NewConnect OPPORTUNITY FOR SME COMPANIES. Vienna, 30 June 2016

Transcription

1 NewConnect OPPORTUNITY FOR SME COMPANIES Vienna, 30 June 2016

2 SMALL AND MEDIUM-SIZED ENTERPRISES IN POLAND Poland s economic growth over the last 25 years has been remarkable. In that period, Poland has more than doubled its income per capita and became a European growth leader at the same time being the only EU country to avoid a recession in 2009 Small and medium-sized enterprises (SMEs) play an essential role in the Polish and the European economy. According to latest data published by the Polish Agency for Enterprise Development (PARP), such companies generate nearly ¾ of Poland s GDP According to IBRD s report Doing Business in Poland 2015, micro, small and medium-size enterprises represent 99% of all economic entities and provide work for 70% of people employed in non-financial enterprises. /According to the Central Statistical Office of Poland (GUS) latest data % Polish enterprises were small and medium-sized/ Poland is one of the EU member states with the highest entrepreneurship factor. More than 17% of adults plan to start a business within three years (the EU average is 14%). According to statistics, while starting a business is no guarantee of success, the average business survival rate in Poland is not at all low at 76% in the first year and 32% in five years* These indicators are relevant to investors on alternative markets, including NewConnect, which list startups and companies with a short track record *Source: PARP, 2012 data from The Report on the Condition of the Small and Medium-Sized Enterprise Sector in Poland in , PARP,

3 SMALL AND MEDIUM-SIZED ENTERPRISES IN POLAND GDP contribution of categories of enterprises by number of employees in Poland LARGE ENTERPRISES; 24,5% TAXES AND CHARGES; 11,4% GROSS VALUE ADDED GENERATED BY SMALL AND MEDIUM - SIZED ENTERPRISES; 48,5% MICRO; 29,7% SMALL; 7,8% MEDIUM-SIZED; 11,0% GROSS VALUE ADDED GENERATED BY OTHER ENTITIES; 15,6% Source: PARP, 2012 data from The Report on the Condition of the Small and Medium-Sized Enterprise Sector in Poland in , PARP,

4 NEWCONNECT AS A MARKET FOR SMEs BASIC ASSUMPTIONS SMEs a great potential for further growth; a driving force of the Polish economy strong demand for capital NewConnect Benefits stemming from the NewConnect market for SMEs Providing solutions for the expansion of high-potential, young and innovative companies Attracting individual investors Allocating more resources for R&D Gaining increased reliability to banks and customers Serving as a preparatory step towards the GPW Main List for the national economy Developing companies that account for a substantial part of the GDP Strengthening Polish stock market position in the CEE region as an efficient network of investors, companies and clients 4

5 NEWCONNECT AS A MARKET FOR SMEs BASIC ASSUMPTIONS NewConnect market has been in operation since 2007 NewConnect was established by the Warsaw Stock Exchange as an alternative trading system (according to MIFID classification MTF) intended for small and medium, dynamically growing enterprises with a clear growth strategy, which need a capital injection between a few hundred thousand and several million zlotys to propel their development NewConnect is an intermediary step for companies which aim form the regulated market far more demanding in terms of admission requirements and mandatory disclosures NewConnect operates on the basis of the Act on trading in financial instruments, Regulation of the Minister of Finance on conditions to be met by the alternative trading system, and the Rules of the Alternative Trading System adopted by the GPW management Board Companies listed on NewConnect market are public companies within the meaning of applicable legal regulations as their shares are subject to obligatory dematerialisation and registration in the National Depository for Securities 5

6 NEWCONNECT MARKET S BALANCE at the end of issuers (including 10 foreign) with a total capitalization of more than 2 bln EUR were listed on NewConnect individual investors are in the lead on NewConnect market as they generate approx. 70% of turnover NewConnect is noticed by international institutions, including World Bank, FESE, which indicate the Polish market as a good example of an alternative market for small and medium-sized enterprises performing an important role in raising capital for development * in the development of NewConnect, the GPW has established cooperation with various Polish organizations and institutions (Polish National Chamber of Statutory Auditors, Polish Agency for Enterprise Development, Institute of Accounting and Taxation, Association of Individual Investors) Newconnect is a path to GPW Main Market for an increasing number of companies a total of 50 companies leveraged their potential and became listed in the regulated market *World Bank Report SME Exchanges in Emerging Market Economies: A Stocktaking of Development Practice, January 2015; EU IPO Report Rebuilding IPOs in Europe, Creating jobs and growth in European capital markets issued by FESE and European Issuers and European Private Equity & Venture Capital Association, March

