3i Group plc, UK

Process Definition Document

3i SBU: Finance
Process : Financial Controls
Sub-process : Portfolio Accounting, Agresso Controls and Processing, Agresso
system reconciliation and expenses accruals.
Version/Revision : PD-Draft-v 1.5
Date : June 09, 2007
Author : Ankur Lakhani
Reviewer : Bala Natrajan

Version History
Approved By
(3i Group plc.
Version No. Date Author History of changes
Representativ
e)
09th June, Ankur
PD-Draft-v1.5 AS-IS process
2007 Lakhani

1. Introduction 3

2. Portfolio Accounting .......................................................................................................... ............7

 2.1 Processing the Investment/Divestment deals in system ....................................7
2.1.1 As-Is Process Analysis.............................................................................7
2.1.2. Detailed As-Is Process Flow....................................................................8
2.1.3 Variations............................................................................................12

3. Agresso Controls 13

3.1 As-Is Process Analysis..............................................................................13

3.2 As-Is Process Flow...................................................................................14
3.3 As-Is Detail Process Description................................................................14

4. Processing & Posting Accounting Packs on Agresso.................................................... ...........15

4.1 As-Is Process Analysis.................................................................................15

4.2 As-Is Process Flow...................................................................................16
4.3 As-Is Detail Process Description................................................................16
4.4 Process Variations...................................................................................17

5. Expenses accruals and Systems reconciliation - Agresso ......................................................18

5.1 As-Is Process Analysis.................................................................................18

5.2 As-Is Process Flow...................................................................................19
5.3 As-Is Detail Process Description................................................................19
5.4 Process Variations...................................................................................20
5.5 Process Exclusions...................................................................................20

6. Compliance 21

7. Glossary of terms used...................................................................................... ..........................22

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1. Introduction

Objective of the document

This document captures the process of accounting for all investments and managing them on
portfolio basis. This document also identifies Static data maintenance as currently being done by the
Portfolio accounting team operating from UK. The concept of the As-Is process and context is
captured along with description of other incidental/supporting activities, applications used, and a
glossary of terms used within 3i Group plc, UK.

Portfolio accounting:

The portfolio accounting team initiates and maintains the accounting for all investments, divestments
and income recognition on Frameworks, the investment accounting system at 3i.

The investment process will require the following documents:

(1) Investment paper with signatures

(2) Committee minutes approving the investment
(3) Setting Up Forms (SUF)
(4) Variation notes before Completion
(5) Investment checklist
(6) Investments Funds Requisition (IFR)

Similarly the divestment process will require the following documents:

(1) Divestment paper – details on sale (cash only/stock only/cash-stock), full/partial status, proceeds,
deductions (brokerage fees, legal fees, commissions etc)
(2) Divestment checklist
(3) Setting up Forms, if divestment proceeds include new stocks issued
(4) Paper work for write-offs

Investing entities are reviewed for correctness on papers submitted; accounting is executed for 14-15
investment entities including the ELPs/SLPs. An investment request will need to be set up for each of
the entities on Trema; this will then be coded as a FrameWorks control account.

The transaction may be effected through inter-company transactions when 3i pays up (typical for
specific currencies) or individual payouts from each of these entities, while the external funds pay out
separately.

All investment requisitions need to be authorized and approved by respective groups and portfolio
accounting team separately. Lawyers and/or investment operations would review prior to release of
funds. Summary of Investment Completion (SoIC) is the final form received from legal team indicating
that the investment is completed.

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The greater challenge in this function is to get the paperwork and information rather than actual set
up on Frame Works. All cash outflows through the month need to be registered by end of the month.
Typically data capture on FrameWorks should be completed within 2-3 business days.

Forex runs are affected after transactions are closed for the month end; all capital items are required
to go through the forex run. Rollback transactions relate to corrections of errors on the system and
can be done only within the month end. There could be utmost 2-3 rollbacks daily and routed through
specific people within 3i.

