1. Perspectives from the Americas Recent Experiences with IFRS Bruce Mescher August 30, 2011

2. Agenda Overview of IFRS in the Americas Case Study: IFRS Convergence in Brazil Best Practices & Lessons Learned Looking Forward © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 2

3. Overview of IFRS in the Americas

4. IFRS continues to propagate and flourish in the Americas. Mixed implementation models in the region – public companies, statutory convergence, financial institutions, updated standards Increased interest and movement towards adoption of IFRS for SMEs (Caribbean, Central and South America) Public sector converging with international standards in many parts of the region Regional connectivity and collaboration Standard Setting – GLASS Capital Markets Integration (MILA, Brain) Regional connectivity, cross border capital flows, regional capital markets integration, and the rise of multilatinas continue to drive a strong business case for IFRS. Brazil 2010 Argentina 2012 Chile 2009-2011 Mexico 2012 Canada 2011 Peru 2011 Ecuador 2010-2012 Colombia Convergence Plan United States ??? Venezuela 2011 SME Bolivia 2013 Guatemala 2009 © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 4

5. Case Study: IFRS Convergence in Brazil

6. Case Study – IFRS Convergence in Brazil Regulatory Milestones 2005 Comitê de Pronunciamentos Contábeis – CPC Central Bank Communicado 14.259 – Financial Institutions CVM 457 – Listed Companies SUSEP Circular 357 – Insurance Companies Law 11.638 (Dec 2007) – sets convergence path for BR GAAP / Statutory accounting with IFRS and expands scope of statutory audits MP 449 / Law 11.941 – Transitional Tax Regime First Wave – CPC New Standards CPC/IFRS for SME CMN Resolution 3.786 – Financial Institutions First Year Full IFRS Reporting 2006 2007 2008 2009 2010 © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 6

7. Case Study – IFRS Convergence in Brazil IFRS Convergence Timeline 2008200920102011 CPC Phase 1 11.638 CPC Phase 2 Major Convergence (effective 2010) CPC Phase 3 Ongoing Convergence Transitional Tax Regime Optional Transitional Tax Regime Mandatory (pre2008 Statutory Methods) Statutory Accounting Tax Listed Companies Financial Institutions Full IFRS Optional Full IFRS Mandatory © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 7 IFRS/CPC SME IFRS for SME Optional (beginning in 2009) 15 CPCs +40 CPCs, OCPCs, ICPCs We are here. IFRS Transition Date IFRS Reporting Date Brazilian accounting standards are substantially converged with IFRS in 2010.

8. Case Study – IFRS Convergence in Brazil CPC vs. IFRS Standards New BR GAAP (CPC) standards have been issued in line with their respective IFRS-IASB standards, with only a few minor differences/modifications: ‒ Simplified / eliminated certain options available under IFRS-IASB (e.g., revaluation) ‒ Specific transition rules that facilitate consistency with transition rules under IFRS 1 ‒ Equity method of accounting (instead of cost or fair value) for subsidiaries when presenting individual financial statements for statutory purposes Memorandum of understanding between Brazil and the IASB ensures that the CPC will continue to issue new BR GAAP standards in line with IASB CPC and the application of the RTT significantly decouples tax and statutory accounting (e.g., depreciation methods) CPC serves as official accounting records applicable to most organizations (electronic tax filings, distributable reserves and dividends, thin capitalization rules, transfer pricing) © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 8

9. Case Study – IFRS Convergence in Brazil Phase 2 Results – IBrX Companies © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 9 Source: Deloitte Research summarized from Company Reporting Includes only companies reporting for first time in 2010 (approximatley 80 companies) Excludes Phase 1 topics including stock options, certain financial instruments, leasing and functional currency implemented in 2008. 2009 Reported Profits  15-20% (average) 2009 Reported Equity  10-15% (average)

10. IFRS is already impacting the business environment. Case Study – IFRS Convergence in Brazil Factors being influenced by the adoption of IFRS (%) © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 10

11. As a result of IFRS adoption, companies are not only benefiting from a single, global financial language, they have strengthened their operational and financial processes. Case Study – IFRS Convergence in Brazil Positive Impacts of IFRS Adoption to Date (%) © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 11

12. Case Study – IFRS Convergence in Brazil IFRS Investments and Efforts (%) InvestmentsPrincipal Efforts A large percentage of companies invested over R$500 thousand in IFRS conversion activities. 41% > R$ 500 mil © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 12

13. 56% of companies admitted that they thought their IFRS conversion process could have been more efficient. Case Study – IFRS Convergence in Brazil IFRS Inefficiencies – What could have been better? (%) © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 13

14. Companies are focused on people, process and technology to reduce IFRS reporting cycle times. Case Study – IFRS Convergence in Brazil Post-conversion priorities (%) © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 14

