated) At IPO (10/03/05) Current (01/12/05) 720-770 760 1,282

Source: company info, open sources Valuations At IPO (11/03/05) 2005E 2006E Lebedyansky, P/E 14.21 13.6 10.3

Source: company info, Renaissance Capital estimates

Company profile portfolio of brands with a presence in all price Lebedyansky is a leading Russian manufactur- segments. It also produces branded baby food er of juice and one of the industry’s most and private juice labels for leading Russian dynamically developing enterprises. retail chains. Lebedyansky's major sharehold- Lebedyansky's annual turnover grew from $18 ers are State Duma Deputy Nikolay Bortsov, million in 1998 to $376 million in 2004, and the former General Director of the company, market share from 4% to 30% during the same his son and several top-managers. period. The company's success is due to effective brand promotion, marketing policy and distribution. Lebedyansky has a strong

Financials IR contacts 2003 2004 Name Alexander Kostikov Revenues, $ million 272.6 376 Position Director of Public and Investor Relations Phone 7 495 933 6250 Net income, $ million 34.4 53.3 Address 11, Timura Frunze st., 119021, Moscow, Russia Source: company info Email [email protected] Web www.lebedyansky.ru 1 Based on the 2004 earnings

Khleb Altaya (Pava)

“The latest 'no-name' company to appear from left field IPO profile and persuade investors to take a punt.” Khleb Altaya was the first floatation of a Russian agricultural company and the smallest Russian — The Banker, April 5, 2005 IPO to date, raising $8 million on RTS and MICEX. The company offered investors 10% of its share capital, half of which consisted of newly issued shares and was placed on MICEX, while a stake of existing shareholders was placed on RTS. According to the underwriter, Finam Investment Company, most of the shares were bought by foreign investors. The stock floated at $0.9, at a 5% discount to the bottom of the announced price range, which was attributable to high risks and low level of awareness about the company. Khleb Altaya plans to increase its free float up to 30% by 2007.

Key Data Date of IPO March 22, 2005 Stock exchange MICEX, RTS Underwriters Lead managers Finam Form of the offer Ordinary shares Number of securities offered 8.84 million By the company 4.42 million By existing holders 4.42 million Percentage of the share capital offered 10% Price range $0.95-$1.1 Offer price $0.9 Total capital raised $8 million Use of proceeds Acquisition of strategic assets in the food industry.

Source: company info

The PBN Company

Stock Performance (RTS: AKHA) Offer price Opening 1st day 1st week 1st month Current (22/03/05) price close close close (01/12/05) $ 0.9 0.91 0.91 0.91 0.91 8 change — +1.1% +1.1% +1.1% +1.1% +12.5%

Source: RTS Market Сapitalization, $ million Pre IPO (estimated) At IPO (22/03/05) Current (01/12/05) 80-90 80 70.1

Source: company info, open sources Valuations At IPO (22/03/05) 2005E 2006E Khleb Altaya, P/E 17.41 12.38 8.46

Source: company info, Centre Invest Bank

Company profile expand its activities beyond the Siberian mar- Khleb Altaya is one of Russia's leading grain ket. In June 2005, in order to avoid the 'region- processors and the largest in Siberia. Khleb al flavour' in its name, the company changed Altaya controls about 2.5% of the domestic its name to 'Pava'. Khleb Altaya (Pava) is con- flour market. Following its IPO in 2005, Khleb trolled by its founders, Andrey Igoshin, Altaya received a loan from the IFC for about Chairman of the Board, and Pavel Igoshin. $20 million and completed a bond issue for RUR350 million ($12.5 million). The company plans to acquire grain processing plants in the European part of Russia, which will help it to

Financials IR contacts 2003 2004 Name Larisa Bannikova Revenues, $ million 39 80.2 Position Head of PR department Phone +7 3852 63 01 55 Net income, $ million 1.9 4.6 Address 38, Pushkina st., Barnaul, Russia Source: company info Email [email protected] Web http://www.apkhleb.ru/ 1 Based on the 2004 earnings

Severstal-auto

“This has been a good opportunity for investors to buy attrac- for automotive manufacturing in Russia and tive shares at a reasonable price. Moreover, it's going to be increasing competition from foreign car makers. the most liquid stock in the Russian automotive sector,” Some analysts suggested that the low pricing was due to the size of the offer, which was rela- — Vyacheslav Smolyaninov, UralSib. tively large for a domestic IPO. The company Kommersant, April 25, 2005 sold 8.94 million shares that were held by the existing shareholder, New Deal Investments, at $15.10 per share, raising $135 million. Following the IPO, NDI bought back 4.47 million shares of additional issue, while Severstal-auto's free float increased to 37.4%, making it one of the most liquid stocks in the Russian automotive sector. IPO profile More than 60 investors have bought into Severstal-auto sold 30% of its shares at a 4% dis- Severstal-auto, about 85% of which were foreign count to the bottom of the expected price range. funds. The company said that the situation was attributable to unfavorable market conditions caused by negative news on the world automotive market. Investors were concerned about the prospects

Key Data Date of IPO April 22, 2005 Stock exchange RTS, MICEX Underwriters Lead managers Deutsche UFG Co-managers Troika Dialog Form of the offer Ordinary shares Number of shares offered 8.94 million By the company 0 By existing holders 8.94 million Percentage of the share capital offered 30% Price range $15.80—$17.80 Offer price $15.10 Total capital raised $135 million Use of proceeds Development of the joint venture with SsangYong; Facilitation of production growth.

Source: company info

The PBN Company

Stock Performance (RTS: SVAV) Offer price Opening price 1st day 1st week 1st month Current (22/04/05) close close close (01/12/05) $ 15.1 15.3 15.8 15.6 15.3 17.05 change — +1.3% +4.6% +3.3% +1.3% +12.9%

Source: RTS Market Сapitalization, $ million Pre IPO (estimated) At IPO (22/04/05) Current (01/12/05) 470 450 514.6

Source: company info, open sources Valuations 2004 2005E 2006E Severtal-auto, P/E 7.6 5.5 4.43

Source: Renaissance Capital estimates Company profile range in Russia. In 2004, the company's consoli- Severstal-auto is an automotive holding controlling dated net income increased by 49%, making it the 81% of Ulyanovsky Automotive Plant (UAZ), a most profitable domestic car maker. manufacturer of off-road vehicles, light truck and minibuses, and 91% of Russia's leading automo- Severstal-auto is the automotive division of tive engine maker Zavolzhsky Motor Works (ZMZ). Severstal Group. The major shareholder in Both companies are traded on the RTS. In 2004, Severstal-auto is Cyprus-registered New Deal Severstal-auto established a 50-50 joint venture Investments (NDI), which is 85% controlled by with the Korean automotive company SsangYong Alexei Mordashov, chairman of the board at to assemble SsangYong Rexton SUV off-road cars Severstal-auto and CEO of Severstal, and 15% is and possibly other models of the Korean carmak- controlled by Vadim Shvetsov, general director of er in Russia. In addition, Severstal-auto is an exclu- Severstal-auto. sive distributor of the entire SsangYong model Financials IR contacts 2003 2004 Name Elena Milinova Revenues, $ million 632 799 Position Head of Corporate Reporting and Investor Relations Net income, $ million 36 58 Phone +7 495 540 7766 Address 2/3 Klari Tcetkin st., Source: company info Moscow, Russia Email [email protected] Web www.severstalauto.ru

Pyaterochka

“Pyaterochka does not need money, and none of the pro- requirement to list first on the domestic market, ceeds of the IPO will go back into the company.” although the company denied that the choice was linked to the regulatory environment. — Member of the company's supervisory board. Pyaterochka's GDRs were priced at the bottom Financial Times, July 20, 2005 of the target $13-$16 interval. A 4.5% stake was subject to the over-allotment option, but underwriters sold only a 2% stake. The IPO was viewed as favorable by the company. The offering was placed with institutional investors IPO profile in Europe, the UK and North America. With a The IPO, valuing the company at about $2 bil- free float of over $600 million and better liquid- lion and representing Russia's third largest ity than any other shares in the sector, public offering, underscored investors' Pyaterochka became the first Russian blue appetite for the country's consumer-related chip retail stock. The two owners of the com- companies. The offshore registered holding pany sold 30% of their equity, keeping the pro- company helped the retailer avoid the FSFM's ceeds.