Income recognition is equally involved as the investment/divestment transaction. Investment

administration has to address each legal entity separately. For example, if five legal entities are
involved in an investment, five separate interest bills go out to the investee company for the share of
loan given out by each legal entity. Cash reports are pulled off daily and all non-Treasury receipts are
coded as GL, FrameWorks, and company transactions. The investment related to the receipt and the
involved entities need to be traced and coded. Conversations with related portfolio administrator will
be necessary to understand the transaction. Cross currency transactions involve receipts in one
currency from an investment made in a different currency.

Systems Overview:

All SMi deals remain on GASP while all open non-SMi deals have been migrated to FrameWorks.

FW version 7 upgrade (current version 6.4) is scheduled to be completed (user testing with resources
from Trinity Park) before Dec 2007. Numerous bugs were identified in the earlier version and are yet
to be fixed. FW includes many modules such as (1) portfolio accounting (2) portfolio manager (3) fund
accounting (4) nominal ledger (5) contact management.

The basic record details for a company captured on FrameWorks include the following:
(1) Name/address of customer
(2) Currency of investment
(3) Standard industry code
(4) Business line within 3i
(4) Cost centre code

The securities involved in a typical deal structure captured on FrameWorks are as follows:
(1) Equity shares – every investor has same rights (dividends) for the same class of equity; e.g.
alphabet shares include A-Z ordinary shares
(2) Interest bearing loans – For each entity, an interest profile (includes rate, billing address and
frequency, invoice template, gross of tax for direct investments with Investment Trust status, net of tax
for Eurofunds) & a redemption profile (amount, redemption frequency, Group may have PIK loans
while EuroFunds have deep discount bonds)
(3) Preference shares

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(4) Deep discounted bonds
(5) PIK notes

Financial Controls:

Individuals in this group have responsibilities along horizontal services and accounting for individual
entities. There are multiple horizontal services within this function which support all business lines and
support functions, as follows:

o Interface processing
o Reconciliations
o Controls

Refer to systems overview for more details on interface processing.

Reconciliations among the core systems - FrameWorks/Aggresso/GASP – are executed by cost

centre, by legal entity, by currency and by sterling and also with the data warehouse. This process
typically takes over 4-5 days. This team also investigates why some entries are found the way they
are in FW or GASP to answer queries from the investment team.

The controls process manages the individual heads such as Gross investments, Debtors & Creditors
accounts across the entities.

A brief summary of the activities performed by the financial controls team include the following:

o Foreign exchange rates are uploaded monthly into both GASP & FW and manually captured
on Agresso. Portfolio accounting systems use last forex rates recorded but can be
overridden, where required.
o Day 1 processing will be initiated by moving data from the interface tables. All data are
transferred at the transaction level and not at the summary level.
o FW provisions are income provision runs where the provisions are applied on the income
streams based on the health status rules for investments. These are computed in the
interface tables and hence provision data sits in Agresso but not on FW.
o Expenses are captured on Aggresso through the Purchase ledger and include board costs,
audit costs, acquisition and divestment costs. These expenses are also only on Aggresso but
not on FW.
o Revaluations & translation processing is executed by client (2 FTEs x 4 hrs) in a 2 step
process and is done 3 times monthly. This is required to get the 4 currency views in line.
o Partnership level capital & income distributions cannot be tracked on Aggresso, and hence
the use of MS Excel.

The group company month end is around Day 8-Day 10, the funds month end is around the end of
next month.

System Overview:

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Aggresso is the ERP accounting system for statutory reporting for different entities. There are no
automatic data feeds into Aggresso; Richmond/Frameworks & GASP have daily transactions and
once a month, those are interfaced with Aggresso. Richmond can post automatically into GASP daily,
but cannot do so in Frameworks, hence control accounts (FW) are used, for nominal ledger accounts
on Aggresso, since they cannot be posted directly. Data from GASP and control accounts get into
Aggresso on a monthly basis via interface tables. The PowerBuilder based interface tables use the
FW GL codes while taking data into Aggresso from FW.

Aggresso organizes itself by collecting statutory entities into “clients”. Clients are defined by 4 key
elements - Year end/Reporting currency/Regulatory requirements (country)/chart of accounts.
Reporting views are by 4 currencies – transaction currency, reporting currency, Euro and Sterling.
While FW and IA are used for all other countries, France based transactions have separate
transaction numbers which factor both entity and transaction type.

