EFFICIENT GROUP LIMITED Registration number: 2006/036947/06. Group and Company Annual Financial Statements for the year ended 31 August 2017

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1 Registration number: 2006/036947/06 Published on 13 November 2017 The annual financial statements were prepared by: Yazeed Patel CA(SA) Financial Manager The financial statements have been audited in compliance with the applicable requirements of section 30 of the Companies Act of South Africa

2 Contents Page The reports and statements set out below comprise the annual financial statements of Efficient Ltd (the ) and of the its subsidiaries (the ), presented to the shareholders of the : Directors' responsibility and approval 2 Audit and risk committee report 3 to 5 Statement of compliance by the company secretary 6 Directors' report 7 to 11 Independent auditor's report 12 to 16 Statements of financial position 17 Statements of comprehensive income 18 Statements of changes in equity 19 to 20 Statements of cash flows 21 Significant accounting policies 22 to to 76 The following supplementary information does not form part of the financial statements and is unaudited: Analysis of shareholders 77 1

3 EFF"ICIENT GROUP LIMITED Directors' responsiblllty and approval for the year ended 31 August 20l7 The directors are responsible for the preparation and fair pre51mtat10n of the and annual financial statements of Efficient Ltd, comprisinq the statements of financial position at 31 August 2017, the statements of comprehensive income, chanoes In equity end cash flows for the year then ended, and the notes to the fln11.ncl11.i statements which Include slgnlflcant accounting policies and other explanatory notes, In accordance with International Financial Reporting Standards (IFRS) and the requirements of the Companie& Act of South Africa. In addition, the directors ere responsible for preparing the directors' report. The directors are also responsible for such Internal control as they determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and for malntalnln,;i adequate accounting records and an effective system of risk management as well as the preparation of the supplementary schedule Included In these financial statements. The directors have made an assessment of the ability of the and to continue as going concerns and' have no reason to belleve that the businesses wdi not be golno concerns In the year ahead. The auditor ls responsible for reporting on whether the and flnanclal statements are falr1y presented in accordance with the applicable flnimcial reporting framework. Approval of the and annual financial :.tetements The and annual flnanclal statements of Efficient Ltd, as Identified In the first pareoraph, were approved by the /40 board of directors on 9 November 2017 and are signed by: t Dr sr BooyH Mr H Weldhue Authorised di r Authorised director Chairman oft Board Chief Executive Officer 9 November 7 9 November 20!7 2

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8 Directors' report The directors submit their report. Efficient Ltd (the ), (registration number 2006/036947/06) is a public company incorporated in the Republic of South Africa. The 's registered address is 81 Dely Road, Hazelwood, Pretoria, Review of activities Main business and operations The is the holding company of the Efficient subsidiaries. The 's subsidiaries' main activities are that of asset management, asset administration, asset consultation and offering of financial services. Operating results The financial statements presented on pages 17 to 76 set out fully the financial position, results of operations and cash flows of the and. At the reporting date, the 's and 's current liabilities exceed its current assets. Management assessed the and 's cash flow forecasts and its access to secured credit, which includes the realisation of net deferred tax assets of R10.97 million (2016: R10.34 million) for the and R (2016: R1.43 million) for the during the next 12 months. Based on the cash flow forecast and the timing of cash inflows and outflows, management is of the opinion that the will be able to settle its short-term commitments as and when they become due. As the ultimate holding company of the, the will also be able to settle its short-term commitments as and when they become due. The 's profit for the year amounted to R46.89 million (2016: R37.52 million) and the 's profit for the year amounted to R82.67 million (2016: loss for the year of R3.90 million). Acquisitions During the current year, the acquired four (2016: 15) financial advisory client bases from various independent financial advisors for a total purchase price of R3.86 million (2016: R6.40 million) through Efficient Financial Services (Pty) Ltd which will be settled in cash on varying dates based on the respective agreements, including the business of Vital Consult National Holdings (Pty) Ltd as a going concern on 1 March Stead Wealth Management (Pty) Ltd also acquired one financial advisory client base during the year. These acquisitions were accounted for as business combinations. The acquired the entire issued share capital of Vital Consult Wealth Management (Pty) Ltd for a consideration of R1 million. Interests were also acquired in the businesses of W-Allen White Brokers (Pty) Ltd and Secure Capital Investments (Pty) Ltd for considerations of R3.77 million and R7.81 million respectively. The consideration for Secure Capital Investments (Pty) Ltd includes a non-controlling interest portion of R1.75 million. The Private Clients business within Efficient Select (Pty) Ltd was merged with that of Uhuru Asset Management (Pty) Ltd, to form a company, Efficient Private Clients (Pty) Ltd, in which the acquired a 50.1% interest. The purchase consideration was R6.61 million, of which R4.76 million related to non-controlling interests. In addition to the above, the acquired Efficient Independent Distribution Services (Pty) Ltd, a dormant company with no identifiable assets and liabilities, at a purchase consideration of Rnil. 2 Share capital During the current year, the number of shares authorised and in issue remained unchanged. Number of shares '000 Cents per share R'000 Authorised: At 31 August , ,0000 Issued: At 31 August , ,2507 7