Key Data Date of IPO May 6, 2005 Stock exchange LSE Underwriters Joint global coordinators and bookrunners CSFB, Morgan Stanley Co-lead managers UFG, ING Co-manager Gazprombank Form of offer GDR (each representing 0.25 shares) Number of securities offered 46 million By the company 0 By existing holders 46 million Number of securities subject to the over-allotment option 6.9 million (of which only 3.2 million were sold) Percentage of share capital offered 32% Price range $13-16 Offer price $13 Total capital raised $639 million Use of proceeds The company received no proceeds from the sale of GDRs.

Source: company info, Aton Research

The PBN Company

Stock Performance (LSE: FIVE) Offer price Opening price 1st day 1st week 1st month Current (06/05/05) close close close (01/12/05) $ 13 — 12.5 12.38 13.15 24.5 change — — -3.8% -4.7% +1.1% +88.5%

Source: Factiva Market Сapitalization, $ million Pre IPO (estimated) At IPO (06/05/05) Current (01/12/05) 1,900 - 2,450 1,991 3,523

Source: company info, open sources Valuations At IPO (06/05/05) 2005E 2006E Pyaterochka, P/E 26.91 19.1 12.9

Source: Factiva, Aton Estimates

Company profile in the Russian regions outside the Moscow and Pyaterochka is the leading grocery retailer in St. Petersburg areas and in Kazakhstan and Russia in terms of sales, with a chain of 296 Ukraine (349 franchised stores as of October company-managed stores located in the 1, 2005). Moscow and St-Petersburg areas as of October 1, 2005.

In addition to the company’s own stores, fran- chisees operate Pyaterochka-branded stores

Financials IR contacts 2003 2004 Name Tanja Djurdjevic Revenues, $ million 760 1,106 Position Investor Relations Phone +7 495 783 9794 Net income, $ million 34 74 Fax +7 495 203 0098 Address Sechenovsky per., 6-1, Pyaterochka Holding NV Source: company info Moscow 119034, Russia Email [email protected] 1 Based on the 2004 earnings Web www.e5.ru

Evraz Group

“We did not need money, but we needed shares as acquisition Morgan Stanley, the lead underwriter of the issue, currency. Small factories and plants are more interested in has not exercised its option for a 1.23% stake due our shares than in our money.” to the falling stock price. At the same time, industry analysts considered the IPO successful given the — Alexander Abramov, President, Evraz Group market situation. Financial Times, July 20, 2005 “A non-Russian metals company couldn't make such an offering in the current market conditions,” according to Renaissance Capital.1 Evraz's acquisition of the IPO profile Czech Republic's Vitkowice Steel in July 2005 was Unlike its domestic peer, Mechel, which placed its funded with IPO proceeds. The company granted shares on the NYSE amid booming world steel prices three independent directors hired prior to the offering in October 2004, Evraz's IPO came in unfavorable options to buy shares for up to $5 million at the IPO market conditions. In the first half of 2005, metal stocks and with 1-year options for $800,000 at IPO prices. globally fell by 10-20%, as they were undermined by decreasing steel prices. As a result, Evraz Group float- Prior to the IPO, Evraz Group consolidated its assets ed close to the bottom of the announced price range, at the offshore company Mastercroft, whose shares at $14.50 per GDR, although the offer was oversub- were subsequently transferred to Evraz Group S.A., scribed by 1.5 times. In Q3 of 2005, global steel stocks which is registered in Luxemburg. In order to avoid have recovered on average by 15% with Evraz's price possible conflicts with the FSFM, shares of five of the up to $18 by September 30, which suggests that the Group's enterprises were listed on the RTS. The hold- timing of the offering was unlucky. ing company, however, is not listed in Russia.

Key Data Date of IPO June 2, 2005 Stock exchange LSE Underwriters Global coordinator Morgan Stanley Lead managers Morgan Stanley, CSFB, Renaissance Capital Form of the offer GDR (3 GDRs per ordinary share) Number of securities offered 29.1 million By the company 29.1 million By existing holders 0 Number of securities subject to the over-allotment option 4.31 million Percentage of the share capital offered 8.3% Price range $13.5-$17 Offer price $14.5 Total capital raised $422 million Use of proceeds Acquisition of Palini e Bertoli and Vitkowice Steel.

Source: company info, open sources 1 Source: Bloomberg

The PBN Company

Stock Performance (LSE: EVR)

Offer price Opening price 1st day 1st week 1st month Current (02/06/05) close close close (01/12/05) $ 14.5 — 14.0 14.45 14.40 17.00 change — — –3.4% –0.7% –0.3% +17.2%

Source: Factiva Market Сapitalization, $ million Pre IPO (estimated) At IPO (02/06/05) Current (01/12/05) 4,700 - 6,000 5,100 6,015

Source: company info, open sources Valuations At IPO (02/06/05) 2005E 2006E Evraz, P/E 5.12 5.0 4.5

Source: Factiva, Renaissance Capital Estimates

Company profile announced the acquisition of two large European Evraz Group is a vertically integrated steel and steel producers, Vitkowice Steel (Czech mining company and is Russia's largest steel Republic) and Palini e Bertoli (Italy), which will producer. The group's principal assets include enable the Group to enter the high value-added three of the leading steel plants in Russia: Nizhny European steel plate market. In September 2005, Tagil (NTMK) in the Urals region, West Siberian Evraz established a joint venture with Mitsui for (ZapSib) and Novokuznetsk (NKMK) in Siberia. the development of the Denisovskoye coalfield in Evraz also has several ore mining and process- Yakutia. ing companies, coal mines and transport assets. As a result of assets consolidation carried out in Evraz's president, Alexander Abramov, holds a 2004, Evraz has increased total revenue three 59.11% stake in the company, and his deputies, times and net income by almost five times over Alexander Frolov and Valery Horoshkovsky, hold the previous year. In July-August 2005 Evraz 28.18% and 1.88% respectively.

Financials IR contacts 2003 2004 Name Nikolay Arutyunov Position Director, Investor Relations Revenues, $ million 2,168 5,933 Phone +7 495 232 1370 Net income, $ million 253 1,345 Address 15, bld. 4 and 5, Dolgorukovskaya st., 127006, Moscow, Russia Source: company info Email [email protected] Web www.evraz.com 2 Based on 2004 earnings

Rambler Media

“We wanted to enhance the profile of our company. We raising money was a secondary issue for the have international partners and when we tell them that company. The London listing was more about Rambler is a media company listed in London we feel a gaining status and enhancing Rambler's inter- completely different level of trust towards us.” national profile.

— Irina Gofman, CEO, Rambler Media At the time of the listing, some analysts and investors expressed some concerns about the company, and specifically its level of financial disclosure. Nevertheless, the company suc- ceeded in raising $40 million (albeit to a limited IPO profile number of investors). And while the IPO was Rambler came to the markets at a time of con- priced at $10.25, at the lower end of the tinued investor demand for new Russian expected range, Rambler has seen the price of issues, particularly companies offering expo- its shares increase by close to 40% since the sure to the Russian growth story. In this case, listing.

