An analytical review (introductory document) is a valuable tool in raising awareness of potential investors which may be published both to mark admittance to the holding and regularly in the future.

High quality and orderly presentation of the information relating to your business within a holding forwarded to the investors are a key component to complete understanding of your business activities, strategy and prospects, as well as of the holding as a whole. This may positively affect the liquidity and cost dynamics of the joint shares and fundraising.

Maximizing liquidity will be one of the company’s and the holding’s essential joint tasks once the company enters the market. However, planning this trend may begin at the admittance stage in order to positively affect trading activity from the very start.

Acquiring the status of an economically sound project to be financed within a holding company entails significant changes in company management techniques. The company will then have third-party shareholders protected by the Companies Act and the Acquisition Code. This imposes certain responsibilities on the management and the major shareholders. Depending on the company’s stock ownership structure, its full acquisition may become a reality. The company management must be prepared to take such risks and to adhere to stricter transparency requirements and reporting standards, to say nothing of the accompanying inputs of time and money. Besides, the company will have to make its business information more public than what is required of a non-public company and manage business and conduct transactions according to the Exchange Regulations.

A company within a holding company operating on the exchange is also obliged to keep the holding company informed and updated on a regular basis. The holding company, on the other hand, provides information regarding the financial standing, output, and business aspect of the market, which, of course, does not always comply with the desire to protect trade secrets. In reality, most of the companies find a way to reconcile their business needs with the regulatory requirements. However, we must keep in mind that this responsibility is a part of what it is to be a foreign financing project, and as such it must be taken into account. Apart from adhering to regulatory requirements, the company must find time and resources necessary for effective communication with the holding company and the market.

As soon as holding companies are entered into the Official List of the Exchange, they are obliged to adhere to the Principles of Good Corporate Governance stipulated in the UK Corporate Governance Code (formerly — the Uniform Code) — a set of rules intended to ensure that each listed company has an effective Board of Directors acting in the best interest of all persons involved in the company operations.

Having thoroughly examined the company status quo, we may find it helpful to reorganize the group structure (of the holding company as a whole or parts thereof) so as to optimize the company’s tax liabilities.

Being part of a holding, a company must have management data and financial report systems at its disposal which enable it to generate monthly management reports (within three weeks after EOM) and to fulfill its obligations to provide reports stipulated by the Exchange Regulations. It is of particular importance when the market must be notified of changes in the company’s performance indicators with regard to market expectations. If the company has no such system at its disposal or the existing system does not meet the financial holding company system requirements, the company will have to implement one that does.

In order to cut labor costs (and losses) while eliminating any problems that could arise prior to the expert evaluation, we may require a third-party accounting firm to assist with creating, analyzing, and presenting a report on the sufficiency of the company’s financial statements. It is important to emphasize that a company cannot have VAT and income tax payables upon entering a holding company.

The accounting reports data must be kept current! Consequently, we thoroughly examine all accounting reports before integrating a company into one of our holdings.

If the accounting and reporting policy is to be amended, the information must be transformed as soon as possible in order to provide historical data that the reports will be based on.

When integrating a company into one of our holdings, we inspect and recommend the standardization of labor agreements according to the internationally accepted format to ensure their conformance with exchange requirements.

The first type of financial reports: «Private» financial reports that are not intended for publication, mostly required for the purposes of international standardization, as well as financial project and IPO correction. As a rule, these documents are transacted for the purposes of financial statistics assessment, systems analysis, analysis of control techniques, and estimation of current assets.

The second type of financial reports: Publicly available financial data that has to be provided as part of the holding admittance document. Firstly, it concerns the disclosure of auditor-certified financial statistics and, if necessary, interim financial statements. It often includes preliminary financial information and much less frequently — financial estimates.

A full report consists of a detailed business activity report which emphasizes the company’s financial indicators, economic standards, and core business activities. Sometimes a special commercial and technical evaluation report is required to analyze the core activity of the company and the respective market. A full report does not contain future estimates (they constitute a separate report).

A full report is a private document usually intended only for the holding company and for the company itself. It is not brought to public attention (with the exception of certain advisors) including potential investors. The expert evaluation required for the preparation of this report could prove quite burdensome and inconvenient for the company and the evaluation itself may take a significantly long time.

This work is often carried out alongside many other types of work involved in preparing for standardization and IPO. All of these tasks will require the attention of the management, in addition to their everyday responsibilities for supervising the company’s current activities. Before beginning the financial standardization process, the management should consider whether the company possesses sufficient internal resources to meet these needs simultaneously or whether they should temporarily bring in additional resources to ensure more effective process management.

It might be more convenient for your company to set up a «data room» containing financial information before the main work is begun. In this case we recommend that you contact our accounting firm in charge of the reports relating to your company’s holding placing to request a preliminary list of the required financial information items that will prove helpful in performing this work.

Scope of Full Report

A full report is expected to contain a detailed outline of the company structure and operation. The actual scope of a full report has to be approved by London Issuing as well as by you and the accounting firm in charge of the reports.

Although the report is created in the most expansive manner possible, in some cases its scope may be limited. For instance, if the company was not engaged in commercial activities (e. g. «cash» or investment companies) or when the information is obtained from other sources, e. g. based on the findings of a commercial or technical assessment.

Since the amount of work is determined individually for every case, a full report usually contains the following company information:

• Dynamics of financial indicators;
• Taxation;
• Core activities;

• Financial reporting systems;
• Accounting reports policy;
• Management and employees.