9 Directors' report 3 Borrowing limitations In terms of the Memorandum of Incorporation of the, the directors may exercise all the powers of the to borrow money, as they consider appropriate. The following borrowings were entered into by the during the current year: During March 2017 Efficient Capital (Pty) Ltd entered into an amortising term loan agreement with Standard Bank of South Africa Ltd amounting to R9.60 million to finance the acquisition of the 's Dely property. The continued to utilise the facility available with Standard Bank of South Africa Ltd to fund the construction of the Dely offices. Drawdowns of R9.90 million were made during the year on this facility. During the current year, the secured a bank overdraft facility of R10 million with Standard Bank of South Africa Ltd. 4 Distribution to shareholders Dividends of 5.47 cent per share and 1.63 cent per share were declared and paid in December 2016 (2015: 6.15 cent per share) and May 2017 (2016: 1.58 per share) respectively, by the to its shareholders. 5 Share-incentive scheme In terms of the share-incentive scheme, the share-based payment expense for the current year recognised in profit or loss was R (2016: R1.32 million) for the and R (2016: R ) for the. 6 Directors The directors of the during the year and at the date of this report are as follows: Date appointed Date resigned Executive H Weidhase AT de Klerk DD Roodt RH Walton Chief Executive Officer Chief Financial Officer Non-executive SF Booysen (1) Chairman LC Cele (1) L Taylor (1) JA Mabena J Rosen (1) AP du Preez MM du Preez (alternate to Mr AP du Preez) SDL Rushton (alternate to JA Mabena) OJ Goosen (2) I Groenewald (Alternate to OJ Goosen) B Ngonyama (1) /08/ The non-executive directors' contracts do not provide for a fixed-term employment period. (1) These non-executive directors are independent. (2) OJ Goosen was initially appointed as an alternate director to AP du Preez on 8 May However, upon the resignation of AP du Preez as a non-executive director on 23 August 2017, OJ Goosen was appointed to the board as a non-executive director. 8

10 Directors' report 7 Directors' interest The beneficial interest in the at 31 August 2017, direct and indirect, of the directors in office during the current year: Direct '000 Indirect ' Total '000 % Direct '000 Indirect '000 Total '000 % Ordinary shares Executive DD Roodt , ,72 H Weidhase , ,66 AT de Klerk , ,55 RH Walton , ,42 Non-executive SF Booysen , ,86 AP du Preez (1) ,34 MM du Preez (1) ,42 J Rosen , ,01 No changes in the reported interest of the directors in office were recorded since 31 August 2017 and the date of this report. The beneficial interest, direct and indirect, of associates of the directors at 31 August 2017 are as follows: Ordinary shares associated to Direct '000 Indirect ' Total '000 % Direct '000 Indirect '000 Total '000 % Executive H Weidhase , ,91 Non-executive SF Booysen , AP du Preez (1) ,28 Executive 2015 '000 Non-vested share appreciation rights allocated '000 '000 Closing Balance DD Roodt H Weidhase AT de Klerk RH Walton Grant price (cents) N/A 8 Directors' interest in contracts DD Roodt, H Weidhase and SF Booysen are shareholders of Midnight Storm Investments (Pty) Ltd. The rented its Dely Road offices from Midnight Storm Investments (Pty) Ltd at market related tariffs. During the current year, the purchased the property from Midnight Storm Investments (Pty) Ltd at a market related consideration of R9.60 million. (1) As these directors resigned during the current year, their interests (if any) at the reporting date are not considered to be held by directors. 9