Key Data Date of IPO June 15, 2005 Stock exchange AIM Underwriters Sole Book Runner Deutsche Bank, UFG Joint-lead Managers Deutsche Bank, UFG, ATON Form of offer Ordinary shares Number of securities offered 3,891,029 By the company 3,000,000 By existing holders 891,029 Number of securities subject to the over-allotment option 466,924 Percentage of share capital offered 26% Price range $10.00–$12.50 Offer price $10.25 Total capital raised $40 million

Source: company info, open sources

The PBN Company

Stock Performance (AIM: RMG) Offer price Opening price 1st day 1st week 1st month Current (15/06/05) close close close (01/12/05) $ 10.25 11.20 11.55 12.15 12.25 14.75 change — +9.3% +12.7% +18.5% +19.5% +43.9%

Source: LSE Market Сapitalization, $ million Pre IPO (estimated) At IPO (15/06/05) Current (01/12/05) 1,900 - 2,450 153.50 220.90

Source: company info, open sources Valuations At IPO (15/06/05) 2005E 2006E Rambler Media, P/E — — 37.8

Source: open sources

Company profile 'Lenta.ru'; broadband ISP 'Rambler Telecom'; Rambler Media is an integrated and diversified interactive advertising company 'Index20'; Russian language media, entertainment, serv- mobile content service provider 'SMXCOM'; ices and content delivery company with three and entertainment TV network 'RamblerTV'. main segments: internet services; mobile value added services; and television broadcast. Rambler Media operates businesses including the Russian language internet portal and search engine rambler.ru; on-line news site

Financials IR contacts 2003 2004 Name Nikolas Duperrier Revenues, $ million 4.950 12.505 Position IR Manager Phone +44 (0) 20 7321 5024 Net income, $ million –3.956 –4.412 Fax +44 (0) 20 7321 5020 Address 30, St. James Square Source: company info London, UK Email [email protected] Web www.rambler.ru

Novatek

"The demand for this transaction in terms of size and at $19, up 13% from the sale price. Following the quality was among the best seen for any transaction in rush, UBS AG and Morgan Stanley, which man- the last 24 months." aged the offer, exercised an option to sell an additional 1.7% stake, raising total IPO proceeds to — Henrik Gobel, Head of European Equity $966 million and the company's free float to 19%. Syndicate at Morgan Stanley. The offer, representing the second largest Russian Bloomberg, July 21, 2005 IPO to date after Sistema's $1.56 billion floatation in February, was more than 12 times oversubscribed and valued the company at nearly $5.5 billion. IPO profile Notwithstanding investors’ concerns about the Voracious demand for Novatek's IPO suggested company’s relationship with Gazprom, Novatek’s that foreign investors are not as worried about the IPO was a success. It was largely due to the com- Russian government's increasing oversight in the pany's appeal to a broad range of investors seek- natural resources sector as the Western media ing exposure to the world's largest market for gas. alleged after the Yukos affair. Novatek's owners According to the IPO prospectus, the capital raised sold 17.3% of equity in London at $16.75 for each will be used for payment of the debt which GDR, getting the maximum price of the expected emerged in the process of the company's consoli- range. On the first day of trading, Novatek closed dation at the end of 2004.

Key Data Date of IPO July 21, 2005 Stock exchange LSE Underwriters Lead managers Morgan Stanley, UBS AG, CSFB Co-managers Troika-Dialog, Alfa Capital Markets, Vnesheconombank Form of the offer GDR (each representing 0.01 shares) Number of shares offered 52.44 million By the company 0 By existing holders 52.44 million Number of shares subject to the over-allotment option 5.25 million Percentage of the share capital offered 19% Price range $14.75-16.75 Offer price $16.75 Total capital raised $966 million Use of proceeds Debt restructuring.

Source: company info

The PBN Company

Stock Performance (LSE: NVTK) Offer price Opening price 1st day 1st week 1st month Current (21/07/05) close close close (01/12/05) $ 16.75 — 19 20.85 22.6 23.40 change — — +13% +24.5% +34.9% +39.7%

Source: Factiva quotes, LSE Market Сapitalization, $ million Pre IPO (estimated) At IPO (21/07/05) Current (01/12/05) 4,700 5,496 7,105

Source: company info, open sources Valuations At IPO (21/07/05) 2005E 2006E Novatek, P/E 10.61 14 12.7

Source: company info, Renaissance Capital estimates

Company profile duction rates. Novatek will produce about 25-27 OAO Novatek is Russia's largest independent billion cubic meters of gas in 2005 compared gas producer and second-largest natural gas with 20.9 billion cubic meters produced in 2004. producer. The company's upstream activities Production will nearly double by 2010, reaching are concentrated in the Yamal-Nenets Region, 45 billion, according to industry analysts' projec- which is the world's largest natural gas produc- tions. Structures linked with the management ing area and accounts for over 90% of Russia's control 68.3% of the company, 29% of which is natural gas production and one third of the held by its CEO Leonid Mikhelson. world's gas production. Novatek has about 583 Vnesheconombank and IFC have minority inter- billion cubic meters of natural gas reserves, ests of 5.6% and 1%, respectively. enough for more than 20 years at current pro-

Financials IR contacts 2003 2004 Name Alexey Ivanov Revenues, $ million 562.8 877 Position Investor Relations Officer Phone +7 495 730 60 20 Net income, $ million 107 198 Address 8, 2-nd Brestskaya street, 125047, Moscow, Russia Source: company info Email [email protected] Web www.novatek.ru 1 Based on 2005E earnings ($479.9 million)

Urals Energy

“Exploration drilling is a kind of activity that could not be reserves are unproven, the offering valued the funded by borrowing. If we don't find anything, it will be a company’s proven reserves at approximately $4 problem to pay off the debt. That is why we don't finance per barrel, among the most expensive given that geological exploration with loans, but raise money through in July 2005 the company had purchased the share capital.” Arcticneft oil company from LUKoil at $1 per barrel. Urals Energy sold 26.7 million new shares, — William Thomas, CEO and Co-founder representing 31% of its capital, close to the high of Urals Energy. end of the $3.2–$4.45 indicative range. The stock Vedomosti, August 23, 2005 was 5 times oversubscribed and opened with a 5% premium to the offer price. Several large IPO profile international investment funds purchased the Booming world oil prices and the limited number company's shares. Following the IPO, lead of Russian oil & gas stocks available have con- underwriter Morgan Stanley exercised an over- tributed to investors' enthusiasm toward Urals allotment option for an additional 4 million shares, Energy's offering in London, which has one of the increasing the free float to 35% and raising capi- highest derivatives among Russian IPO stock. tal to $132 million. Urals Energy aims to increase Despite the fact that Urals Energy's largest oil market capitalization up to $1 billion in two years.

Key Data Date of IPO August 4, 2005 Stock exchange AIM Underwriters Lead managers Morgan Stanley Co-managers Form of offer Ordinary shares Number of securities offered 26.7 million By the company 26.7 million By existing holders 0 Number of securities subject to the over-allotment option 4 million Percentage of share capital offered 35% Price range $3.2–$4.45 Offer price $4.2 Total capital raised $131.7 million Use of proceeds Development of existing projects, particularly exploration of Arcticneft's oil reserves; financing further acquisitions.