15. Case Study – IFRS Convergence in Brazil Perspectives – Key Success Factors Decision and commitment – “IFRS for All” Stakeholder support, participation and input Central role of the CPC - composition, charter and communication Tax “neutrality” IFRS part of broader financial reporting and corporate governance changes ‒ New public company listing and annual reporting requirements ‒ New statutory audit requirements ‒ Migration to international auditing standards Favorable economic “moment” – providing additional incentives ‒ International interest and global investment in Brazil ‒ Solid financial system in the wake of the financial crisis ‒ Capital markets in expansion © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 15

16. Case Study – IFRS Convergence in Brazil Perspectives - Macro Challenges Application of IFRS in the local legal/regulatory environment ‒ Coordination between regulators ‒ Tax neutrality – application and future uncertainty Consistency in the application of standards ‒ Principles vs. rules – significant cultural and operational change ‒ Industry-specific issues and interpretations (e.g., real estate, concessions) Transition – upgrading people, processes and systems Quality of financial statement disclosures and alignment with other reporting requirements/initiatives – regulatory scrutiny Dissemination of IFRS for SMEs Continued and proactive participation in global IFRS “ecosystem” © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 16

17. The Road to IFRS Maturity Case Study – IFRS Convergence in Brazil Maturity Quality Effectiveness Efficiency Today Investors Regulators Standard Setters Analysts Suppliers of Credit Board of Directors Auditors Stakeholder Influence Full Realization of IFRS Benefits Where are we?Where do we want / need to be? Improve quality of financial information Increase comparability Facilitate access and lower cost of capital © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 17

18. Best Practices & Lessons Learned

19. Challenges – Global Themes Initial adoption of IFRS Resource constraints Overall timing considerations General financial reporting – quality and completeness of disclosures Increased scrutiny by regulators Comparability within industries and local benchmarks Statutory implementations – visibility and consistency Upgrading people, processes and systems Ongoing application of IFRS Keeping up with unprecedented number of new standards Principles vs. rules ‒ Need for interpretative guidance for new standards ‒ Principles-based standards are good, but what about MY issue? ‒ Concern over lack of bright-line rules Anticipating future developments in IFRS © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 19

20. Best Practices & Lessons Learned Dealing with the Challenge of IFRS Adoption High Level - Governance Tone at the Top - involve leadership at earliest stage, designate a steering committee Project Management Team - establish a cross-functional project management team Communication - establish lines of communication among various functions within the organization Coordination of Initiatives - consider planned technology changes, finance transformation, major transactions, and other related initiatives with an eye towards efficiency and synergy Roadmap to success - plan in advance to achieve a cost-effective and sustainable implementation © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 20

21. Best Practices & Lessons Learned Dealing with the Challenge of IFRS Adoption Detail Level Assessments — Have we identified and prioritized areas of impact and determined long lead-time items? Have we evaluated implications for planned or possible future transactions? Statutory Reporting — if multinational, where are we already using IFRS and how has it been applied? Where else will we / can we use IFRS? General Financial Reporting – Have we adequately identified our information and reporting needs? Have we aligned them with other reporting requirements? How are we preparing the market and managing expectations? IFRS Workshop — Have we discussed impacts with key members of Management? The Board? The Audit Committee? © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 21

22. Best Practices & Lessons Learned Dealing with the Challenge of IFRS Adoption Detail Level Tax — Have we adequately assessed all tax impacts? Process and Systems – Have we evaluated our short and long-term process and system requirements for IFRS? How should our internal controls be enhanced in response to IFRS changes (e.g., new financial reporting risks, spreadsheets)? Resources — Have we developed internal and external resource estimates? Have we initiated internal training and awareness programs? Have we coordinated sufficiently with external specialists – auditors, actuaries, valuation experts? What are our longer-term resource needs post implementation? © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 22

23. Looking Forward and Final Thoughts

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25. Appendix IFRS Case Study

26. Case Study – IFRS Convergence in Brazil Convergence Snapshot © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 26 Statutory Accounting Law 11.638 requires that large private entities (Assets > R$300 million or Revenues > R$240 million) are required to prepare annual financial statements using Brazilian statutory accounting practices (contained in Law 6.404/76 and amended by Law 11.638) and are required to have their financial statements audited annually Accounting Principles Committee (Comitê de Pronunciamentos Contabeis – CPC) charged with re-writing Brazilian accounting standards in accordance with IFRS (convergence) and developed a phased workplan beginning in 2008 CPC version of IFRS for SME´s issued and effective for 2009 Tax Law 11,941/09 introduced a Transitional Tax Regime (RTT) and will remain in force until the publication of a law that treats the tax effects of new accounting methods and criteria - Law 11.638 – goal is “fiscal neutrality” Tax bases under RTT use 2007 statutory accounting methods Listed Companies Listed companies are required to report consolidated financial statements in accordance with IFRS beginning in 2010 Financial Institutions Financial institutions regulated by BACEN and insurance companies regulated by SUSESP have similar 2010 IFRS mandates for their consolidated financial statement requirements – however some exceptions (e.g., comparability)

