PRESENTATION TO IOSCO MADRID, SPAIN TRANSITION TO IFRS: CHALLENGES FOR SUPERVISORS A SOUTHERN AFRICAN PERSPECTIVE BY JEFF VAN ROOYEN CEO – URANUS GROUP 15 – 19 October 2007

Contents SA Business Landscape IFRS Framework in SA IFRS challenges in Southern African Region How can IASCF help?

Current business landscape in South Africa Total population of 47 million Dual economy – sophisticated vs unsophisticated JSE* has a market capitalisation of US $825 billion with over 405 companies listed.** 20th largest stock exchange in the world by market capitalisation** Listed companies are obliged to comply with full IFRS LISTED & LARGE UNLISTED COMPANIES Large unlisted companies comply with full IFRS if deemed public interest companies. Challenge is to encourage new listings and grow capital market SME’s are obliged to comply with IFRS for SME’s SMALL & MEDIUM COMPANIES Informal record keeping if any Unemployment rate of about 30% INFORMAL SECTOR * JSE Limited ** At 31 March 2007

IFRS FRAMEWORK IN SOUTH AFRICA Corporate Laws Amendment Act 2007 All companies required to publish their financial information in accordance with GAAP Establishment of an independent Financial Reporting Standards Council to develop and maintain the accounting standards in line with international practice The standards will be onerous for public interest companies because they are primarily for the benefit of investors. (full IFRS)

IFRS FRAMEWORK IN SOUTH AFRICA JSE Listings requirements Compliance with full IFRS mandatory for all listed companies Registered with IASB – amongst the first countries to adopt IFRS Recently adopted IFRS for SME’s for limited interest companies (amongst the first - if not the first country in the world) Strong Accounting Profession – qualifications recognised internationally

IFRS CHALLENGES IN SOUTHERN AFRICA Eastern Central and Southern African Federation of Accountants (ECSAFA) Kenya - Malawi Tanzania - Lesotho Maurities - Swaziland Uganda - Botswana South Africa - Ethopia Congo - Namibia Zambia - Zimbabwe All ECSAFA member countries have adopted IFRS although only South Africa is registered with the IASB

IFRS CHALLENGES IN SOUTHERN AFRICA Serious implementation challenges which include:- Capacity Limitations:- Lack of technical expertise Lack of funding (World Bank funding available) Weak professional institutes (lack of reciprocity) Lack of training programmes (within region)

PROPOSED INTERVENTIONS BY ECSAFA Facilitate establishing of appropriate legal framework for adoption of IFRS in all jurisdictions (assist and influence government where necessary) Facilitate establishing of technical support structures at the accounting institutes (some progress has been made) Collaborate in providing appropriate training and training materials (South Africa has huge role in this regard) Collaborate in sourcing funding for the strengthening of accounting profession and implementation of IFRS (World Bank is providing funding) Arrange regional conferences / seminars to promote awareness and transfer skills. (recently hosted workshop relating to IFRS for SME’s)

HOW CAN IASCF HELP Encourage use of full IFRS for all listed companies and public interest companies Encourage use of IFRS for SME’s (suitable for SME’s and limited interest companies) Provide training materials at affordable prices (discounts are already in place) Provide “train the trainer” programmes (in progress for SME standards) Host regional conferences / seminars to promote awareness of benefits of IFRS (e.g enhance investment climate) Encourage / influence World Bank and IMF to provide funding and technical support for implementing of IFRS

Jeff van Rooyen Jeff van Rooyen is the CEO of Uranus Group, an investment and management consulting group of companies which he co-founded in 2005 In addition, Jeff serves on the Boards of a number of companies which are listed on the JSE. These include MTN Group Ltd and Pick ‘n Pay Stores Ltd. Jeff is also a Trustee of the International Accounting Standards Board Foundation. (IASCF) He is the former CEO of Financial Services Board, the capital markets regulator in South Africa and former Vice-Chairman of IOSCO executive committee