11 Directors' report 9 secretary and professional advice All directors have unlimited access to the services of the company secretary, who in turn has access to the appropriate resources in the provision of this support. All directors are also entitled to seek independent professional advice with regards to the affairs of the. The company secretary is Mr J Nyahuye was appointed on 1 December Business and postal address: 81 Dely Road Hazelwood Pretoria Subsidiaries within the Ultimate shareholding Entity (2) (1) Held through Efficient Financial Services (Pty) Ltd Efficient Wealth (Pty) Ltd Twist Street Securities (Pty) Ltd Efficient Infund Consult (Pty) Ltd Efficient Select (Pty) Ltd Boutique Collective Investments (RF) (Pty) Ltd Boutique Investment Partners (Pty) Ltd Instit (Pty) Ltd Naviga Solutions (Pty) Ltd Twist Street Collective Investments (Pty) Ltd Select Manager (Pty) Ltd Stead Wealth Management (Pty) Ltd Exceed Asset Management (Pty) Ltd Exceed Private Clients (Pty) Ltd W-Allen White Brokers (Pty) Ltd Secure Capital Investments (Pty) Ltd (3) Efficient Independent Distribution Services (Pty) Ltd Efficient Private Clients (Pty) Ltd Efficient Board of Executors (Pty) Ltd Vital Consult Wealth Management (Pty) Ltd Efficient Capital (Pty) Ltd Efficient Central Services (Pty) Ltd Efficient Swaziland (Pty) Ltd Efficient Select Swaziland (Pty) Ltd (4) Midnight Masquerade Investments (Pty) Ltd Efficient Share Trust 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 70,48% 70,48% 70,48% 70,48% 70,48% 70,48% 100% 50,10% 50,01% 100% 100% 100% 51% 51% 100% - Direct shareholding Direct shareholding Indirect shareholding - Efficient Wealth (Pty) Ltd Indirect shareholding - Efficient Wealth (Pty) Ltd Direct shareholding Direct shareholding Direct shareholding Direct shareholding Direct shareholding Indirect shareholding - Naviga Solutions (Pty) Ltd Direct shareholding Indirect shareholding - Select Manager (Pty) Ltd Indirect shareholding - Select Manager (Pty) Ltd Indirect shareholding - Select Manager (Pty) Ltd Indirect shareholding - Select Manager (Pty) Ltd Indirect shareholding - Select Manager (Pty) Ltd Direct shareholding Direct shareholding (combined shareholding with Efficient Select (Pty) Ltd) Direct shareholding Direct shareholding Direct shareholding Indirect shareholding - Efficient Capital (Pty) Ltd Direct shareholding Indirect shareholding - Efficient Swaziland (Pty) Ltd Direct shareholding Direct control (1) The ultimate shareholding above indicates the shareholding held by the at the highest sub-group level. (2) Direct shareholding/control implies that the subsidiary is owned or controlled by the. (3) Select Manager (Pty) Ltd has a 51% interest in this entity. (4) Efficient Swaziland (Pty) Ltd has a 51% interest in this entity. 10

12 Directors' report 11 Events after the reporting date No significant events occurred subsequent to the reporting date that requires any additional disclosure or adjustments to the annual financial statements, other than the financial support approved for various subsidiaries within the as per note 37 to the financial statements. 12 Special resolutions On 25 January 2017, the held its annual general meeting and it was resolved that: non-executive directors of the are paid fees for the services rendered as directors of the and the amounts paid and payable were approved; the directors are authorised to approve that the provides any direct or indirect financial assistance to any company or corporation that is related or interrelated, under certain conditions; and the directors are authorised to buy back ordinary shares up to a maximum of 20% in aggregate of the 's issued ordinary share capital as at 25 January

