## (a) ifrS 1 mandatory exceptionS 

IFRS 1 outlines specific guidelines that a first-time adopter must adhere to under certain circumstances. The Company has applied the following guidelines to its opening statement of financial position dated January 3, 2010: 

## (i) Hedge accounting 

Hedge accounting can only be applied prospectively from the transition date to transactions that satisfy the hedge accounting criteria in IAS 39 at that date. Hedging relationships cannot be designated retrospectively and the supporting documentation cannot be created retrospectively. As a result, only hedging relationships that satisfied the hedge accounting criteria as of its transition date are reflected as hedges in the Company’s results under IFRS. Each of the Company’s hedging relationships were assessed to conclude that all hedges recorded under Canadian GAAP qualified for hedge accounting under IFRS at the transition date. 

## (ii) Use of estimates 

Retrospective adjustments to accounting judgments or estimates are not allowed as part of the transition, unless there is objective evidence that those estimates were in error. The estimates previously made by the Company under Canadian GAAP were not revised for application of IFRS except where necessary to reflect any difference in accounting policies. 

## (b) ifrS 1 exemptionS 

IFRS 1 sets forth guidance for the initial adoption of IFRS. Under IFRS 1 the standards are applied retrospectively at the transitional statement of financial position date with all adjustments to assets and liabilities taken to retained earnings unless certain exemptions are applied. The Company elected to apply the following exemptions from full retrospective application of IFRS in its opening statement of financial position dated January 3, 2010: 

## (i) Business combinations 

The Company elected to utilize an option provided by IFRS 1 to retrospectively apply IFRS 3 (2008), Business combinations (“IFRS 3 (2008)”) to business combinations that occurred subsequent to a specific date, which may be on or before the Company’s transition date. As such we have restated all business combinations that closed on or after December 19, 2007 to reflect the requirements of IFRS 3 (2008). 

## (ii) Consolidated and Separate Financial Statements 

In accordance with IFRS 1, if a company elects to apply IFRS 3 (2008) retrospectively, the amendments to IAS 27, Consolidated and separate financial statements (“IAS 27 (2008)”), must also be applied retrospectively. As the Company elected to retroactively restate in accordance with IFRS 3 (2008) effective December 19, 2007, we are also required to early adopt the amendments to IAS 27 (2008) effective December 19, 2007, which did not have any financial impact on the Company’s statements. 

## (iii) Currency translation differences 

Retrospective application of IFRS would require the Company to determine cumulative currency translation differences in accordance with IAS 21, the effects of changes in foreign exchange rates (“IAS 21”), from the date a subsidiary or equity method investee was formed or acquired. IFRS 1 permits cumulative translation gains and losses from foreign operations to be reset to zero at a Company’s transition date. The Company chose to apply this election and has eliminated the cumulative translation difference and adjusted retained earnings by the same amount at the date of transition to IFRS. If, subsequent to adoption, a foreign operation is disposed of, the translation differences related to this foreign operation that arose before the date of transition to IFRS will not affect the gain or loss on disposal of this foreign operation. 

## (iv) Employee benefits – recognition of actuarial gains or losses 

The Company elected to apply an optional exemption provided by IFRS 1 that allows unrecognized cumulative actuarial gains or losses and vested past service costs (but not any unrecognized non-vested past service costs), as calculated in conjunction with an IFRS-compliant actuarial valuation, to be immediately recognized on the Company’s date of transition to IFRS, as part of the transition adjustment to retained earnings. 

