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FAAS Solutions, including BT listing on SGX Pankaj Chadha, Ajit Krishnan

Accounting Processes

&

IT Enablement

Financial Accounting

Excellence

Non-audit attest &

support

Regulation

Governance &

Financing

The Financial

Accounting Advisory

Agenda

FAAS- What is it about


Financial Accounting Excellence

Includes all kind of accounting advise

Examples: GAAP conversions, transactions related accounting matters

(PPA, Carve-out or spin-off), accounting on new standards, consolidation

reporting, on call financial accounting & reporting advice

Accounting Processes & IT Enablement

Includes process advise regarding implementing new standards, GAAP

conversions or financial statement close processes; further, development of IT

enablement tools and solutions helping to implement new accounting standards

or GAAP (no ERP advise!); Integrated solution with ITRA for ERP implementation

for development of Global Chart of Accounts

Examples: Consolidation reporting, incl. fast close advise; accounting process

and controls support; corporate treasury solutions

What ‘s included in the service portfolio (1/2)


Regulation, Governance & Financing

Includes all kind of regulatory services and management board/supervisory

board advisory, including advise on debt and equity financing

Examples: Development and validation of management and advisory board

reporting; development and validation of KPI reporting; assistance and

remediation on cost accounting; IPO and other public offer assistance; advise on

debt covenants; advise on financial communication

Non-audit attest & support

Includes all kind of other support and validations related to clients´ accounting

function

Examples: Advise on regulatory requirements; financial statement auditability

services; audit monitoring advice

What ‘s included in the service portfolio (2/2)

Anchor Solutions

Anchor Solution-1

► Accounting Processes & IT Enablement

► Consolidation Assistance, Consolidation Manual, Group Chart of

Accounts

► What is Consolidation Assistance, Consolidation Manual and Group

Chart of Accounts?

► Assistance for consolidation through provision of on-site support of expert

resources; development of consolidation manual or developing a chart of

accounts under a multiple GAAP regime

► Benefits / Value provided by Consolidation Assistance, Consolidation

Manual and Group Chart of Accounts :

► Speedier consolidation; Reliable financial information; Free up executive

time

Anchor Solution-2

Financial Accounting Excellence

Transactions related accounting matters advisory

► What is Transactions Related Accounting Matters Advisory?

► Evaluation and advice on accounting complexities in various phases of a

transaction ( Pre deal; contracting; implementation and post deal)

► Examples

► Carve-outs financial statements

► High level GAAP differences

► Purchase Price allocation assistance

► Accounting advice

► Financial Remediation- reconciliations etc

Anchor Solution-3

Regulation, Governance & Financing

► IPO and other Public Offer Assistance

► What is IPO and Other Public Offering assistance?

► Bouquet of solutions to assist companies on end to end basis

► Benefits / Value provided by IPO and Other Public Offering

assistance:

► Knowledge sharing on various fund raise options

► Developing a project charter

► Execution assistance of various workstreams

► Timely advice and speedier resolution of matters of importance for the

fund raise

► Assisting management in dealings with various stakeholders

Business Trust advisory

Companies with heavy asset base and steady cash flow

Looking for low-cost fund to fuel major

expansion plans

Looking to unlock value of asset base

without affecting

operations Looking for lowering

gearing ratio by paying off

high cost debt

Who should consider Trust Structure on SGX?

List of Sectors/Industries

-Power; Renewable energy

-Roads, Ports

- Ships

- Hotels, Hospitals

- Industrial Parks

- SEZs

- Old Age Homes

Alternatives Trust Structures on SGX

Real Estate Investment Trusts (“REITs”) Business Trusts (“BTs”)

Real estate investment trust (“REITs”) are investment vehicles that invest in a diversified pool of professionally managed real estate assets.

REIT sponsor plays an important role because it is the entity that sources the properties that are initially placed into the REIT at the time of listing.

Sponsor often holds large holding in REIT and Trustees discharge their fiduciary role to protect interest of unit holders.

REITs are predominantly externally managed by a REIT manager. The manager is paid a fee by the REIT in return for its management services and often owned by sponsor.

Business Trust (“BT”) is an arrangement to allow unit holders to participate in or receive profits, income or returns from management of property or operations of business.

Real estate companies can adopt structure of REIT or BT. However, other companies mostly falls under purview of BT, except in rare situation.

In BT, Trustee and property manager are one party only having to discharge duties of both.

Sponsor often holds significant holding in BT and indirectly or directly have control over trustee manager.

