DACT Treasury Fair, 14 November 2014 How to fill the gaps of a TMS in areas of reporting and hedge accounting DACT Treasury Fair, 14 November 2014 Ramón Tolk Director Treasury Operations & Control - VimpelCom Kees-Jan de Vries Director Capital Markets and Accounting Advisory Services - PwC

External and internal factors require Treasury’s to look beyond its current TMS landscape Journal entries are prepared manually System vendors do not really invest in flexible and tailor made reporting solutions Hedge accounting is a rather manual process Demand for a straight through EMIR reporting solution FINCAD does not provide IFRS 13 compliant valuations

A well diversified leading international mobile operator

Treasury at VimpelCom Treasury teams HQ Amsterdam: 13 Regional treasury teams in Moscow (approx. 20), Rome (approx. 20), Kiev (5) Local teams in each OpCo Some info on size (USD bn 30-Sep-14) Gross Debt 27.7 Cash & Cash Equivalents /Deposits 6.0 Derivatives 7.8 Developments 2010 March 2012 Oct 2013 Nov 2013 HQ to Amsterdam TMS: Bellin Treasury Analytics Chatham Financial

Old and new IT landscape 2010-2011 2012-2013 Today Treasury Analytics

Changes since implementation Bellin as TMS Does this mean that we have selected the wrong system back in March 2012? No! We are still a satisfied Bellin client! In March 2012, the decision to select Bellin was mainly driven by implementation speed and user friendliness We knew back then that the strength of Bellin was not in the reporting and derivative valuation/hedge accounting areas … …, but Bellin partnerships fill these gaps We believe that there is no TMS available in the market that could meet our requirements and could compete with our current IT landscape, both from a functionality and cost perspective

Treasury Analytics

Treasury Analytics What? Business Intelligence reporting layer Developed by PWC in cooperation with Bellin Takes data directly from Bellin database Why? Reduce reporting time (8 BDs  2 BDs) and time spend (-5 man days)  focus on value added work Move away from Excel (error prone)

Treasury Analytics project at VimpelCom Started in October 2013 Consideration at start: majority of design and construction to be finalized before mid December 2013  Ambitious timeline: Project team: VimpelCom HQ + PWC consultants (NL+DE)

Treasury Analytics – Content & Structure

Treasury Analytics / QlikView – example 1

Treasury Analytics / QlikView – example 2 Selection possibility periods Filter possibilities group

Treasury Analytics / QlikView – example 3

Treasury Analytics – our next steps We can now modify / set-up reports by ourselves (no need to hire PWC for this) Roll-out to Business Units / OpCos

Chatham Financial

Chatham Financial What? Why? System with functionality on IFRS compliant valuation / hedge accounting (given our size of derivative portfolio, no possibilities for short cuts / backside sigarbox calculations) Selected after RFP process with FinCad, Kyriba, Reval and SuperDerivatives PWC engaged as consultant; EY as external auditor also consulted during process Why? Ability to meet reporting deadlines, despite large portfolio of derivatives (60-70) Valuation takes into account CVA/DVA (IFRS 13) based on Total Expected Exposure methodology, not Current Exposure Hedge effectiveness testing (regression / dollar offset): CVA/DVA included in derivative, not in hypothetical derivative

Chatham Financial - valuation Deal input in system Valuations will be run daily; exportable to Excel

Chatham Financial – effectiveness testing System supports both regression and dollar-offset as effectiveness testing methodology VimpelCom preferred regression: Change hedge accounting as per 30-Sep-13 CVA/DVA  100% effectiveness impossible Deals with small numbers

Chatham Financial – hedge documentation and JEs Hedge designation in system causes creation of hedge documentation System also prepares monthly/quarterly JEs

Questions?