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18 Statements of financial position at 31 August 2017 Notes ASSETS Non-current assets Property and equipment Goodwill Intangible assets Investments in subsidiaries Investments in equity-accounted associates Other investments Loans receivable Deferred tax assets Current assets Other investments Short-term portion of loans receivable Trade and other receivables Cash and cash equivalents Current tax receivable Total assets EQUITY AND LIABILITIES Equity Share capital and share premium Treasury share reserve 13,1 (532) (440) - - Accumulated income (losses) 13, (24 752) Fair value adjustment reserve 13, Revaluation reserve 13, Equity attributable to equity holders of the parent Non-controlling interests (2 443) - - Total equity Non-current liabilities Loans and borrowings Provisions Deferred tax liabilities Current liabilities Short-term portion of loans and borrowings Provisions Trade and other payables Current tax payable Cash and cash equivalents Total liabilities Total equity and liabilities Net asset value per share (cents) 290,68 246,28 Net tangible asset value per share (cents) 16,20 (30,86) 17

19 Statements of Comprehensive Income Restated 2016 (1) Notes Revenue (1) Operating expenses ( ) ( ) (17 668) (22 963) Operating profit Dividend income on other investments Profit on disposal of equipment Profit on disposal of customer contracts and customer relationships Other income (expenses) (915) (1 159) Fair value adjustment of investment designated at fair value through profit or loss (8) 108 (8) 25 Realised fair value adjustment on available-for-sale investments Gain on derecognition of loan payable to non-controlling interest Re-measurement of loans and borrowings at fair value through profit or 20 loss (6 589) (4 661) Impairment of goodwill 21,1 (9 324) Impairment of intangible assets 21,2 (118) Impairment of investments in subsidiaries 21, (21 153) Impairment of investments in equity-accounted associates 21,4 (5 265) - (5 265) - Impairments on loans receivable, net of reversals 21,5 - - (422) - Share of profits from investments in equity-accounted associates, net of taxation Operating profit (loss) before net finance income (1 137) Net finance income (costs) (3 620) (2 770) Finance income 22, Finance costs 22,2 (6 084) (3 630) (3 951) (3 231) Profit (loss) before taxation (3 907) Taxation 23 (14 924) (16 845) (222) 4 Profit (loss) for the year (3 903) Other comprehensive income Items that may be reclassified subsequently to profit or loss Unrealised fair value adjustments of available-for-sale investments Realised fair value adjustment of available-for-sale investments (161) reclassified to profit or loss Related taxation (31) (57) Items that may not be reclassified subsequently to profit or loss Revaluation of property Related taxation (438) Other comprehensive income, net of taxation Total comprehensive income for the year (3 903) Profit for the year attributable to: Equity holders of the parent Non-controlling interests (907) (23) Total comprehensive income for the year attributable to: Equity holders of the parent Non-controlling interests (907) (23) Basic and diluted earnings per share (cents) 24 52,95 41,55 (1) The comparative information has been restated as a result of a re-presentation between dividend and finance income and revenue. Revenue was erroneously classified as dividend and finance income in the prior year. Refer to note 18 of the notes to the financial statements. 18

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22 Statements of cash flows Restated 2016 (1) Notes Cash flows from operating activities Cash receipts from customers (1) Cash paid to suppliers and employees ( ) ( ) (34 481) (9 984) Cash generated from operations 27, Finance income received Finance costs paid (6 084) (3 630) (3 951) (3 231) Dividends received from investments in equity-accounted associates Dividends received from other investments Taxation paid 27,2 (20 337) (15 199) - - Net cash inflow from operating activities Cash flows from investing activities Acquisition of businesses, net of cash acquired 27,3 (8 388) (1 967) - - Proceeds on disposal of business 27, Acquisition of investments in subsidiaries - - (21 068) - Proceeds from loans receivable (loans receivable advanced) (3 751) (982) (9 095) Purchase and development of intangible assets (136) (1 217) - - Proceeds on disposal of intangible assets Disposal (acquisition) of other investments (966) - Proceeds on disposal of equipment Purchase and development of property (21 395) (23 984) - - Purchase of equipment (3 969) (1 133) (137) (309) Net cash (outflow) inflow from investing activities (19 844) (23 127) (9 387) Cash flows from financing activities Proceeds from long-term liabilities Repayment of long-term liabilities (13 596) (14 881) (13 127) (17 072) Repayment of forward purchase and dividend liabilities (21 861) (30 572) (15 001) (30 572) Repayment of other vendor finance liabilities (6 336) (4 453) - - Dividends paid (6 410) (6 990) (6 433) (7 010) Net cash outflow from financing activities (25 814) (27 857) (19 232) (37 654) Cash and cash equivalents movement for the year (9 901) (13 347) Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year (6 701) (1) The comparative information has been restated as a result of a re-presentation between dividend and finance income and revenue. Revenue was erroneously classified as dividend and finance income in the prior year. Refer to note 18 of the notes to the financial statements. As a result, the statement of cash flows for the cash received from customers and dividends received from subsidiaries was restated. 21

