IFRS conversion – getting started Christabel Cowling, Partner Scott Hartman, Executive Director 17 September 2009

1. IFRS conversion – getting startedChristabel Cowling, PartnerScott Hartman, Executive Director17 September 2009

2. The “to-dos” of baseline preparation • Understand proposed SEC roadmap and monitor future developments • Organize a project team • Five phases of conversion • Phase 1: Diagnostic/Impact assessment – KEY ACTIVITY • Develop project timeline/internal conversion roadmap • Impact on budgeting and planning/interaction with analysts • Impact on SOX 404 planning/procedures • Change management/training

3. Proposed SEC Roadmap – large accelerated filer Q1 needed for fiscal 2015 reporting Fiscal 2014 Fiscal 2009 Fiscal 2010 Fiscal 2011 Fiscal 2012 Fiscal 2013 Restate opening balance sheet IFRS reporting 2012, 2013 and quarterly statements for 2014 filed under US GAAP standards 2014 annual IFRS statements are published with comparatives for 2013 and 2012 Fiscal 2015 quarterly IFRS statements are published with comparatives for 2014 Run US GAAP and IFRS parallel Design and implementation of process, control and systems Secure resources Awareness and knowledge of IFRS Modification of business operations, tax, regulatory and HR programs Impact assessment Drafting new accounting policies Preparation of convergence plan Training New IFRS standards Change management, project structure and governance (budget implications, resourcing, etc.)

4. Regulatory compliance work stream Tax work stream Example project management team Planning assumptions PMO • Upstream impacts: consider key leads • Downstream impacts at divisional level; consider key Divisional team leads Steering committee Accounting and reportingwork stream Business processes work stream Information technology Human resources Reporting packages Accounting policies Debt agreements Financial close process Financial planning and analysis Other finance process Other business processes Change management and training

5. IFRS conversion activities

6. IFRS conversion key activities Today First year of reporting Education and awareness Diagnostic (Impact Assessment) Design and planning Solutiondevelopment Implementation Post implementation review Determine key accounting differences Validate conversion recommendations Model IFRS accounts and chart of accounts (IFRS) Implement solutions Debrief • Accounting and reporting • Tax planning and compliance • Business processes and systems • Regulatory compliance Evaluate potential impact on the business Evaluate solution alternatives Develop accounting policy manual Test and remediate Identify opportunities for improvement Prioritize conversion activities and make recommendations Determine future state Develop process and system change requirements Parallel reporting under IFRS Implement improvements • Change management, communication and training • Project management

7. IFRS impact assessment

8. Scope of IFRS impact assessment Accounting and reporting work stream • Accounting and reporting objectives • Identify the critical US GAAP to IFRS conversion accounting, reporting and disclosure differences • Build a strong IFRS knowledge base within the IFRS core team • Gain greater visibility into unique historical regulatory accounting, and other industry specific issues. • Inventory regulatory reporting requirements and identify IFRS conversion impacts • Key performance indicators • Number of critical US GAAP to IFRS accounting and reporting differences • Number of regulatory reports impacted • Number of IFRS proficient internal resources • Resource assumptions • Core team • Identify key accounting differences and potential options • Attend training and develop own skills • Coordinate and attend key meetings with the relevant corporate and operating unit resources • Others • Assist with the identification of where the accounts are located (corporate, operating companies, etc.) • Provide the existing applicable accounting policies • Identify regulatory reports

9. Scope of IFRS impact assessment Tax work stream Tax objectives • Understand the potential impact of IFRS on your company’s effective tax rate, deferred tax assets/liabilities, tax planning and compliance and treatment by federal, state and local taxing authorities, and tax related processes • Identify the tax impact of critical US GAAP to IFRS conversion accounting differences • Build tax-specific IFRS knowledge base within the company’s tax department Key performance indicators • Involvement of tax personnel in IFRS conversion Resource assumptions • Core team • Be represented on project team • Attend training • Inventory FIN 48 positions • Identify US GAAP and Tax reporting differences • Coordinate and attend key meetings with the relevant SBU and operating unit resources • Others • Assess impacts on systems used for tax reporting

10. Scope of IFRS impact assessment Business process and systems work stream • Business process and systems objectives • Identify key business processes and (or) functions affected by an IFRS conversion • Develop an efficient approach to integrate IFRS considerations into any potential Business Transformation initiatives • Understand the impact of IFRS to systems data, configuration requirements and (or) reporting • Determine whether IFRS can be further leveraged to support the organization’s strategic initiatives • Key performance indicators • Participation by the appropriate process and systems personnel during interview/facilitated sessions • Number of potential discrete synergies and impacts of an IFRS conversion to any business transformation initiatives • Resource assumptions • Core team • Be represented on project team • Validate and provide feedback relative to the work being performed by A&R work stream • Provide feedback relative to the scope and approach of business transformation (if applicable) • Coordinate and attend meetings with relevant project resources • Others • Participate in process and systems-oriented interview/facilitated sessions