REITs Vs BTs

Typical REIT Structure

Unit Holders,

Sponsor

REIT

Properties

REIT

Managers

Property

Management

Company

Trustees

Investment

in REIT

Dividends &

other

distributions

Trustee’s fee

Acts on behalf

of Unit Holders

Rental/ Other

income

Ownership

of assets

(vested in

Trustee)

Management

fees

Management

service

Property

Management

fees

Property

Management

Services

Business

Group

SPV

Typical Business Trust (“BT”) Structure

Business Trust

Assets

Unit Holders

Business Group (Sponsors)

Trustee-

Manager

Investment in

trust Dividends &

other

distributions

Dividends

& other

distributions

Management

Fees

Management

service

Provides

majority of

the assets

Invests in

Trustee-

Manager

Distributions

From India perspective, REIT Structure generally not viable options due to FDI challenges.

Business Trusts on SGX*

No Name of Business Trust Location of Properties Nature of Properties

Market Cap (SGD in

millions) as on 30th

Oct, 2012

Dividend

Indicated

Yield %

1 CitySpring Infrastructure Trust Singapore Piped Gas Network 683.50 7.29%

2 First Ship Lease Trust Lesee spread in various countries

Container Vessels 83.14 0.00%

3 Rickmers Maritime Lesee spread in various countries

Container Vessels 152.52 8.13%

4 Ascendas India Trust India Real Estate 697.33 6.54%

5 Indiabulls Properties Investment Trust

India Infra and RE assets 469.54 0.10%

6 Treasury China Trust Shanghai Real Estate 360.14 0.00%

7 K-Green Trust Singapore Green Infra Assets 636.08 6.20%

8 Hutchison Port Holdings Trust Hong Kong & Shenzhen (Ports) Container Port 6749.39 8.00%

9 Perennial China Retail Trust China Real Estate 540.10 7.92%

10 Religare Health Trust India HealthCare Assets 451.13 NA

*Source : Bloomberg as of 30th October, 2012

Challenges of BT Structure

► Governance of Business Trust

► Sponsor Support of Business Trust

► Listing Criteria of the SGX

► Sponsor Liability under the Laws of Singapore

Case Study Ai-Trust - Structure

The VCUs

•Information Technology Park Limited (ITPL) (92.8%ownership)

• Ascendas IT Park (Chennai) Limited (AITPCL) (89% ownership)

• Cyber Pearl Information Technology Park Private Limited (CPITPPL) (100%

ownership)

•VITP Private Limited (VITPPL) (100% ownership)

Notes:

►Karnataka State Government through KIADB holds a 7.2% stake in ITPL. The Singapore SPV holds a 92.8% stake in ITPL (i) directly through its 46.4% stake in ITPL and (ii) indirectly through its wholly-owned subsidiary, Information Technology Park Investments Pte Ltd (“ITPI”) which in turn holds a 46.4% stake in ITPL.

►The Tamil Nadu State Government, through TIDCO, holds an 11% stake in AITPCL.

►As at the date of listing, the Singapore SPV owns 59.3% of AITPCL and the remaining 29.7% interest in AITPCL will be acquired from ALI and paid for out of part of the proceeds of the Offering on the Listing Date subject to the fulfillment of certain conditions.

►AITPCL and VITPPL own 100% of ITPC and The V respectively, while ITPL and CPITPPL own 74% and 83% of the total SBA of ITPB and CyberPearl respectively.

Unit Holders

a-iTrust

Distribution Holding the units

Ascendas Property

Fund Trustee Pte Ltd.

(the Trustee-Manager)

Trustee and Mngt fees

Mngt. services

Ascendas Property Fund

(India) Pte. Ltd.

(the Singapore SPV)

100%

ownership and

Sh’s loan

Dividends,

principal

repayment of SH’s

loan

Singapore

India

The Properties

•ITPB

•ITPC

•CyberPearl

•The V

Ascendas Property

Management Services

(India) Private Limited (the

Property Manager)

Provides Property Mngt

services

Property Mngmt fees

Ownership Property

income

Ownership of ordinary

shares, CCPS, redeemable

Pref. shares & SH’s loans

Dividends on ordinary shares, redeemable Pref. shares

& CCPS, interest income, principal repayment of

shareholder’s loans, and proceeds from share buy-back

Case Study IPIT - Structure

Notes:

►The Mauritius Tier 1 SPV is M Holdco1 Limited.

►The Mauritius Tier 2 SPVs are Ariston Investments Sub A Limited, Ariston Investments Sub B Limited, FIM Holdco I Ltd., FIM Holdco II Ltd., M Holdco2 Limited and M Holdco3 Limited.

►Including optionally convertible preference shares.

►The Indian SPVs are Indiabulls Properties Private Limited (“IPPL”) which owns One Indiabulls Centre and Indiabulls Real Estate Company Private Limited (“IRECPL”) which owns Elphinstone Mills.