7 NEWCONNECT IN NUMBERS NewConnect in KEY DATA Number of IPOs number of delistings (including transfers to Main Market) number of companies at the year's end capitalisation at the year's end (EUR mln) 13 companies transfered their listings to GPW Main Market in

8 NEWCONNECT IN NUMBERS Return rate of NewConnect companies, >0-<=25% >25-<= 50% >50-<=100% >100%- <=250% >250- <=500% >500- <=1000% >1000% Number of companies 8

9 NEWCONNECT IN NUMBERS Amount (EUR mln) and number of dividend payments, ,82 15,35 20,00 17,03 18,59 15, ,55 0,92 3,91 7, ,00 5, ,00-5,00-10,00 number of companies at the year's end Value of dividends paid out (EUR mln) Number of dividends - total 9

10 NEWCONNECT AND OTHER EUROPEAN MTFs - according to FESE data Number of companies at the end of 2015 UK Poland 418 Euronext 200 Nasdaq 196 Germany 157 Luxembourg 137 Italy Spain Norway Ireland Hungary Cyprus Austria Turkey Greece UK Germany Ireland Euronext Nasdaq Italy Poland Austria Spain Norway Luxemb Cyprus Turkey Greece Capitalisation at 2015 end (mln EUR) UK Turkey Euronext Nasdaq Germany Ireland Norway Italy Poland Austria Hungary Luxembourg Cyprus Greece Spain Turnover in 2015 (mln EUR) Liquidity=Turnover/Capitalisation 2015 Number of IPO in 2015 Value of IPO in 2015 (mln EUR) Norway 75% Nasdaq 48% Euronext 43% UK 43% Italy 26% Poland 23% Germany 9% Ireland 9% Austria 1% Luxembourg 1% Greece 0% Spain 0% Cyprus 0% Nasdaq UK Poland Euronext Italy Spain Turkey Romania Germany Norway Ireland Luxemb Austria Nasdaq UK Italy Spain Euronext Norway Turkey Germany Poland Ireland Luxembourg Austria Romania

11 NEWCONNECT SUPERVISION ARCHITECTURE: DIVISION OF COMPETENCES BETWEEN GPW AND PFSA SUPERVISION STRUCTURE POLISH FINANCIAL SUPERVISION AUTHORITY WARSAW STOCK EXCHANGE - ATS ORGANISER ISSUERS AUTHORIZED ADVISORS 11

12 THE ROLE OF AUTHORISED ADVISORS AUTHORIZED ADVISORS Authorised Advisors are a key pillar of the NewConnect market architecture. The Authorised Advisor model is based on LSE AIM s Nominated Advisors (Nomads), taking into account the obvious differences of scale and historical tradition as well as functional characteristics between these two markets. The main responsibilities of Authorised Advisors defined in the ATS Rules include: to check the issuer s fulfilment of all conditions required for the introduction of the company s financial instruments to trading in the ATS; to ensure that the prepared information document conforms to the requirements under the ATS Rules; to make a declaration to the effect that the information document is prepared in compliance with the requirements under the ATS Rules; to support the issuer in its compliance with the disclosure obligations under the ATS Rules; to provide the issuer with on-going advice with respect to its instruments listed in the ATS. The Authorised Advisors are supervised by GPW. The supervision is two-pronged: on-going supervision including on-going monitoring of Authorised Advisors and imposing sanctions under the ATS Rules in the event of any identified breach of the applicable regulations; periodic supervision including annual assessment of Authorised Advisors mainly according to qualitative criteria including the quality of introduced companies, the quality of documents prepared by Authorised Advisors for the purpose of the introduction, compliance of the introduced issuers with the disclosure obligations, and other activities of Authorised Advisors in support of the development of the ATS. 12