27. Case Study – IFRS Convergence in Brazil CPC vs. IFRS Standards © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 27 CPC Phase I (2008)CPC Phase 2 – Major Convergence (2009/2010) TopicCPCIFRSTopicCPCIFRSTopicCPCIFRS Structural Framework Structural Framework - Complement Agriculture CPC 29IAS 41 Impairment of Assets CPC 01IAS 36 Business Combinations CPC 15IFRS 3 Revenue CPC 30IAS 18 Effects of Changes in Foreign Exchange Rates CPC 02IAS 21 Inventory CPC 16IAS 2 Non-current Assets held for Sale and Discontinued Operations CPC 31IFRS 5 Cash Flow Statements CPC 03IAS 7 Construction Contracts CPC 17IAS 11 Income Taxes CPC 32IAS 12 Intangible Assets CPC 04IAS 38 Investments in Associates CPC 18IAS 28 Employee Benefits CPC 33IAS 19 Related Party Disclosures CPC 05IAS 24 Interests in Joint Ventures CPC 19IAS 31 Exploration for and Evaluation of Mineral Assets CPC 34IFRS 6 Leasing CPC 06IAS 17 Borrowing Costs CPC 20IAS 23 Consolidated and Separate Financial Statements CPC 35/36IAS 27 Government Grants CPC 07IAS 20 Interim Financial Statements CPC 21IAS 34 First Time Adoption of IFRS (2010) and CPC Phase 2 CPC 37/43IFRS 1 Transaction Premium and Costs Associated with the Issuance of Debt/Shares CPC 08IAS 39 Segment Reporting CPC 22IFRS 8 Financial Instruments - Phase II CPC 38/39/40 IAS 32/39 IFRS 7 Statement of Value Added CPC 09N/A Accounting policies, changes, corrections of errors CPC 23IAS 8 Earnings per Share (2010) CPC 41IAS 33 Share-based Payments CPC 10IFRS 2 Subsequent events CPC 24IAS 10 Financial Reporting in Hyperinflationary Economies (N/A) CPC 42IAS 29 Insurance Contracts CPC 11IFRS 4 Provisions, Contingent Liabilities and Contingent Assets CPC 25IAS 37 Interpretations (15) ICPCIFRIC Present Value Measurements CPC 12N/A Presentation of Financial Statements CPC 26IAS 1 Orientations (5) OCPCN/A Initial Application of Law 11,638 Accounting Changes CPC 13N/A Fixed Assets CPC 27IAS 16 Updates/Corrections CPC XX(R)N/A Financial Instruments - Phase I CPC 14IAS 32/39 Investment Property CPC 28IAS 40

28. Case Study – IFRS Convergence in Brazil Impacts and Challenges TopicCPCObservations & Challenges Business Combinations CPC 15 Allocation of purchase price and goodwill at FMV Goodwill no longer amortized Transaction costs expensed Recognition and measurement of non-controlling interests Contingent consideration (e.g., earn-outs) measured at FMV Negative goodwill recognized in income Deferred tax implications Fixed Assets CPC 27 ICPC 10 Revaluation option NOT permitted Estimated useful lives and residual values updated annually – no longer acceptable to simply use tax rates Component depreciation required if material Capitalized borrowing costs (CPC 20) Deemed cost encouraged (but optional) on transition Application of RTT to depreciation Biological Assets CPC 29 All biological assets recorded at FMV with changes to the income statement FMV assumptions and models Potential for earnings volatility Share-Based Awards CPC 10 Awards measured at FMV at grant and recognized to expense (either immediately or over vesting period) FMV considerations for complex awards Recognition (push-down) of parent awards © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 28

29. Case Study – IFRS Convergence in Brazil Impacts and Challenges TopicCPCObservations & Challenges Financial Instruments CPC 38 39 40 Classification FMV measurement considerations Hedge accounting Disclosure requirements Leases CPC 6 ICPC 4 Capital/Finance lease classification is required for qualifying leases Other contracts (production, power purchase agreements) may be considered leases Employee Benefits CPC 33Option to charge directly to equity or expense through income Real Estate ICPC 02 OCPC 01/03 Implications for revenue recognition on construction contracts (as work progresses or upon delivery) Investment property permitted to be valued at FMV (ICPC 10) Concession Contracts ICPC 01 OCPC Significant impacts to energy, sanitation and highways Regulatory assets / liabilities General Financial Reporting Public Companies Statement of Cash Flow Statement of Value Add Presentation - classification First-time adoption – reconciliations / restatements Segment Reporting Alignment with new public company annual reporting requirements © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 29

30. Appendix IFRS Impact Study

31. Developed in partnership with Brazilian Institute of Investor Relations (IBRI) Electronic questionnaires made available to public companies with investor relations departments during the period April-June 2011 Study based on responses from 46 companies supplied by representatives of Investor Relations Summary The Survey Transformation of Investor Relations Impacts and Benefits of IFRS Communicating IFRS with the Market IFRS Conversion Efforts The future with IFRS MethodAnalysis More information available at www.deloitte.com.br © 2011 Deloitte Touche Tohmatsu. Todos los derechos son reservados. 31