Organisation of the team

The portfolio accounting team for the UK geography is a part of the Financial Controls group within
the Finance Department. In the current structure, there is a Portfolio Accounting Manager who reports
to the Head of Financial Control and within her team there are six portfolio administrators. Also, there
is one executive each for Frameworks Support & Maintenance and Systems Development team.
The Financial Controls team has 6 executives managing Agresso Support & Maintenance (1
executive); System Reconciliation and reporting (2 executives) and Agresso processing & controls (3
executives).

The portfolio accounting function for the US is currently supported out of Birmingham besides also
being dispersed in regional geographies like France, Germany and Sweden.

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2. Portfolio Accounting
Portfolio accounting describes the processing and maintenance of investment records of the deals
made by the business lines. The Portfolio administrators are responsible for gathering information on
the investment deals from the investment executives; processing them; setting-up entities and
investments on Frameworks; passing entries in Trema as well as Frameworks. The Portfolio
administrators as a part of processing & posting the entries through Frameworks, create entity and
investment level master files in Frameworks and in this sense enter and maintain Static Data.

2.1 Processing the Investment/Divestment deals in system

The process begins when a payment request is initiated by the investment executives for a proposed
investment to the portfolio accounting team at least 48 hours prior notice should be given, but it is
likely that cash is required to move out of Treasury with lesser notice. The portfolio administrator
receives the investment papers with required Committee approvals, set-up forms (hard-copy of the
relevant portion is provided) and request for payments.

The portfolio administrator verifies the documents to ensure the completeness of the information
given. The administrators would also ensure that the document has all the necessary approvals in
place (includes variations before completion). The portfolio administrator verifies if the investment is
made in an existing investment or in a new company (Please note that currently, investments are
maintained on the basis of entities). The portfolio administrator sets-up the contact details; entity and
investment level details in Frameworks.

Once this information is updated in Frameworks, the portfolio administrator sets up payment
requisition entries in Trema (Treasury Management system; also known as Richmond) and these
entries are authorised by a senior portfolio administrator. These entries would in effect be verified by
the administrator in the Treasury middle office team.

The portfolio administrators similarly post entries in Frameworks (Please note that the entries in
Frameworks would be done only after the cash is paid out of Treasury i.e. only once the actual
payment is made). Once the entries are posted on the systems, the portfolio administrators set up the
income related details for accruing the income (For e.g. Interest rates and billing intervals are set up
for loans). Similarly, the details of repayment schedules are entered by the team along with one-time
and recurring fees. The portfolio accounting team also manages the accounting for divestment deals
in a similar fashion.

2.1.1 As-Is Process Analysis

Inputs
• The main inputs are investment/divestment papers; approvals of relevant authorities; set-up
forms; request for payment, variations before completion, variations after completion, write-
off forms, investment and divestment checklists, 3rd party authorities, summary of investment
and divestment completions. The investment executives and group secretariat are the main

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 sources of information, the advice from tax & legal departments act as important inputs to
understand increasingly complex investment structures.

Enablers
• Trema/Frameworks systems;

Outputs
• Complete set of Portfolio accounts; facilitating investment payment and receipt.

2.1.2. Detailed As-Is Process Flow

As-is- Portfolio Accounting Entries for Gross New Investments & Portfolio Maintenance

Process periodicity -for every drawdown

Originator- Investment

Start
Executives/Group
Secretariat

Gather deal
related Forward Collect all the Obtain
documents . Fill Investment approvals / necessary
up Set -up forms. committee documents and approvals for
Send Investment minutes send increasing limits
paper

Receive
Investment Request for Request for
Do necessary
paper /
documents exist ? No all necessary increasing gross
payment documents commitment
Portfolio Accountants

requisition

Yes
No

Is it within Gross
Is this investment Is this further
in existing entity ? Yes investment ? No Commitment
figure?