Source: company info

The PBN Company

Stock Performance (AIM: UEN) Offer price Opening price 1st day 1st week 1st month Current (04/08/05) close close close (01/12/05) $ 4.2 4.41 4.38 4.52 4.57 — change — +5% +4.2% +7.6% +8.8% —

Source: Factiva Market Сapitalization, $ million Pre IPO (estimated) At IPO (04/08/05) Current (01/12/05) 256 356 225.8

Source: company info, open sources

Company profile approximately 110 million tons (850 million bar- Urals Energy is an independent exploration and rels). Urals Energy is actively increasing and diver- production company, incorporated in Cyprus. Its sifying its reserve and production portfolio through principal assets and operations are on Sakhalin acquisitions of additional assets. The company Island, the Komi Republic in Timan-Pechora and plans to participate in auctions for new subsoil the Republic of Udmurtia. The company's five pro- fields in the Nenets Autonomous District and the duction subsidiaries in Russia have proven and Republics of Komi and Udmurtia. probable reserves of 15 million tons of oil (112 million barrels). They produced approximately 9,900 The company's largest shareholders are Chairman barrels of oil per day as of the end of 2005. The Vyatcheslav Rovnenko and Director Georgy company exports approximately 80% of its output. Ramzaitcev, holding 22% and 20%, respectively. Urals Energy's largest asset is Petrosakh, the The former son-in-law of Boris Yeltsin, Leonid owner of an exploration license at the Sakhalin-6 Dyachenko, a director and president of the compa- oilfield, which has gross prospective oil reserves of ny, holds 7.5% of Urals Energy.

Financials IR contacts 2004 1H 2005 Name Stephen Buscher Revenues, $ million 8.18 28 Position Chief Financial Officer Phone +7 495 795 0391 Net income, $ million - 3.67 – 0.365 Address 6 Oktyabrskaya st., Moscow, 127018, Russia Source: company info Email [email protected] Web www.uralsenergy.com

Amtel-Vredestein

"The placement appears to have been done at 15 per The company's recent flotation in London actual- cent below the lower end of the indicative price range due ly bucked the trend of Russian public offerings to an initial overvaluation, as the asking price implied a this year, most of which were met with strong premium to global peers." investor demand. The shares were placed at $11, which was below the expected price range. —Tatiana Kapoustina, Analyst at Aton Capital, The Financial Times, November 15, 2005 One person close to the transaction attributed the lower than expected pricing at least in part to the negative financial results from Finland's Nokian Tyres, a competitor to Amtel-Vredestein. IPO profile Notwithstanding the low price, the growth Amtel-Vredestein is one of the largest tyre manu- prospects in Russia and in Amtel-Vredestein's facturers in Europe, and the first of the tyre com- strong industry make the company an attractive panies with large manufacturing facilities in the buy for investors looking to gain exposure to the countries of the former Soviet Union to do an IPO. developing automotive sector.

Key Data Date of IPO November 18, 2005 Stock exchange LSE Underwriters Joint Global Coordinators UBS Investment Bank, Alfa Capital Markets Co-managers ING Bank and Troika Dialog Form of offer Global Depositary Receipts Number of securities offered 18.3 million By the company 13.9 million By existing holders 4.4 million Number of securities subject to the over-allotment option 2.75 million Percentage of share capital offered 27.1% Price range $13.00–$16.00 Offer price $11.00 Total capital raised $201 million Use of proceeds To pay down debt

Source: open sources

The PBN Company

Stock Performance (LSE: AMV) Offer price Opening price 1st day 1st week 1st month Current (18/11/05) close close close (01/12/05) $ 11 — 11 11.15 N/A 10.75 change — — -1.3% +1.4% N/A -2.3%

Source: LSE Market Сapitalization, $ million Pre IPO (estimated) At IPO (18/11/05) Current (31/10/05) — 742.5 725.6

Source: open sources

Company profile In April 2005, the Group acquired the Dutch pre- Amtel-Vredestein Group is one of the largest tyre mium-class tyre manufacturer, Vredestein manufacturers in Europe. Operational facilities of Banden. Vredestein's primary operating facilities the Group are located in Russia and Holland. The are based in Holland; it further outsources its Group currently comprises a total of six enterpris- operations to Malaysia, India, Thailand and es: three tyre complexes in Russia (Amtel- Indonesia. Vredestein Povolzhe, Kirov; Amtel-Chernozemye, Voronezh; Amtel-Sibir, Krasnoyarsk); a tyre plant in Holland Banden produces UHP (Ultra High Performance) (Vredestein Banden); and two chemical plants in and HP (High Performance) tyres. The compa- Russia (Amtel-Kuzbass, Kemerovo and Amtel- ny's distribution network extends through Europe Carbon, Volgograd). with about 30% of sales realised in Germany; the company's products are also sold in North The Group's Russian enterprises produce a wide America and South-East Asia. range of tyres for passenger cars, trucks and light trucks, agricultural, aviation and other specialized machinery, as well as motorcycles and bicycles.

Financials IR contacts 2003 2004 Position Public and Investor Relations Revenues, $ million 407 499 Phone +7 495 981 9818 Address 45, Kutuzovskiy prospect, Net income, $ million 10 5 Moscow, Russia Email [email protected] Source: company info Web www.amtel-vredestein.ru

IMS Group

“IMS Group is one of the leading marketing and sales services The issue was oversubscribed and the placing groups operating in Russia and the CIS and the AIM listing price was fixed at the middle of price corridor. In will enable the Group to build out the business development the 10-day period after the IPO, the share price plan, to grow our emerging markets business whilst also consid- increased by 7.6%. ering acquisition opportunities” The management considers the IPO to have been Greg Thain, Chairman, IMS Group, a success, with the very solid base of European The IMS Group's First Day of Trading Press release, financial institutions invested into the company. 6 December 2005 The company's valuation at IPO was one of the highest among its peers in the international media IPO profile sector that reflects both the company's past per- IMS Group is one of the very latest IPOs related formance and its significant potential for growth. to the Russian consumer boom. The Company's shares were admitted to trading on AIM on 6 One of the most important IPO objectives of the December 2005. company was to stimulate and retain its key employees, most of which are young Russians of IMS Group raised $26.3 million through a placing 35 years and below. As a result of the IPO, 5 top of 8 million ordinary shares at a placing price of executives of IMS Group were valued at $1 mil- $3.3 per share. The company's market capital- lion and higher. Another 20 employees have ization comprised approximately $100 million fol- shares and share options ranging in value from lowing admission to trading. $50 to $1,000,000.

Key Data Date of IPO 6 December 2005 Stock Exchange AIM Lead manager Canaccord Capital Europe Form of the offer Ordinary shares Number of shares offered 8 million By the Company 4,215,000 By existing shareholders 3,875,000 Percentage of the share capital offered 26.4% Price range $3.11 - $3.46 Offer price $3.29 Total capital raised $26.3 million Use of proceeds Acquisitions of marketing businesses in Russia, India, Turkey, Hungary and other emerging markets

Source: open sources

The PBN Company

Stock Performance (AIM: IMSG.L) Offer price Opening price 1st day 1st week 1st month Current (06/12/05) (07/12/05) close close close (16/12/05) GBp 190 190.5 191.5 208 N/A 204.5 change — +0.3% +0.8% +9.5% — +7.6%

Source: company info, open sources Market Сapitalization, $ million Pre IPO (estimated) At IPO (06/12/05) Current (16/12/05) 65 99.6 109.7

Source: LSE, Bloomberg, company info Valuations At IPO (06/12/05) 2005E 2006E IMSG, P/E — 27.1 16.7

Source: Canaccord Capital estimates

Company profile The company's clients are blue-chip multination- International Marketing & Sales Group Plc, incor- al and Russian companies operating in FMCG, porated in Ireland, is one of the leading compa- telecommunications, retail trade, banking and nies offering a range of sales and marketing serv- finance, automotive, consumer electronics and ices to the Russian market and increasingly to pharmaceutical industries. The portfolio of servic- emerging CIS markets. es includes merchandising and sales support, consumer and trade promotions, consulting and The company was founded in 1996 by its current market research, direct marketing and CRM. Chairman and Chief Executive Officer, Gregory Thain. Over the last three years, IMS Group has IMS Group currently has twelve offices in Russia developed rapidly with growth in EBITDA at a rate and the CIS and employs over 450 full-time pro- in excess of 100% per annum. fessionals.