►Cyprus SPV is Navilith Holdings Ltd (“Navilith”).

►Navilith will be acquired by IPIT post-listing which will then acquire the optionally convertible debentures (“OCD”) in the Indian SPVs from FIM Holdco I Ltd. and FIM Holdco II Ltd.

Unit Holders

IPIT


Indiabulls Property

Management

Trustee Pte. Ltd.

(the Trustee

Manager)

Mngmt & trustee

services

Mngmt & trustee

fees

Cyprus SPV

Owners

hip (to

be

acquire

d by

IPIT

post-

listing)(

100%)

Dividends/proceeds on

redemption of

PSC/proceeds on

repayment of SH loan

Mauritius

Tier 1 SPV

Dividends/proceeds on redemption

of PSC/ proceeds on redemption of contributed

capital/proceeds on repayment of SH’s loan

100%

Mauritius

Tier 2 SPV

Mauritius

100%

Dividends/proceeds on redemption of

PSC/ proceeds on redemption of contributed

capital/proceeds on repayment of SH’s loan

Indian SPVs

India

100% Dividends/proceeds on

redemption of PSC/ proceeds

from share buy back

Optionally / Compulsory

Convertible Debentures

Inte

rest/

Pro

ceeds o

n r

edem

ptio

n o

f

optio

nally

convert

ible

debentu

res

Indiabulls

Real Estate

Limited

(the Property

Manager)

Provides property

Mngmt services

Property Mngmt

fees

One Indiabulls Centre and

Elphinstone Mills (the Properties)

Property

income 100%

Case Study RHT - Structure

Notes:

► FHIL, a wholly-owned subsidiary of the Sponsor, will hold 28.0% of the Units expected to be in issue at the Listing Date.

► Kanishka Healthcare Limited (“KHL”) will, within three business days of the Listing Date, complete its subscription for CCPS in EHIRCL for an aggregate consideration of `3,000 million (S$68.9 million). EHIRCL is a wholly-owned subsidiary of the Sponsor and is not part of the RHT Group.

► The remaining 51.0% of shares in Fortis Hospotel Limited (“FHTL”) are held by the Sponsor as it is required to maintain ownership of 51.0% of the shares in FHTL.

► Fortis Global Healthcare Infrastructure Pte. Ltd. (“FGHIPL”) holds or will hold interest-bearing compulsorily convertible debentures (“CCDs”) issued by Escorts Hospital and Research Centre Limited (“EHRCL”), Escorts Heart and Super Specialty Hospital Limited (“EHSSHL”), Escorts Heart and Super Specialty Institute Limited (“EHSSIL”), FHTL, International Hospital Limited (“IHL”) and KHL.

► KHL holds or will hold interest-bearing optionally convertible debentures (“OCDs”) issued by Fortis Health Management Limited (“FHML”).

► EHSSHL holds or will hold interest-bearing OCDs issued by KHL.

► FHTL holds or will hold interest-bearing OCDs issued by each of EHSSIL and KHL.

► EHRCL holds or will hold interest-bearing OCDs in Hospitalia Eastern Private Limited (“HEPL”) and KHL.

► KHL holds 29,000 redeemable preference shares (“RPS”) in issue in FHML.

► FHML holds 490,000 non-cumulative RPS in HEPL.

► IHL holds 500,000 RPS in EHSSHL.

Unit Holders

RHT


Religare Health

Trust Trustee

Manager Pte Ltd.

(Trustee-Manager)

Fees

Acts on behalf

of Unit holders

and provides

Mngt. services

FGHIPL

100%

Singapore

India

KHL

52%

FHML

48%

52%

EHSSIL FHTL IHL HEPL

48%

100% 49%

74.46%

100%

EHIRCL EHSSHL EHRCL

100%

100%

CCPS 25.54%

Considerations of the BT structure

Legal & Regulatory

Compliance with Indian and Singapore

laws as applicable to company, while

structuring the business trust

Governance of trust is prime important

which is taken care through draft of

trust deed with higher corporate

governance standards

Compliance with Indian FEMA and FDI

regulations while inviting foreign

investors for asset investments in India

Compliance with Singapore listing

criteria and requirements

Taxation

Evaluate tax propositions for various

structure being considered for

business trust to achieve given

strategy

Careful analysis of tax aspects /

implications if company is

contemplating to create business trust

for indirectly owned assets

Evaluate tax implications for

distributions from and investments in

off-shore trust

Analysis of potential tax implications

on disinvestment in Indian assets in

future depending on the investment

structure of the trust

Financial Reporting

Evaluations of accounting implications for various business trust structures being evaluated , at the very inception, considering following

legal, tax and commercial aspects.