No
Process periodicity : income accrual cycle
Pass gross
Update
Systems-Frameworks

investment
contact entries
details
End
Yes
Set -up Interest Process Generate Receive
Set-up definitions ; interest/other invoices from Queries . Check
billing format; available validity.
securities Yes capital accruals by templates & Resolve Allocate cash
details repayment 2nd week send it to the queries and against
profiles every month clients send Invoice outstanding
invoices
Systems- TREMA

Set- up Requisition for Cash is coded

payment to customer/ while PIK notes
lawyers for each legal have to be
entity. Authorise converted by
requisition Portfolio
Administrator

Receive
Receive fresh
Invoices Raise Queries .
Are calculations invoice with
and check done accurately No Request for accurate
Clients

for fresh inoice

amounts
accuracy Make
Payments in
form of cash /
Yes PIK notes

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As-is- Portfolio Accounting Entries Processing for Divestments

Process periodicity-for every divestment

Originator- Investment

Start
Executives/Group
Secretariat

Gather
divestment Forward Collect all the
related document Investment approvals /
and send it to committee documents and
Portfolio minutes send
administrator

Receive Request for

Do necessary
Divestment
documents exist ? No all necessary
details documents
Portfolio Accountants

Yes

Is this only Cash Is it for cash &

No No
divestment paper both

Receive
Yes Yes proceeds in
form of Paper
Receive
Receive
proceeds in
cash
form of cash
proceeds
& paper

End End
Investigate and
calculate the
transfer/conversion
Systems-Frameworks

Set-up new investment/ Set-up new investment/ to the new entity for
capital/fee definitions or For the new paper
capital/fee definitions or both full and partial
amend existing ones for investment create
amend existing ones for divestment
partial divestments or close contact details and
partial divestments or close
those no longer and create set- up security
those no longer and create
deferred consideration details
deferred consideration
Set-up new investment/
capital/fee definitions or
amend existing ones for
Investigate, calculate partial divestments or close
Investigate,
amount of cost relating those no longer and create
calculate and
to the cash proceeds deferred consideration
allocate cash to
and paper proceeds
the investment
and allocate the cash
either a full or
for both full or partial
partial divestment End
divestment
Systems- TREMA

Receive cash Receive cash

proceeds and proceeds and
do the coding do the coding

Receipt of Investment deal documents and setting-up process

As the Business line executives get ready to complete an investment they send a request to the
portfolio accounting team for processing the entries related to the deal. As a policy guideline, the
payment request should reach the portfolio accounting team at least 48 hours prior to date on which
cash is required to leave treasury, but rarely happens and regularly get the paperwork when we chase
following receipt of the monies. This request would be accompanied by investment papers; committee
approvals; set-up forms; variation forms, write-off documents, requests for payment etc. Please note
that the minutes of the Committee Meeting in which Investment is approved is sent by the group
secretariat to the portfolio administrators. Variations before and/or completion consist of changes to
the original terms of the investment, ranging from changes in interest rates, repayment profiles, to
conversion of one security to another, and one currency to another.

The portfolio administrators are required to exercise their diligence on these approval documents and
identify missing information. When the portfolio administrator identifies that some information
necessary for processing the payment is incomplete, s/he should go back to the investment
executives/group secretariat and obtain all relevant information. (Presently, this communication is
mainly via phone and email). Once complete information is obtained, the portfolio administrator
gathers all the details about the investee company from the details provided by the investment

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executives. These details are analysed to understand if the investment is in an existing company or in
a new entity. If the investment is in a new entity the portfolio administrators must set-up contact and
entity details, and for new and further investments the investment, income, repayment related details
of the investee company are required to be set up. Following are the main activities done for setting-
up entities in Frameworks:

I) Set up Contact and company details: Once complete details are available, the
portfolio administrators would first set-up contact details [name & address of
customer], contact person (the addressee on the interest invoice bill as specified in
the Set-up form) etc. [line 5 has to be populated to enable data retrieval by other
users]. The portfolio administrators can also make use of an application called
Interaction, a database which maintains details on companies that are normally in
contact with 3i. The contact details entered are then pulled into Frameworks.