Financials IR contacts 2003 2004 2005 2006 Name Alexander Utochkin Turnover, Position Senior Economist Phone +7 495 380 0727 $ million 12.05 21.95 43.78 69.06 Address 13, 2nd Zvenigorodskaya st., building 43, Net income, 6th floor, 123022, Moscow, Russia $ million 0.40 1.43 3.69 6.00 Email [email protected] Web www.imsg.co.uk Source: company info

Novolipetsk (NLMK)

kets and forecasts for steel prices to fall in 2006. “We are delighted that [our] secondary offering has attracted NLMK's listing prompted significant coverage in such strong interest from international institutional investors. the financial press about the risks of investing in Novolipetsk Steel has a clear growth strategy and a deep com- the company. There were several references to mitment to continuing to create significant value for all our the “26 pages of risk factors” in the company shareholders." prospectus, which covered risks ranging from a price-fixing investigation, potential conflicts of — Vladimir Lisin, Chairman, Novolipetsk interest and substantial commitments to fund public services in Lipetsk.

IPO profile Nevertheless, the IPO was generally seen as a Novolipetsk was the third Russian steel company success. The decision to list in London was less to come to market, following Evrazholding earlier about raising capital than it was about raising the in 2005 and Mechel in 2004. The offer, which international profile of the company. However, was more than three times oversubscribed, met while in London, Chairman Vladimir Lisin reasonable investor demand and was priced in described the company's extensive investment line with most analyst expectations at $14.50. plans in the near and medium-term.

The offer was taken up predominantly by global "We plan to continue to consider acquisitions of emerging markets investors and industry funds. other businesses and assets, including steel pro- Investor enthusiasm for the stock was held back to ducers and suppliers of raw materials, in accor- some extent by instability in the world metal mar- dance with our development strategy", said Lisin.

Key Data Date of IPO 9 December 2005 Stock exchange LSE Underwriters Joint Bookrunners UBS Limited, Merrill Lynch International Co-lead managers Alfa Capital Markets Form of offer GDS (each representing ten ordinary shares) Number of securities offered 420,000,000 Percentage of the share capital offered 7% Offer price $14.50 Total capital raised $609 million

Source: open sources

The PBN Company

Stock Performance (LSE: NLMK) Offer price Opening price 1st day 1st week 1st month Current (09/12/05) close close close (16/12/05) $ 14.50 — — N/A N/A 14.34 change — — — N/A N/A -1.1%

Source: open sources Market Сapitalization, $ Pre IPO (estimated) At IPO (09/12/05) Current — 8,689 N/A

Source: open sources Valuations At IPO (09/12/05) 2005E 2006E NLMK, P/E — 6.16 10.63

Source: open sources

Company profile The company's product mix includes pig iron, NLMK is a vertically-integrated steel producer. It slabs, hot- and cold-rolled steel, and a variety of has a 97% stake in Stoilensky GOK, Russia's third- value-added products, such as galvanized steel, largest iron ore producer, a 33% stake in KMA- pre-pained steel, electrical steel and other spe- Ruda and 12% in Lebedinsky GOK. The company cialty flat products. In 2004, NLMK had the is becoming increasingly self-sufficient in electrici- largest share (34%) of Russia's cold-rolled steel ty, and in 2004 supplied 37% of its own energy market, and was one of Europe's largest produc- needs. In 2005, NLMK acquired from the Russian ers of electrical steel. state a license for a large coking coal deposit that is expected to be operational by the end of 2008.

Financials IR contacts 2003 2004 Name Anton Bazulev Position Deputy General Director, External Relations Revenues, $ million 2,468 4,539 Phone +7 (495) 915-15-75 Net income, $ million 656 1,773 Address 1/15 Kotelnicheskaya nab., building B, 6 Moscow 109240 Russia Source: company info Email [email protected], [email protected] Web www.nlmksteel.com

LSE

The London Stock Exchange is one of the world's The success of AIM is built on a simplified regulato- foremost equity exchanges and a leading provider ry environment, designed specifically for the needs of services that facilitate the raising of capital and of smaller and growing companies. AIM enables the trading of shares. There are over 3,000 compa- smaller and growing companies to gain access to nies listed in London, with a total market capitalisa- international investors, to raise capital for growth and tion of more than £3.7 trillion. The Exchange is the acquisition, and to enhance their global profile. most international equities exchange, by trading, in Currently there are more than 1,330 companies the world, and Europe's largest pool of liquidity. admitted to AIM (of which 196 are international), with a combined market capitalisation of £37 billion. The Exchange offers a choice of two markets to suit the differing needs of its customers: the Main International companies can list a number of Market and AIM. The Main Market is the products in London, including shares, depositary Exchange's principal market for more established receipts and debt instruments ranging from sim- companies and is currently home to some 1,362 ple eurobonds and credit-linked notes to com- UK companies and 334 overseas companies with plex asset-backed issues, high yield bonds and a total market capitalisation of more than £3.5 tril- convertible bonds. lion. A listing on the Main Market gives companies a ranking alongside some of the world's leading The Exchange has a long association with com- companies and also boasts a concentration of panies from the CIS and Russia, with seven com-

The main differences in the admission criteria for the Main Market and AIM are: Main Market AIM • Minimum 25% shares in public hands • No minimum shares to be in public hands • Normally 3 year trading record required • No trading record requirement • Prior shareholder approval required • No prior shareholder approval for transactions1 for substantial acquisitions and disposals • Pre-vetting of admission documents by the UKLA • Admission documents not pre-vetted by Exchange or UKLA • Sponsors needed for certain transactions • Nominated adviser required at all times • Minimum market capitalisation • No minimum market capitalisation

experienced institutional fund managers keen to panies joining the Exchange in the past year, invest in larger, established companies and high, raising £2.9 billion in total. At the same time, yet less prescriptive standards of regulation which Russian companies also have an opportunity to make it attractive to both companies and investors. be traded on one of the world's leading exchanges for smaller and growing companies. AIM is the Exchange's market for growth companies There are 23 AIM companies with assets and and since its launch in 1995 has become the world's operations in the CIS, including Rambler Media most successful growth market, enabling more than and Urals Energy which joined AIM raising £26 2,000 companies to raise over £20 billion in capital. million and £76 million respectively.