Conversion the Indian GAAP financial information into IFRS/US GAAP /Singapore GAAP

Preparation of the historic financial information , proforma financial statements, projections and forecasts, as required to be included in the

offer document

Commercial

Ensuring revenue stream for unit

holders and investors of business trust

Managing conflict of interest between

business group and business trust

having common business

Keeping sponsor’s commitment to

convince unit holders on viability and

profitability of business trust

Ernst & Young stake in the Process

- Work seamlessly with other stakeholders to check accounting implications for various structures being considered

- Evaluate and resolve complex accounting and reporting issues

- Assist company to prepare financial information to be included in offer documents

- Liaise with independent accountant

-

- Evaluate various business structures from tax perspective which are being explored to achieve given business strategy.

- Assist trust in adopting appropriate structure from tax perspective and strategy for public company

- Complete audit/review of interim/annual financial statements

- Assist in the response to be given to listing authority

- Provide “Comfort Letter”

- Ensure compliance with Indian and Singapore laws with respect to business trust being selected

- Draft trust deed considering regulatory compliance and commercial concerns.

- File the required legal documents with listing authorities

- Perform due diligence

- Assist company to file listing application

- Assist in performing road shows and investors meetings

- Execute underwriting agreement

LISTING PROJECT MANAGEMENT

Financial &

Accounting

Advisor

Tax

Advisor Independent

Accountant

Recent Developments

- Will SEBI permit REIT in India?

- Is Alternate Investment Fund a compelling alternative?

- What is the FDI policy outlook for investment in the sectors, mainly

Real Estate?

- Is this a Sale & Lease Back arrangement?

- What feedback are we getting from bankers and SGX?

How to Identify Opportunity

► Type/size of clients

► External business environment / client issues

► Questions to Ask

FAQs

► What differentiates EY from its competitors?

► Do you have relevant experience for these solutions in India or you

would source these resources from your overseas offices?

► Can you provide a client reference where your solution has been

successfully implemented?

► Can we enter into a success fee based arrangement?

Key Credentials

Key credentials

► Mothersun Suni –

IFRS conversion

assistance &

Accounting manual

► Federal Mogul –

Excel model for

Consolidation

► Sona Okegawa-

IFRS conversion

assistance

Automobile

► NNPC – Accounting

Manual and IFRS

Financial Statement

in Excel/Access

► Oil India –

Accounting Manual

► Essar oil –

Accounting manual

► SKS Power –

Accounting manual

► Cairn Energy- IFRS

conversion

Oil & Gas&Utilities

► Ranbaxy – IFRS

Conversion, Fixed

Asset Register re-

creation

► Religare Health

Trust– Accounting

Manual & IPO

advisory

► Strides Arcolabs-

IFRS conversion

assistance

Pharma/Hospital Manufacturing/FMCG Communcation

Gems/metals/minerals

► Diarough –

Accounting manaul,

consolidation

manual and

Hyperion

implementation

assistance

► Bharti Airtel- IFRS

conversion

assistance

► Vodafone-

Accounting advisory

► MTNL- Accounting

advisory

► Duraline – Faster

FSCP and reduce

usage of Excel for

reporting

► Hamdard - Chart of

Account definition

► Rexam HTW

Beverages-

Financial

remediation

► BOTM- White paper

on RBI notification

► J & K Bank- IFRS

conversion

► Alloahabad Bank-

IFRS conversion

► Bank of Maharastra-

IFRS conversion

► Bank of India

► Canara Bank

FS ► Fluer Hotels- IFRS

diagonstic

► DLF Limited-

Transaction

advisory

► Bharti Reality-

Accounting Advisory

► Omkar developers –

Accounting Advisory

► Religare Health

Trust- Accounting

Advisory

Infra & Real Estate

Key credentials

Professional Services Technology

► Project Aptar- Accounting due-diligence on the

financial statements of target acquiree to identify

and quantify GAAP differences (IGAAP vs US

GAAP).

► Nokia- Assistance in carve- out accounting

► Various IPO audits including accounting advisory

► Various IFRS conversion projects

► IPPM- USGAAP training for a in bound acquisition

► Reebok- Financial remediation project

► HM- Pre entry accounting study

► Various revised Sch VI and XBRL engagements

Others

► Dell Computers-

IFRS conversion

assistance

► Allgeier –

Accounting manual

& transaction

accounting

► Mckinsey & Co-

Deferred tases

► MIH- Accounting

Advisory

► Mckinsey & Co-

Deferred tases

► International Travel

House- regulaotry

advisory

Thank You

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