After setting-up contact details, entity wise details are set-up in the Frameworks system.
These details would include place of operation, type of company, Group to which it
belongs, currency, Industry, sector, MIDAS number (this number enables data to flow to
data warehouse) etc. Once the entity data is updated, the case status (health of the
investee entity) is set-up. Please note that while updating many arrears, such as the
region/place, cost centre, legal entity, billing template etc, in Frameworks when there is a
need to add a new region for example, in the drop box, a request is to be made to
Support & Maintenance executive (presently, Ms. Birte Lassetter) and the region would
get updated from back-end. The portfolio administrator would then update the Accounting
information in Frameworks. This code would help identify the industry/sector in future
references. This code is to be obtained from the Industry & Sector team via an email.

II) Once the contact and entity details are set-up, the portfolio administrator sets up
Security details in Frameworks. The attributes of the securities are mainly the types
of security (Equity, Loans, Deep Discount bonds; (currently deep discount bonds are
not supported in Frameworks)); type of interest (fixed/floating), rate of interest
applicable; date of accrual of interest (if the security is a loan).

if the investment is in an existing company, then the setting-up of contact details and generic
company details are not required. However, the administrator must inquire whether it’s a further
investment in the investee company. If so, the administrator needs to set-up the security details. if it is
not a further investment, then the administrator needs to check if the request for payment is within the
gross commitment figure. If the drawdown is higher than the gross commitment approved, the
administrator needs to liaise with the Investment executives for enhancing this limit. The
enhancement must be approved by appropriate authorities before the portfolio administrator can go
ahead with setting-up of the requisition for payment in Trema (Treasury management system).

ii) This updating of master data is required only when the investment is in a new entity.

Setting-up requisition for investment payment in Trema & Posting entries in Frameworks

Once the contact, entity and security details are updated for a company, (this information would
already be available for existing investments) the portfolio administrator sets up the requisition(s) for
payment in Trema to forward cash to the client/lawyers for each legal entity. Portfolio administrators
make the payment entries after the payment requisition is set-up in Trema. The entry has to be
authorised in Trema by senior administrator in after which the administrator in Treasury middle office
would be able to view, verify and authorise the payment online.

Once this is done, entries have to be posted in Frameworks. For passing these entries, the
Investment Commitment has to be set-up. Investment commitment is the total amount of investment

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(in the form of equity participation, loan etc) approved by the authorities in a particular investee
company. This defines the approved commitment limit. Once the commitment limit is set, the gross
investment is set-up in Frameworks, which is actually the first drawdown.

Setting-up Income definitions, billing formats, accruals processing and Capital repayment
schedules

Once the gross investment is set-up, income definitions are set-up in Frameworks. These income
definitions include Interest /dividend/fee definitions. The portfolio administrator has to use a string of
codes to set-up income definitions. The income accrued may not be received in the form of cash, in
which case, the client would pay in the form of PIK notes and these have to be converted. Where the
income accrues and the payment is to be received in the form of PIK (payment in kind), a new
investment account has to be opened. Once the income definitions are set-up, accrual processing is
started. Presently, accrual processing is done at the middle of every month (presently the income
accrual calculations pertaining to PIK notes are done on Frameworks but a spreadsheet is used to
confirm the calculations).

After the income accrual processing is done, the administrator sets up the billing formats, the invoice
layout, tax regime for the investment and the country of residence. After this, invoices can be
generated on Frameworks. These invoices are uploaded in Frameworks as templates and it is
important to select the correct template. Once the invoices are generated in the prescribed template,
they have to be sent to the addressee through post.

The portfolio administrator also has to set-up the Capital Repayment profile on Frameworks. This
process involves entering the repayment schedule, fees receivable and other details.

Activities flow for Divestments

In case of Divestments, the portfolio administrator must identify the consideration to be received. The
administrator must check the divestment paper to identify if it is a cash divestment or the
consideration is received in the form of another security (e.g. divestment proceeds would be received
in the form of equity/loan in other investee company) or in the form of cash and paper. Once the
consideration is understood the portfolio administrator has two methods of accounting for the
proceeds. These methods are as under:

I) Cash Divestment: The Business line would dispose-off investments (as approved) and the
investment executives would forward all the necessary divestment papers (e.g. committee approvals)
to the portfolio administrators. Once these documents are received the portfolio administrator would
verify them for completeness. If the documents provided are not complete, the portfolio administrator
must liaise with the investment executives/group secretariat to obtain the required documents.