1Not applicable to reverse takeovers

The PBN Company

Russian and CIS companies on the London Stock Exchange's Main Market

List date Company Sub sector 18/11/2005 Amtel-Vredestein Tyres & Rubber 13/12/1996 AO Tatneft Oil & Gas - Exploration & Production 21/10/2004 Efes Breweries International N.V. Beverages - Brewers 08/06/2005 Evraz Group SA Steel 28/10/1996 Gazprom OAO Oil & Gas - Exploration & Production 16/09/1999 JSC Kazkommertsbank Banks 01/12/2005 Kazakhgold Group Gold Mining 12/10/2005 Kazakhmys Other Mineral Extractors & Mines 04/11/2005 Kazkommertsbank Banks 07/05/1997 Lukoil OAO Oil - Integrated 27/07/2005 Novatek OAO Oil & Gas - Exploration & Production 30/09/2003 OMZ Engineering - General 11/05/2005 Pyaterochka Hldg N.V. Food & Drug Retailers 14/02/2005 Sistema JSFC Diversified Industrials 30/09/2003 Utd Heavy Machinery Uralmash-Izhora Engineering - General Main Market AIM “We are delighted to be listed on the Main Market “We are very pleased to be admitted to trading of the London Stock Exchange and were very on AIM, the right market for a company like pleased to receive such a positive reaction to our Rambler Media, which operates in a high growth company from the international investment com- market, and would like to thank investors for their munity. Our decision to join the growing number strong support and interest in our business,” — of leading Russian companies to be listed on the Irina Gofman, CEO of Rambler Media. London Stock Exchange reflects our desire to attract a broad institutional investor base,” — Admission process Mark Gyetvay, CFO of Novatek.2 • All prospective companies need a nominated adviser from AIM's approved register, who will Admission process co-ordinate the admission process and carry out To be admitted to listing on the Exchange's Main due diligence to ensure the company is suitable Market the issuer must: for AIM and that all the necessary information • satisfy the UK Listing Authority's listing rules — about the company is included within the admis- this is a set of specific regulatory requirements for sion document. admission to the Official List, and •An applicant must provide an admission docu- • apply to the Exchange to be admitted to trad- ment that includes information about the compa- ing on the Main Market. ny's directors, their promoters, business activities More detailed information about the listing and financial position. requirements for the Main Market can be • AIM offers a simplified fast-track admission obtained from the Exchange's website and the process for international companies meeting cer- UKLA's website. tain criteria known as the AIM Designated

2 Source: www.londonstockexchange.com

LSE

Markets Route. This means that companies who Annual fees are payable by all companies which have had their securities traded upon an AIM have either equity securities or certificates repre- Designated Market for at least 18 months prior to senting shares admitted to trading. Fees vary the date of admission to AIM can apply to be according to the type of security being admitted admitted without having to publish an admission to market and the domicile of the company being document. The current AIM Designated Markets admitted to market. are the main markets of: Australian Stock Exchange, Euronext, Deutsche Börse, AIM Johannesburg Stock Exchange, Nasdaq, NYSE, An admission fee of £4,180 is payable by all com- Stockholmsbörsen, Swiss Exchange, Toronto panies seeking admission to AIM, and an annual Stock Exchange and the UKLA Official List. fee of £4,180 is payable by all AIM companies.

Fees A fees calculator is available on the London Main Market Stock Exchange website for the calculation of Admission fees are payable on all applications for admission and annual fees for the Main Market securities to be admitted to trading on the and AIM at: London Stock Exchange, based on the market www.londonstockexchange.com/feescalculator capitalisation of those securities at admission.

London Stock Exchange Contacts Jon Edwards, Head of CEE & CIS Tel: +44 (0) 20 7797 1599 Email: [email protected]

Svetlana Rozanova, Manager Russia Tel: +44 (0) 20 7797 4081 Email: [email protected]

Arabela Militaru, Analyst Tel: +44 (0) 20 7797 4208 Email: [email protected]

Regulatory authorities Financial Services Authority (FSA) http://www.fsa.gov.uk

UK Listing Authority (UKLA) — a division of the FSA, which maintains the Official List of the London Stock Exchange's Main Market. http://www.fsa.gov.uk/Pages/Doing/UKLA/

The PBN Company

NASDAQ is the largest U.S. electronic stock mar- NASDAQ is committed to the Russian market. ket. With approximately 3,200 companies listed, In March 2005, it signed agreements with the of which about 10% are non-US listings, NAS- leading Russian Stock Exchanges. A DAQ lists more companies and on average, Memorandum of Cooperation was signed with trades more shares per day than any other U.S. the Moscow Interbank Currency Exchange market. It is home to category-defining compa- (MICEX) and a Memorandum of Understanding nies that are leaders across all areas of business was signed with the RTS Stock Exchange including technology, retail, communications, (RTS). NASDAQ has two Russian companies financial services, transportation, media and listed in on its market, Golden Telecom, with a biotechnology. NASDAQ is the primary market for market cap of £1 billion and Moscow Cable trading NASDAQ-listed stocks. Approximately Com (MOCC), which has a market cap of £50 54% of NASDAQ-listed shares traded are report- million. ed to NASDAQ systems.

NASDAQ National Market Listing Requirements Requirements Initial Listing Continued Listing Standard 1 Standard 2 Standard 3 Standard 1 Standard 2 Marketplace Marketplace Marketplace Marketplace Marketplace Rule 4420 (A) Rule 4420 (b) Rule 4420 (c) Rule 4450 (a) Rule 4450 (b) Stockholders' equity $15 million $30 million N/A $10 million N/A Market value of N/A N/A $75 million1,2 N/A $50 million listed securities or or or Total assets $75 million $50 million and and and Total revenue $75 million $50 million Income from continuing $1 million N/A N/A N/A N/A operations before income taxes (in latest fiscal year or 2 of last 3 fiscal years) Publicly held shares3 1.1 million 1.1 million 1.1 million 750,000 1.1 million Market value of publicly $8 million $18 million $20 million $5 million $15 million held shares Minimum bid price $5 $5 $57 $1 $1 Shareholders 400 400 400 400 400 (round lot holders) 4 Market makers5 334 24 Operating history N/A 2 years N/A N/A N/A Corporate governance6 Yes Yes Yes Yes Yes

1. Issuers listed as of June 29, 2001, may qualify for continued listing under either the new minimum $10 million stockholders' equity standard or the old minimum $4 million net tangible asset standard until November 1, 2002. 2. For initial listing under Standard 3 or continued listing under Standard 2, a company must satisfy one of the following to be in compliance: (a) the market capitalization requirement, or (b) the total assets and the total revenue requirement. 3. Seasoned issuers must meet the market capitalization requirement and the bid price requirement for 90 consecutive trading days prior to applying for listing. 4. Excluding extraordinary and non-recurring items. 5. Public float is defined as total shares outstanding less any shares held by officers, directors, or beneficial owners of 10 percent or more. 6. Round lot holders are considered holders of 100 shares or more. 7. Electronic Communications Networks (ECNs) are not considered active Market Makers. Source: NASDAQ. See www.NASDAQ.com for footnote explanations. RUSSIA’S IPO PIONEERS

NASDAQ

Listing Fees

NASDAQ Capital Market Listing Requirements

Requirements Initial Listing Continued Listing Stockholders' equity1 or $5 million or $2.5 million or Market value of listed securities2 or $50 million or $35 million or Net income from continuing $750,000 $500,000 operations (in latest fiscal year or 2 of the last 3 fiscal years) Publicly held shares3 1 million Market Value of Publicly held shares4 $5 million $1 million Operating history or 1 year or Market value of listed securities2 $50 million Minimum Bid Price2 $4 $1 Shareholders 300 300 (round lot holders)4

The PBN Company

Market Makers5 32 Corporate Governance6 Yes Yes

1. For initial listing, a company must satisfy one of the following to be in compliance: the stockholders' equity requirement, the market value of listed securities requirement or the net income requirement. 2. Seasoned companies qualifying only under market value of listed securities requirement must meet the market value of listed securities and the bid price requirements for 90 consecutive trading days prior to applying for listing. 3. Publicly held shares is defined as total shares outstanding less any shares held by officers, directors or beneficial owners of 10% or more. In the case of ADRs/ADS, for initial inclusion only, at least 100,000 shall be issued. 4. Round lot holders are shareholders of 100 shares or more. 5. An Electronic Communications Network (ECN) is not considered a market maker fo the purpose of these rules. 6. Marketplace Rules 4350 and 4351 Source: NASDAQ. See www.NASDAQ.com for footnote explanations.