13 THE ROLE OF AUTHORISED ADVISORS AUTHORIZED ADVISORS There were 80 Authorised Advisors as at the end of 2015 The Authorised Advisor community is very diverse in terms of the scope of activity (ranging from companies whose core business is to operate as Authorised Advisors to companies for which it is an auxiliary business line), legal form (brokers, law firms, consultancies, auditors, etc.), size (revenue levels and staff numbers) and activity on NewConnect (number of introduced and assisted companies) brokerage houses 20% auditors 4% law firms 11% consultancies 65% consultancies law firms brokerage houses auditors 13

14 DISCLOSURE OBLIGATIONS OF NEWCONNECT ISSUERS AND CHANGES UNDER THE MARKET ABUSE REGULATION TILL 3 JULY 2016 scope of current and periodical reports disclosed by issuers of shares listed on NewConnect and issuers seeking introduction to trading is included in the ATS Rules compliance with the disclosure obligations is supervised by GPW, which may impose penalties under the rules in the event of issuers non-compliance or inadequate compliance with the disclosure obligations changes as of 3 July EU Market Abuse Regulation implementing a common regulatory framework on market abuse as well as measures to prevent market abuse to ensure the integrity of financial markets in the EU AMENDMENTS AFTER 3 JULY 2016 The key changes following the implementation of MAR include: Direct effect of most of the MAR provisions in all member states Scope of MAR covers alternative trading systems (MTFs) PFSA will take over direct supervision over ATS issuers compliance with such obligations (in cooperation with GPW) WSE will still be performing its supervisory functions with regard to obligations set forth in the ATS Rules (including periodic reports) 14

15 ENTRY INTO NEWCONNECT CURRENT FORMAL REQUIREMENTS CURRENT FORMAL REQUIREMENTS 15

16 TYPES OF LISTINGS AVAILABLE ON NEWCONNECT PRIVATE PLACEMENT a private offering targeted at maximum of 149 entities or individuals. Regardless of the size of the issue, admission to trading is based on a brief informational document approved by an Authorized Adviser by the Warsaw Stock Exchange; official prospectus approved by competent authority is not required PUBLIC SHARE ISSUE this path involves the same admission procedures as those applicable on the regular market, in particular approval of the stock offering including the prospectus by the competent authority 16

17 NEWCONNECT BEST PRACTICE CODE OF BEST PRACTICE FOR COMPANIES LISTED ON NEWCONNECT MARKET CODE OF BEST PRACTICE FOR AUTHORISED ADVISORS ON NEWCONNECT MARKET principles setting high standards for the disclosure policy and relations with Authorised Advisors comply or explain reporting code of behaviour for Authorised Advisors on the NewConnect market in relations with issuers and themarket environment Under the revision process 17

18 WHO INVESTS IN NEWCONNECT COMPANIES? individual investors with a bigger risk appetite looking for above-average return on investments hedging funds closed-end funds asset management companies private equity and venture capital funds Share of investor categories in turnover on NewConnect, % 80% % 40% % 0% Foreign Individual Institutional 18

19 WORLD BANK REPORT SME EXCHANGES IN EMERGING MARKET ECONOMIES. A STOCKTAKING OF DEVELOPMENT PRACTICES - WORLD BANK REPORT In January 2015, the World Bank published a report on organised markets for small and mediumsized enterprises in emerging market economies. The report summarises the World Bank s longterm research project. The report emphasises the importance of small and medium-sized enterprises in building up emerging market economies and points out that SMEs must be supported in many ways, including access to capital. The World Bank has analysed seven SME markets: NSE IndiaEmerge (India), JSE AltX (South Africa), GreTai Securities Market (Taipei), BM&FBOVESPA BovespaMais (Brazil), GPW NewConnect (Poland), BIST ECM (Turkey) and TSX Venture Exchange (Canada) The report showcases NewConnect as an SME market success story 19