Once the portfolio administrator is in possession of all necessary documents, the cash that is
received in Trema would be coded. Once the entries are done, the portfolio administrator would
determine the investment relating to the proceeds and account for them in Frameworks. If this is a
partial divestment, calculations have to be done to ensure that the correct cost, valuation and foreign
exchange gain/ loss are accounted. The consideration may also be received in a different currency
and corresponding forex conversions have to be completed.

II) For Divestments where consideration is not in cash:

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In such a situation, there can be 2 possibilities:

a) Where proceeds received are in the form of cash and securities- The portfolio administrator must
code the cash on Trema and calculate the costs relating to the cash and paper proceeds and allocate
the cash for both full and partial divestments. For the new paper investment, the administrator must
create contact details and set-up new security details on Frameworks. The transactions on
Frameworks are treated as conversions. The administrators would set-up new interest/capital/fee
definition or amend the existing definitions for partial divestments or close those that are no longer
required and create deferred considerations if applicable

b) Proceeds received in the form of paper only: The administrator calculates the transfer/conversion
to the new entity for both full and partial divestments. The administrators set-up new
interest/capital/fee definitions or amends the existing definitions for partial divestments or close those
that are no longer required and create deferred considerations if applicable.

For partial divestments, the administrator has to take special care while allocating the proceeds
(presently allocated on a pro-rata basis in a spreadsheet). Full and partial divestments will require
different actions. Full divestments require all profiles to be closed down and deferred consideration
and no embarrassment clauses to be set up, whereas partial divestments will require the profiles to
possibly be amended, especially for loan capital repayment schedules.
-
The Portfolio administrator has to calculate offline for cash and paper transactions, the cost to be
attributed to the cash and paper proceeds.

Other activities:
i) The team has to reply to calls from clients, on billing calculations, missing invoices, follow-up on
R185 and PIK note certificates etc.
ii) The portfolio administrator has to regularly liaise with lawyers/tax-consultants for developing a
correct understanding of the investment/divestment deal papers.

2.1.3 Variations
The investment/deal related documents must be sent to the portfolio accounting team at least 48
hours prior to the cash leaving treasury. Often, the documents are not received by the portfolio team
before 48 hours. In effect, the papers are received on 24hrs notice and in few urgent cases the notice
is lesser than 24hrs.

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3. Agresso Controls

3.1 As-Is Process Analysis

Inputs
• The main input for agresso controls is an excel sheet sent to the users for knowing the status
of activity completed.

Outputs
• Status of activity completion in Agresso.

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 3.2 As-Is Process Flow

As-is- Agresso System Activity Controls - Financial Controls

Originator- Agresso
Processing team

Send an excel
sheet seeking
Receive Track/follow- Print
Start information on
individual up with users individual
status of activity
updated excel to get updated responses for
End
completion
sheets file filing
System- Agresso

Complete the
activity

No
Agresso users

Receive the Is the activity Update excel

complete Yes
excel file & send it back

3.3 As-Is Detail Process Description

Agresso control is a process of ensuring that all the activities required to be completed in Agresso are
completed. This process is critical because on a monthly basis data from Frameworks and GASP
move into Agresso and from Agresso this data moves into Data Warehouse. Hence, 3i presently
maintains a cut-off date at month-end after which the data from other systems cannot flow into
Agresso.

Sending excel sheet to all the users and documenting their responses
The primarily responsibility of this team is to make sure that all Agresso processes are run on time
and they exercise control on the processes. This process begins when an excel sheet is sent to all
the users in Finance, in the 3rd week before the month-end to get a signoff on the status of the
activity that they are responsible for. This excel sheet is sent via an email and responses from the
users are stored in physical form. Where the activities are pending completion, the team would follow
up with the users.

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4. Processing & Posting Accounting Packs on Agresso

4.1 As-Is Process Analysis

Inputs
• The main input for agresso processing is the accounting packs from other geographies where
agresso system is not rolled-out.
Enablers
• Agresso.

Outputs
• Accurate entries are posted in Agresso.