NASDAQ support and Services All issuers are provided with an unparalleled level of value added products and services.

In Q3 2005 NASDAQ entered into a joint venture NASDAQ Contact: with Reuters to create the Independent Research Paulina McGroarty Network (IRN). Aimed at improving the quality of Managing Director research information that is disseminated into the Tel: +44 20 7825 5534 market, IRN acts as an intermediary for under-fol- Email: [email protected] lowed public companies seeking to have their equity securities covered by analysts.

NYSE

The New York Stock Exchange is the world's and reporting with the SEC, and complying with leading equities market with a total global market the US corporate governance and transparen- capitalization of $21 trillion. There are about 447 cy regime. non-US listed companies on NYSE, spanning 47 • Recognition of meeting the highest world dis- countries and with a combined global market closure, reporting and governance standards. capitalization of $7.5 trillion. If NYSE's non-US • US trading, ownership, and SEC filings, includ- listed companies were to be ranked as a standing financial statement reconciliations to US alone market, they would be the second largest GAAP, all facilitate the market's benchmarking equities market in the world, after the Exchange the stock against US peers, which in turn can itself. assist in closing valuation gaps that often occur in favor of US peer groups. The NYSE / Russian Federation partnership dates • The NYSE acts as an unparalleled visibility plat- back to the VimpelCom (VIP) IPO on November form for companies in the US community, 15, 1996. The most recent Russian company to amplifying the demand and valuation effects of list on NYSE was Mechel (MTL), which conducted NYSE listing. an IPO on October 29, 2004. Tatneft (TNT), MTS • The NYSE listing and SEC registration provides (MBT), Rostelecom (ROS) and Wimm Bill Dann a flexible acquisition currency in the US. (WBD) are also listed on the Exchange. The total worldwide market capitalization of these compa- NYSE Listings Fees nies exceeds $26 billion. • NYSE listings fees are calculated and based on the shares/ADRs outstanding in the US. A recent study by Doidge, Karolyi and Stulz esti- • The minimum and maximum Listing Fees appli- mated the cross-listing premium for non-U.S. cable the first time an issuer lists a class of com- stocks listed on the major U.S. exchanges at mon shares are $150,000 and $250,000. 31.2%. The cross-listing premium varies across • Minimum and Maximum Continued Listing Fees. countries, with the most significant valuation pre- The minimum and maximum fees applicable on miums going to companies from Canada, annual basis are $38,000 and $500,000. France, Germany, Russia, Singapore, Issuers are billed at $930 per million shares out- Switzerland and the UK. standing in the US.

An NYSE listing offers Russian companies a NYSE Listing Standard long-term enhanced value proposition: The Exchange offers two sets of standards — • Access to the largest and deepest pool of cap- worldwide and domestic — under which non- ital. U.S. companies may qualify for listing. Both • Shareholder value is enhanced directly, through standards include distribution and financial crite- increased demand for the Company's equity. ria. A company must qualify for both the distribu- Many US institutional investors, and most retail tion and financial criteria within that particular investors, prefer, or are restricted to owning, standard. This chart is to be used for an initial US-listed equity securities. The large emerging evaluation only. The Exchange will work with market funds that buy directly may have each company to determine which standards increased appetite for a stock that is registered are best suited to that entity.

The PBN Company

CRITERIA REQUIREMENTS WORLDWIDE DOMESTIC May satisfy either A, B, or C: Distribution Round-Lots Holders 5,000 A. 2,000 U.S. round lot share holders B. 2,200 total shareholders and 100,00 shares monthly trading volume (most recent 6 months) C. 500 total shareholders and 1,000,000 shares monthly trading volume (most recent 12 months) Public Shares 2.5MM 1.1MM Public Market Value $100MM IPO's, Carve-outs & Spin-offs N/A $60MM All other listings N/A $100MM Financials Earnings Aggregate Pre-tax Income for $100MM $10MM last 3 years Minimum Pre-Tax Income in each $25MM $2MM of 2 preceding years of 2 preceding years Valuation/Revenue Test May satisfy either A or B A. Valuation with Cash Flow Test Global Market Capitalization $500MM $500MM Revenues (most recent 12-month $100MM $100MM period) Aggregate Cash Flow for last 3 years $100MM $25MM (all 3 years must be positive) Minimum Cash Flow in each of 2 $25MM N/A preceding years B. Pure Valuation Test Global Market Capitalization $750MM $750MM Revenues (most recent fiscal year) $75MM $75MM Affiliated Company For new entities with a parent or affiliated company listed on the NYSE Global Market Capitalization $500MM $500MM • At least 12 months of operating history Yes Yes • Affiliated listed company is in good standing Yes Yes • Affiliated listed company retains control of the entity Yes Yes

NYSE Contact: David Griffiths Senior Managing Director Tel: +44 20 7025 7881 Email: [email protected]

MICEX

The Moscow Interbank Currency Exchange ket". As a result, trades in non-government secu- (MICEX) is Russia's leading exchange. It serves rities were transferred from the MICEX Stock as a basis for the nationwide system of trading in Market Section, where they had been traded the currency, stocks and derivatives sectors of since 1997. The procedure and the technology of the financial market, covering Moscow and settlements and trades in securities on MICEX SE Russia's largest financial and industrial centers. remained the same, while the functions pertain- Jointly with its partners the MICEX Group (the ing to the organization of trading in corporate MICEX Stock Exchange, the MICEX Settlement securities were distributed between MICEX and House, the National Depositary Center, regional MICEX SE in the following way: exchanges and others), MICEX provides settlement and clearing as well as depositary services • MICEX SE organizes the process of trading, for about 1500 organizations - participants in the work with clients, listing and the development stock market. In terms of the total trade turnover of exchange technologies; (in 2004 — $549 billion with the average daily vol- • MICEX provides clearing services and techno- ume of transactions amounting to $2.2 billion) logical support. MICEX is the largest exchange in Russia, the CIS and Eastern Europe. The MICEX Stock Exchange bases its activities on Russia's Central Bank has used the results from the stock exchange license granted to it in 2004 MICEX in calculating the country's official by the Federal Service for Financial Markets. exchange rate since 1992. The government securities market has about 300 authorized dealers, Daily trades are held on the MICEX Stock who serve seven thousand investors. In 2004, the Exchange in 645 securities of 400 issuers, includ- total volume of transactions in government secu- ing such blue chips as RAO UES, LUKoil, rities reached over $46 billion, including REPO Rostelecom, Mosenergo, Sberbank and deals. Surgutneftegaz, whose total capitalization amounts to about $250 billion. Approximately 2004 annual trading 30% of these securities are already on the MICEX volumes at MICEX SE quotation lists. More than 500 professional participants in the securities market, who repre- Currency market total 350 billion USD sent over one hundred thousand investors, partic- Stock market total 151 billion USD ipate in trading on MICEX SE. Government bond total 47 billion USD Derivatives market total 0.46 billion USD The daily average volume of transactions in secu- MICEX turnover total 549 billion USD rities amounts to 700 million USD (19 billion rubles) which makes up over 80% of the total turnover of In 2003 the MICEX Stock Exchange (MICEX SE) Russia's leading exchange floors. Trades are held was established as a specialized stock floor electronically, using an up-to-date trading and under the program of reorganization of the depositary system, which is connected to regional MICEX Group's stock business. The program trading floors and about 1500 remote terminals in was implemented following the enactment of more than 50 Russian cities. Cash settlements are amendments to the Law "On the securities mar- effected through the MICEX Settlement House,

The PBN Company

Trade volume, Billion USD IPOs and secondary offerings, develops a depositary clearing mechanism of securities and monetary funds and provides consultations at every stage of IPO preparation, including assistance in issue documents. On the technical side, the stock exchange collects purchase bids, automatically closes the deal at the price fixed by the client, and provides settlements on investors' deals, transfer of documents and monetary funds that the client raises through its IPO.

while settlements for securities are effected MICEX also offers some PR and marketing sup- through the National Depositary Center. port, which includes placing information on www.micex.ru, distributing it through Interfax, The total capitalization of the MICEX SE shares RosBusinessConsulting, AK&M, Prime-TASS and market is 253 billion USD. The capitalization of cor- other information agencies as well as organizing porate and regional bonds reached 20 billion USD. presentations on MICEX premises.

