Kreston North European Conference

1. Kreston North European Conference Update on strategyand current developments22- 24 May 2008, St Petersburg Jon Lisby, Executive Director

2. Overall performance in 2007 Analysis of our growth Our current resources How do we compare? Referral performance Regional analysis A change in the fee basis Network v Association What’s our strategy? Where on the line? Now, where, how Agenda

3. $1.708bn Growth 30% Another outstanding year $1.142bn

4. 236 (213) firms, 665 (543) offices 92 (75)countries, 18,500 (15,000) staff Resources

5. Moscow Brazil – 2 firms Dominican Republic Ukraine Vietnam Isle of Man United Kingdom Guatemala Mexico – 3 firms Australia – 3 firms 15 new firmsand ………. 2007 Recruitment

6. France Africa (former E&Y) Côte d’Ivoire Gabon Niger Mauritania Congo Togo Benin Mali Burkina Cameroon Tchad Morocco Poland West Indies, New Caledonianand Reunion Over 2,000 professionals Fee income US$203m Exco France

7. 30% growth comprised 15% impact of recruitment less retirements 15% average organic growth Overall organic growth in line with Big 4 Recruitment of Exco France brings improved balance between Eurafne and North America North America now 49% previously 60% Eurafne now 41% previously 29% Analysis of growth

8. Regional strength/recruitment targets(Source: International Accounting Bulletin Surveys 2007)

9. Regional analysis

10. The Top 10 ( Green up -Red down)

11. How do we compare?

12. Kreston International at start of 2008 30% Growth takes us to – 15th ($21m from13th!) 92 countries with 665 offices 18,500 staff and fee income of US$1.7bn. Strength of membership

13. Belarus(thanks to IEI !) Bulgaria Central America Panama El Salvador Honduras Nicaragua Cyprus Mexico – 6 firms India Venezuela Colombia 2008 Recruitment to date

14. International referrals • Strong growth in value of reported new referrals • US$1.4m in 2007 • 88% between Europe and North America • Still too low! Past 10 years – Value 1997/2007

15. 10% payable by receiving firm 5% receivable by giving firm (in respect of referrals given after Jan 08 and only payable if paid) Adjusted on annual fee subscription 2 years only No fees due on national referrals from 2007 Referral fees – a change

16. Network definition…………….A larger structure: That is aimed at co-operation; and That is clearly aimed at profit or cost sharing or shares common ownership, control or management, common quality control policies and procedures, common business strategy, the use of a common brand-name, or a significant part of professional resourcesBoth IFAC and European 8th Directive Network v Association

17. Association - Network Client acceptance & sign off rules Service lines limited Network Global strategies imposed Ongoing quality monitoring Shared working practices Joint purchasing incl. PI insurance Brand shared Conflict checks Global Forum of Firms Pro-active joint targeting of prospects Tight Profile attracts staff & clients Special interest groups Technical support & Training More about status than international business High Networks within an Association Increased Sovereignty Reactive to client needs Social and Travel club Integration Cost & Value Risk Association Cohesive and credible Local Loose Low Low

18. The Kreston strategy? Which option? Networks within an Association Network definition

19. All Kreston members are required to make amendments to any document, stationery, website, signage or promotional material and eliminate the word “network” and at all times refer to a “global association of independent accountants and business advisors”. Network definition

21. 15th ( or equal 13th!) largest global group Low central cost structure maintained Referrals between members driven by client needs – mainly reactive and little co-ordination of working practices Excellent global coverage and strong growth but with Some location gaps Need to strengthen service line capability in certain locations Brand recognition – low but growing Now?

22. “High profile association (including some networks) working in closer collaboration to proactively win multi national assignments and compete more effectively in the marketplace of mid-tier accounting networks” Where to? The strategy remains…………..

23. Raise the profile Increase collaboration Proactively target quality international assignments And win!! Both national and international The challenge

24. Raise the profile Continued growth and admission of new strong firms National and regional business development plans The challenge

25. Increase collaboration Introduce the tools Global web portal - unlimited users Share working practices Share information – extended Fact Sheet National and regional development strategies(Examples – Mexico,India,Australia/New Zealand) Build multi-firm teams Special interest groups (“SIG”) The challenge

26. Special interest groupsNumerous groups including:- Global audit Global Risk and Advisory (Internal audit, Sarbox) International tax Transfer Pricing Corporate finance – IPO’s, Acquisitions, Due Diligence Global Payroll Building collaboration

27. Global audit An update on progress Proposal made at Chicago World Conference in October 2007 by MHM for a “branded” global audit network Objective – to complete more effectively against BDO, GT, RSM etc Many members interested No agreement to brand from major North American and European firms Discussions ongoing and focused on increasing capability to target, win and efficiency service quality transnational audits Las Vegas Conference –June 2008 Building collaboration

28. Our goals remain ………….. Build cohesion and Accelerate the growth of high quality referrals bothnational and international Build the value of Kreston firms and Do more and better business with people you know, like and trust!

29. Eurafne Conference Hamburg, 18 -20 September 2008

30. World Conference