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 4.2 As-Is Process Flow

As-is- Processing & posting A /c packs on Agresso - Financial Controls

Agresso Processing
team

Check for
Receive the Generate Receive accuracy and
Do the Are the entries End
accounting
decoding correctly posted?
Yes compiled queries , if any raise queries
pack report if any

No
System- Agresso

Pass
Post entries necessary
Journals
Originator- Business unit

Send
accounting
pack at Check for
beginning of Receive
accuracy and
the month compiled
raise queries
reports
if any

Start

4.3 As-Is Detail Process Description

Agresso processing involves revaluation, processing, and posting manual entries in Agresso,
accounts for statutory accounts, Interfaces from GASP/TREMA, making sure that the entries are
routed to the correct accounts.

Asia and Italy do not have Aggresso and their financials are received and captured on Aggresso
manually. The outputs from Aggresso are sent back to these geographies.
This process is critical because it must be completed before the monthly agresso-run. This
information flow happens on a monthly basis when data from Frameworks and GASP move into
Agresso and from Agresso this data moves into Data Warehouse. Hence, 3i presently maintains a
cut-off date at month-end after which date the data from other systems cannot flow into Agresso.

Receiving accounting packs, decoding and posting entries in agresso

The team receives the accounting pack from the business units where agresso is not rolled-out
(currently, Italy and Asia) at the beginning of the month. Once the accounting pack is received, the
executive decodes the pack and inputs in Agresso. This would be done by the end of working day 8,
every month.

Other Activities done by the team:

i) Controlling yearly accounts for Pension Plans:
Process Overview: The pension accountant is responsible for compilation of statutory Pension Plan
accounts and the year-ending followed is 30th June. Pension accountant would prepare/compile the
financials along with a trustee report (on draft basis) which would be presented to the members of the
pension plan (Trustees of the pension fund). The members or the trustees would lend their
suggestions on the financials, which are incorporated by the accountant and submitted to the
members for approval in a Trustee meeting. The accountant would prepare the Trustee report in
conjunction with the HR team. The employee details pertaining to the pension plan is provided by the
HR in hard copy. HR would administer the plans; provide AVC (valuations related document); control

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annuity plans etc. The investment managers for the pension plan are Legal & General. They would
produce a report capturing the new investments and the movements in existing investment on a
fortnightly basis via email (the accountant can also view the website of Legal & General). The
accountant would draw out the details and analyze the movements in investments which are then
reflected in the financials. The details of pension plan are to be manually entered on Agresso where
the pension plan rests as a client. The accountant is presently using excel spreadsheet for preparing
the financials statements and is an extremely manual process. The statutory financials are required to
be audited after the year-end by statutory auditors (Ernst & Young is currently managing the audit) as
required by SOX.
Accountant Profile: The accountant has 18+ years of work experience (3 yrs+ with 3i) and is an
Association of Accountants and Technicians & has to finish module of Chartered Accountancy (Semi-
Qualified). The accountant is solely responsible for preparing the statutory accounts and does not
have any other support/assistant working with him.

ii) Interfaces from GASP/TREMA, making sure that entries are routed to the correct clients/accounts.

iii) Revaluations and translation processing is a two stage process for getting the monetary assets in
Balance sheet at month end rate. (There exists a procedure form/checklist which is attached below).
A month end rate is requested from Treasury through an email. Once this month-end rate is received
from treasury, it would be copied into Agresso. An individual administrator would make entries for a
particular currency. For example, an administrator would pick out all entities where GBP/EURO
equivalent rate needs to be entered and would enter the same for all such entities. Once the rates are
entered in agresso, a print of the screen is taken and compared with rates sent by treasury to check
accuracy of rates entered. This is also an important check point because once the exchange rates are
authorised and saved in agresso, it is difficult to amend them.

iv) Profile of the team handling Agresso Processing and controls: There are 2 semi-qualified
administrators working in the team. One person is training to be a chartered administrator (in her final
year) while the other administrator is a graduate.

v) Statutory report compilation of other 3i subsidiaries.

vi) VAT filing for the above said entities on quarterly basis.

Agresso system development & support involves the management of Agresso rollout to new
geographies, training for new users and ongoing assistance to Agresso users across the company
globally.