MICEX SE developed an effective structure for Fees the placement of bonds of corporate, municipal Listing fees on MICEX SE range from 15,000 to and subfederal issuers, as well as IPOs. Since 60,000 rubles, depending on which list the com- 1999, over 440 issues totaling 630 billion rubles pany is on. Likewise, annual fees range from have been placed at MICEX. 6,000 to 15,000 rubles.

Since 2002, MICEX SE has already had seven Prices for the admission of bonds (corporate, in successful IPOs, exceeding 14 billion rubles. addition to state, regional and municipal) on MICEX Lebedyansky, Severstal-Avto, Irkut, Kalina, SE can range from 0.1% of the volume up to Pharmacy Chain 36.6, RosBusinessConsulting 300,000 rubles, depending on the size of the bond. and Khleb Altaya have conducted IPOs on MICEX. For more information please contact: IPO Project Head Securities can be admitted to trading on MICEX Gennady Margolit, Deputy Director General either through an initial public offering or second- Phone: +7 495 705-9616, Fax: +7 495 745-8127 ary circulation. Secondary circulation of securi- Email: [email protected] ties can be listed or unlisted. Among the requirements taken into account for listing are: financial For operational questions: performance and the stockholders' structure of Leonid Savvinov, Director of Listing Department the issuer, securities' liquidity, total volume of Phone: +7 495 234-4816, Fax: +7 495 745-8127 issue, quality of information disclosure, etc. Email: [email protected]

MICEX SE provides a list of services for clients plan- 125009 Moscow, Russia, Bolshoy Kislovskiy per., 13, ning a public offering. MICEX SE has schemes for Website: http://www.micex.com

RTS (Russian Trading System)

The RTS Stock Exchange (RTS) is Russia's lead- trading floors into a single regulated Russian ing stock exchange in terms of product offerings. securities market. RTS lists leading Russian secu- By the end of 2004, more than 300 securities and rities for purchase by both domestic and foreign bonds traded on RTS. RTS's indicative quotation portfolio investors. RTS ensures efficient market systems comprise about 700 stocks and 500 bills prices for a wide range of stocks and bonds, with issued by Russian companies. RTS in partnership its trading information distributed worldwide with St. Petersburg Stock Exchange executes through the largest financial information services “Gazprom” stock trades. In 2004, total turnover of companies, such as Reuters and Bloomberg. the RTS Group increased by 1.8 times compared to 2003 and reached $37.86 billion. Listing The RTS Stock Exchange provides investors, • 240+ Members; professional market participants and their clients, • 300+ securities of 200+ companies listed on both domestic and foreign, with a wide range of RTS Classic (stock, corporate bonds, municipal opportunities to trade Russian stocks, bonds and and federal bonds, eurobonds, mutual funds); derivatives. According to current legislation, only • Almost 800 OTC-securities of 600+ companies an appropriately licensed Russian company can quoted on RTS Board. work on the local market. Non-residents are welcome to trade Russian securities either as a reg- The RTS Stock Exchange was established in istered client of local brokerages/investment 1995, consolidating several regional securities houses, or by setting up a local subsidiary, getting licensed and joining the appropriate RTS market.

The RTS product line includes a wide variety of products and services offered to investors and market participants, such as:

• RTS Classic Market; • Ruble- and dollar-settlement; • Can be anonymous or non-anonymous; • Quote-driven trading.

RTS Classic Market trades the widest securities list of all Russian exchanges. It provides flexible delivery terms: delivery versus payment (DVP) and free of payment (FOP). Trading on the classic OTC segment of the RTS Stock Exchange began on July 5, 1995.

The PBN Company

• RTS T+0 Market; • Double-auction anonymous market with full preliminary deposition of assets; • Includes trading in “Gazprom” stock; • FORTS - (Futures and Options Trading with Ruble Settlement); • Launched in September 2001; • Fastest growing segment of the RTS; • 87 companies headquartered in Moscow, St. Petersburg, Novosibirsk, Samara, Rostov-on-Don, Kazan and Abakan are registered FORTS members; • 10 futures contracts and 5 futures options are traded; • RTS Board — System used for indicative quotation of securities not listed on the RTS.

Fees, rubles 1. Admission of securities to placement (in the non-listed stock section) including 6000 • cost of document examination 0 • payment for admission to placement 6000 2. Securities fee (clearing fee), including VAT • shares 0.0075% • bonds 0.0075% 3. Securities storage (global certificate) in depositary clearing company, per month 0

Listing procedure costs in rubles (before VAT) To include its securities in the quotation lists, a company has to make a one-time payment of 51,000 for A1 stocks, 40,800 for A2 and 18,000 for B. The cost of maintaining the securities in the lists is 12,000 per year for A1, 9,000 per year for A2 and 6,000 for B list.

Fees for examination of share issue, rubles Share type Nominal cost of all securities in the same category, separate issues of which are listed Up to 100 Up to 500 More than 500 million million million

Ordinary shares 24,000 30,000 42,000 Preferred shares 24,000 30,000 42,000

For more information please contact Oksana Derisheva, Head of RTS Listing Department 127006, Russia, Moscow [email protected] Dolgorukovskaya Str, 38, Bldg. 1 Tel. (495)705-90-31/32 Alexey Fedorov, RTS IPO Department: [email protected]

Research Conducted by The PBN Company

October 2005 — The PBN Company's Guide to the UK and Its Financial Markets: Essential Information for FSU and Other Emerging Market Companies Wanting to Raise Finance in the UK.

March 2005 — Russia: Investment Destination. A confidential survey of 158 foreign investors conducted by The PBN Company for the Foreign Investment Advisory Council and the Russian Ministry of Economic Development and Trade.

October 2004 — The Russian CEO Survey. 175 Russian CEOs speak out on reputation, corporate governance, transparency and raising finance. The PBN Company will conduct a follow-up survey of Russian CEOs in early 2006.

April 2003 — Top 100 Emerging Companies of the Russian Consumer Market. This breakthrough study revealed and analysed the most promising targets for investment throughout all of Russia's consumer-oriented industries.

To obtain copies of any of the above studies, please write to Dominique Winther at [email protected], or visit The PBN Company’s website at http://www.pbnco.com.

ABOUT THE PBN COMPANY

The PBN Company (www.pbnco.com) is the leading strategic communications and financial relations company with a focus on Russia and emerging European markets. The company has offices in Moscow, London, Kiev, Riga, Almaty and Washington DC.

PBN’s clients from the region include: Baltika, Basic Element, Pharmacy Chain 36.6, Renaissance Capital, Rosinter, Rusal, Sberbank, Sibir Energy plc, TNK-BP, Ukreximbank, Ukrainian Mobile Communications, Cardinal Resources plc and the Western NIS Enterprise Fund.

The PBN Company