Financial structure, management, and IFRS Reporting Creating value for growth

1. Financial structure, management, and IFRS ReportingCreating value for growth • Presenter: • John Robinson • Partner

2. Contents Financial management for large Infrastructure entities Decision making mechanisms IFRS Reporting

3. Financial Management for large infrastructure entities Financial structure, management and reporting

4. Financial management for large infrastructure entitiesCreating the perfect balance HR (payroll & subcontracting) Site management/ Inventory store Legal Financial Reporting Engineers (Certification of works done, costs to complete) Fixed Asset management (Allocation of depreciation) Treasury (interest treatment)

5. Decision making mechanism Financial structure, management and reporting r

6. Decision making mechanismFocusing on your priorities Management information systems are the basis of sound decision making in financial management

7. Decision making mechanism • Development of budgets and forecasts • Periodic internal financial reporting • Internal control environment Features of a sound financial management system Financial structure, management and reporting

8. Decision making mechanism (cont’d)Benefits of effective systems for decision making • Ability to correctly assess the financial position and result of the company • Attractiveness to investors • Improved ability to project future results and growth potential • Timely identification important financial trends over a period of time Financial structure, management and reporting

9. IFRS reporting Financial structure, management and reporting

10. IFRS ReportingBringing trust and integrity to the market • In some respects implementing IFRS needs to be seen as a fundamental change in attitude as to how management looks at its Management Information Systems • IFRS reporting is not simply the annual transformation process from local accounting to a set of IFRS compliant Financial Statements.

11. IFRS Reporting (cont’d) Implementing IFRS is a process that requires change and the ongoing operations require people to change the way that they work on a day to day basis Entities continue to operate their financial reporting from a tax perspective rather than from a business perspective. Tax should be an outcome rather than a driver of business Companies in transition economies, like Azerbaijan, typically change very little in terms of their day to day operations when implementing IFRS and rely on a periodic transformation exercise of the “IFRS reporting” department to do the work. As a result they struggle to get timely, relevant information and are very reliant on 1 or 2 people in the organisation to get the information together. This has its own risk when these people are in high demand and it is easy for the company’s “history” to be lost when these people change employment.

12. Identify local GAAP/IFRS differences (accounting, presentation, and disclosure) and identify high-level impact on the entities consolidated financial statements • Analyze optional IFRS policies and first-time (IFRS 1) considerations and implications of anticipated future changes to IFRS standards • Analyze peer company IFRS 1 and accounting policy elections • Identify local tax accounting method issues resulting from accounting workstreams • Consider IFRS as a basis for local country tax reporting • Identify process and technology issues the tax department may face in connection with transition to IFRS • Assess high-level global tax planning implications Accounting and reporting Taxes Typical conversion impacts Activities Financial structure, management and reporting

13. Identify statutory reporting requirements and prioritize statutory locations for IFRS conversion or reconciliations from statutory GAAP to IFRS • Perform initial analysis of required financial applications and technical infrastructure • Identify high-level system gaps to meet future IFRS reporting requirements • Analyze impacts on the overall organization, including the following areas: • Change management strategy and plan (including HR matters such as training and communication strategies) • Legal – Identify certain arrangements with local GAAP metrics • Analyze other organizational impacts • Summarize assessment findings and assist management with developing a strategic workplan and roadmap for its global IFRS implementation including: • Critical activities, timelines, resource estimates, budget estimates, coordination with auditors, etc. Support for local statutory conversion Systems, processes, and controls People and organization Workplan development and communications Typical conversion impacts (cont’d) Activities Financial structure, management and reporting