20 WORLD BANK REPORT: FACTORS FOR ESTABLISHING SUCCESSFUL MTF MOST EUROPEAN EXCHANGES OPERATING EFFECTIVE MTFs: Focus on SMEs that have a fairly sizable growth rate, because they will have capital demands and be most willing to use an exchange to obtain it. Are legally related to a main board, often to receive some form of subsidy; few are stand-alone entities. Do not reduce disclosure content to reduce costs. Content is considered too important. They reduce other requirements, such as the frequency of submitting disclosure documents and allowing online dissemination rather than requiring printed materials. Allow private placements to further reduce entry requirements, at least as a first-stage step to being listed. Have advisors that vet issuers and provide comfort to investors about the quality of the issuance. To be most effective, these advisors should be licensed, regulated, and sanctioned if they support too many ultimately poor performing issuers. Have outreach, public awareness campaigns, and training for SMEs. Benefit from tax incentives for investors, typically as part of a broader SME finance program. 20

21 WORLD BANK REPORT: WHAT MAKES NEWCONNECT SUCCESSFUL? Good timing: External conditions supported the setup of NC as bank deleveraging during the global economic crisis reduced financing to SMEs, who then went to NC Dynamic SME base: Although a young economy, Poland has a dynamic private sector with 4 million regulated companies, of which 1.8 million are active. More than 99 percent of Poland s companies are SMEs. Strong retail investor base: A large number of knowledgeable retail investors comfortable with risk taking, who were already active traders in the derivative and foreign exchange markets Receptive policies and flexible and less onerous regulation: Reduced entry requirements, lower cost than main market Reduced ongoing reporting frequency and more time to deliver information Private placement mechanism, used by the vast majority of issuers Well-regulated Authorized Advisors: To support companies through the listing process and vet the company for investors. AAs can be imposed a sanction or even lose their licenses if they support too many unsuccessful companies or if the companies introduced by them to trading are violating the binding rules Willingness to address problems: 2011 saw a record 172 offerings on NC. However, they included some companies of lower quality. Growing reputational problems (accusations of insider trading, bankruptcies) saw trading volumes and offerings fall during 2012 and In 2013 the GPW announced higher requirements for companies and AAs from June 1, 2013, in the interest of market quality and safety. This was to make the market more attractive for investors and shift the focus from quantity to quality. 21

22 NEWCONNECT FURTHER DEVELOPMENT GPW CONTINOUSLY IMPROVES THE RULES AND PROCEDURES BINDING ON NEWCONNECT IN ORDER TO ADJUST THIS MARKET TO THE EXPECTATIONS OF MARKET PARTICIPANTS AND CHANGING ECONOMIC ENVIRONMENT GPW is currently implementing the NewConnet 2.0 project which was announced in May 2015 as a subsequent stage of development of this market, consisting in particular in performance of specific tasks aimed at improvement of investors confidence and their activation on the market: NewConnect promotion; cooperation with other institutions to improve the security of investors NewConnect new segmentation based on quality factors and aiming at making it more readable and thus encouraging to the search for new investment opportunities improving transparency and accessibility of information about issuers and Authorized Advisors presented on GPW websites revision of the Code of Best Practice for Authorised Advisors and raising the standards of Authorised Advisers change of Best Practice for NewConnect listed companies, following the reform carried out on the GPW Main Market cooperation of the GPW with the Council of Authorised Advisors, established to support the development of NewConnect 22

23 THANK YOU FOR YOUR ATTENTION! Disclaimer This presentation has been prepared by Giełda Papierów Wartościowych w Warszawie S.A. ( Warsaw Stock Exchange, GPW or Company ) for its shareholders, analysts, and other contractors. This presentation has been prepared solely for information and is not an offer to buy or sell or a solicitation of an offer to buy or sell any securities or instruments. This presentation is not an investment recommendation or an offer to provide any services. All efforts have been made to present the data in this presentation; however, some data are derived from external sources and have not been independently verified. No warranty or representation can be given that information in this presentation is exhaustive or true. GPW has no liability for any decisions made on the basis of any information or opinion in this presentation. GPW informs that in order to obtain information about the Company reference should be made to periodic and current reports published in compliance with applicable provisions of Polish legislation. Bartosz Świdziński Director, Market Development Department bartosz.swidzinski@gpw.pl