11. Scope of IFRS impact assessment Project management work stream • Project management objectives • Meet the project plan objectives on time and on budget • Develop an efficient approach to integrate the IFRS conversion into any business transformation initiatives • Develop a preliminary conversion roadmap • Key performance indicators • Progress on IFRS Impact Assessment vs. agreed-to timeline Resource assumptions • Core team • Validate and provide feedback relative to the work being performed by individual impact assessment work streams • Coordinate and attend meetings with the relevant executives

12. 1 High 10 11 3 2 9 4 5 Medium 8 Financial statement impact 7 Low 6 Low High Medium Business impact Initial assessment of priority High conversion risk and effort; management should begin addressing these items immediately. Medium conversion risk and effort; plan to address these issues in the next 6-12 months Low conversion risk and effort; plan to address in the next 12-24 months Example heat map – output of diagnostic/assessment activities

13. Change management/communication and training • Project management objectives • Meet the project plan objectives on time and on budget • Clarify roles and responsibilities • Key performance indicators • Organization becomes knowledgeable of IFRS • IFRS accounting becomes embedded in daily processes Resource assumptions • Core team • Conducting workshops and training • Build on foundation of US GAAP knowledge

14. Example work productHigh-level conversion Roadmap • Current reporting assumptions: • US GAAP as is until FY14 10K • No quarterly reporting in IFRS until FY15 • 3 years of comparative reporting data IFRS comparative transition date 01/01/12 IFRS reporting date 12/31/14 FY09 FY10 FY11 FY12 FY13 FY14 FY15 IFRS Summary Roadmap JFM AMJ JAS OND JFM AMJ JAS OND JFM AMJ JAS OND JFM AMJ JAS OND JFM AMJ JAS OND JFM AMJ JAS OND JFM AMJ JAS OND 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 15 • Phase 2 – IFRS due diligence and validation • Complete required analysis by area • Validate IFRS impacts across geography and relevant functions • Decision on alternatives and options; including tax implications • Finalize IFRS future state design • Decision on implementation timing for policy changes • Develop and document parallel reporting approach • Define simplification/standardization opportunities to be included • Milestones/dates for consideration: • Review diagnostic results and high level go-forward approach with IA and external auditor • Present IFRS approach to executive management (and board) • Additional guidance on financial statement presentation expected • Tax exposure draft expected to be released by IASB • Parallel reporting solution approach validation; post due diligence • All IFRS policy and procedures created/updated and reviewed with IA and external auditor (iterative process but milestone denotes all reviews completed) • Anticipated final decision date from SEC on IFRS (anticipated in 2011, but no specific date announced) • All policies complete and system modifications implemented to support IFRS opening balance sheet • Restate opening balance sheet for IFRS • Begin parallel accounting for comparative years reporting requirements • Mock IFRS transition cut-over • Publish IFRS-based annual statements • Publish initial IFRS-based quarterly reports • Initial training and communication strategies defined • Validate external or investor relations communication approach • Program structure and management processes defined 1 3 5 2 4 • Phase 3 – IFRS solution development • Create/modify policy and procedure documentation • Work with IA to assess and update key control procedures/documentation • Conduct review of policy and procedures with external auditor • Coordinate to drive consistency with local IFRS implementations • Create skeleton IFRS financial statements • Complete systems design documentation • Finalize parallel reporting design • Complete design for simplification/standardization projects Wave 1 – Early Wave 2 – Wait 6 • Phase 4 – IFRS solution implementation • Complete software development and testing (“early” & “wait”)* • Complete parallel reporting system enhancements (“early” & “wait”)* • Rollout software changes (“early” & “wait”)* • Rollout new/updated policies and procedures • Implement one-time adoption elections • Implement IFRS financial statements • Finalize and audit opening balance sheet • Implement simplification/standardization projects • Monitor local IFRS implementations Wave 2 – Wait Wave 1 – Early 7 Catalyst for initiating significant process and/or system changes 8 9 10 2010 Country 1 (8) Country 2(1) Country 3 (3) Etc. (1) 2011 Country 1 (8) Country 2(1) Country 3 (3) 2012 Country 1 (8) Country 2(1) Country 3 (3) 2013 Country (3) 11 • Phase 5 – IFRS comparative period management • Execute and monitor parallel reporting activities (monthly, quarterly) • Execute IA risk assessment and control monitoring • Monitor downstream / upstream impacts • Prepare and manage full IFRS cut-over/delivery • Manage investor relations • Identify and assess opportunities for improvement 12 13 • IFRS organizational change management • Internal and external communication management • Awareness and training • Organization design • Performance management 14 15 16 Operate program management processes; minimum quarterly steering committee updates initially (frequency will increase closer to transition date) • Aligned/dependent strategic initiatives • Accounting and management reporting • Statutory reporting program • Integrations Parallel Accounting Period

15. Related considerations of conversion • Impact on budgeting and planning/interaction with analysts (cost of conversion estimates; forecasted EPS) • Impact on SOX 404 planning/procedures (audit requirements) • Impact on financing arrangements and debt covenants • Monitoring acceptance of regulators (FERC, PUC, etc.) and regulatory compliance considerations (impact on reporting basis/adjustments)

16. Questions? • Christabel Cowling, Birmingham UK office • Scott Hartman, +1 215 448 3388 or email at scott.hartman@ey.com