4.4 Process Variations

i) Constant challenge to get users to correct/amend information on the system and rather than in an
excel.

Confidential Page 17 of 22 9/19/2008

5. Expenses accruals and Systems reconciliation - Agresso

5.1 As-Is Process Analysis

Inputs
• The main input for reconciliation is the data that flows into Agresso from other systems like
Frameworks, Trema, and GASP. The input for expense accruals is an excel sheet containing
the details of expenses sent by respective departments.
Enablers
• Agresso.

Outputs
• Accurate data flow in Agresso and proper expenses accrual.

Confidential Page 18 of 22 9/19/2008

 5.2 As-Is Process Flow

As-is- Expenses Accruals processing on Agresso- Financial Control

Originator- Financial
control team

Send an excel
Receive
sheet seeking
individual Verify
Start information on
updated excel accruals data
expenses to be
sheets
accrued
System- Agresso

Post entries on
basis of cost End
centres

No
Concerned Departments

Send the
Receive the Compile Is required data compiled data
compiled? Yes
excel file accruals data to Financial
Controls team

5.3 As-Is Detail Process Description

Expenses accruals: The process begins when the administrator in Financial Controls sends a
template spreadsheet, and compiles accrual data from different departments (currently, 15
departments) and uploads the data into Agresso. The entries are done on the basis of cost centres,
included in the details sent in the spreadsheet by the different departments. The administrator is also
responsible for data reconciliation of Data Warehouse and Frameworks with Agresso.

Expenses Accruals: Sending excel spreadsheet and posting entries in Agresso

In the last week of the month, the administrator sends a spreadsheet to different departments asking
them to send expense accrual data by the second working day of the month Once the departments
send the spreadsheet with accrual details, the administrator must check all accruals data (to confirm
if there are any duplicate entries) before posting entries in Agresso

The entries are made on the basis of cost centres provided in the spreadsheet sent by the
departments. In case cost details are required, the administrator gets the same from the respective
department. When there is request for adding new cost centre details, the cost centres have to be
created in Agresso, Frameworks, Trema and GASP.

For setting-up a new cost centre, an email request is received from a department and the request is
prepared in a prescribed format. This request would go to the Head of Financial Controls for approval.
Only when it is approved by the Head of Financial Control it would be sent to the executive who
provides Agresso support and maintenance.

Reconciliation between Agresso and Frameworks & Data Warehouse

Confidential Page 19 of 22 9/19/2008

At every month-end, reports are generated from Agresso, Frameworks and Data Warehouse and are
then uploaded onto a spreadsheet. The administrator must investigate this spreadsheet and find out
entries with discrepancies. After discrepancies are identified, the administrator emails the concerned
executive asking him/her to journalize rectifying entries. The administrator in financial controls would
make sure that rectification/journal entries are routed through the systems and not through manual
adjustments (for e.g. when an entry in Frameworks needs rectification, the administrator would
ensure that the entry is passed through Frameworks and not through back-end adjustments in
Agresso.

Other Activities:
i) Every month when data flows from all the systems into Agresso, the administrator must ensure that
all the entries have gone into proper accounts and there are no pending entries in any of the
control/suspense accounts. If such entries exist then the administrator must ensure that these entries
are routed to proper accounts.
ii) Accounts Payable would send details of all payment entries during a month to the administrator on
the 1st working day of the next month. These entries need to be checked and closed on the same day
in Agresso.

A significant share of the communication between this team and other divisions is via email.

5.4 Process Variations

No variations noticed.

5.5 Process Exclusions

i) Agresso support/maintenance and Pension accounting process are excluded from the scope of this
document.

Confidential Page 20 of 22 9/19/2008

6. Compliance

• There are no compliance requirements around staffing and training.

Confidential Page 21 of 22 9/19/2008

7. Glossary of terms used

Portfolio: Represents the investment made in a company.

PIK notes: This refers to Payment in Kind notes. These are notes issued in lieu of cash. These are
notes received against payment of current income such as dividends, interest etc.

Summary of Investment Completion: Provides complete summary of the investment completed

which would be useful in setting up the investment in Frameworks.

Confidential Page 22 of 22 9/19/2008