23 Significant accounting policies 1 Presentation of financial statements 1.1 Standards in issue, not yet effective The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been applied consistently to all the years presented, excluding the accounting policies for new Standards that are effective for the first time as referred to in the notes to the financial statements where applicable. The financial statements of Efficient Ltd (the ) and the financial statements of Efficient Ltd and its subsidiaries (the ) have been prepared in accordance with the International Financial Reporting Standards (IFRS) and SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the Companies Act of South Africa. The financial statements are prepared on a going concern basis using the historical cost convention, except for the fair value adjustments in relation to land and buildings, available-for-sale investments, investments at fair value and loans and borrowings at fair value. The financial statements are presented in South African Rand. References to the shall include the, unless otherwise stated. A number of new Standards, amendments to Standards and Interpretations are effective for annual periods beginning on or after 1 January 2017, and have not been applied in preparing these and financial statements. The and do not plan to adopt these Standards early. These will be adopted in the year that they become mandatory unless otherwise indicated. The new Standards and amendments to Standards and Interpretations relevant to the, are listed below: Effective for the year commencing 1 September 2017 Disclosure Initiatives (Amendments to IAS 7) Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12) Effective for the year commencing 1 September 2018 IFRS 15 Revenue from Contracts with Customers IFRS 9 Financial Instruments Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2) Transfers of Investment Property (Amendments to IAS 40) IFRIC 22 Foreign Currency Transactions and Advance Considerations Effective for the year commencing 1 September 2019 IFRS 16 Leases IFRIC 23 Uncertainty over Income Tax Treatments The above Standards are not expected to have a material impact on the financial statements, except for the potential impact of IFRS 9 and IFRS 15. More information on these Standards and their potential impact follows. IFRS 15 Revenue from Contracts with Customers This Standard replaces IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfer of Assets from Customers and SIC-31 Revenue Barter of Transactions Involving Advertising Services. The Standard contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognised. This new Standard is likely to have impact on the, which will include a possible change in the timing of when revenue is recognised, especially in the 's Financial Services cluster. The will not implement retrospective application for this Standard and will record any necessary adjustments in equity on 1 September The has established a Project Focus Team to review the impact of this Standard in more detail and is currently in the process of performing a more detailed assessment of the impact of this Standard. This Standard is not likely to have an impact on the 's financial statements. 22

24 Significant accounting policies 1.1 Standards in issue, not yet effective (continued) IFRS 9 Financial Instruments On 24 July 2014, the IASB issued the final IFRS 9 Financial Instruments Standard, which replaces earlier versions of IFRS 9 and completes the IASB s project to replace IAS 39 Financial Instruments: Recognition and Measurement. This Standard will impact the, which will include changes in the measurement bases of the s financial assets to amortised cost, fair value through other comprehensive income or fair value through profit or loss. Even though these measurement categories are similar to IAS 39, the criteria for classification into these categories are significantly different. As the majority of the 's financial assets approximate fair value, the impact of this Standard is more likely to be on the disclosures provided in the financial statements for financial assets. In addition, the IFRS 9 impairment model has been changed from an incurred loss model from IAS 39 to an expected credit loss model. This change is not likely to impact the as its main debtors are highly regulated financial institutions which are required to comply with stringent laws and regulations that in most cases include conservative capital adequacy requirements and financial soundness measures. 1.2 Basis of consolidation Business combinations The accounts for business combinations using the acquisition method when control is transferred to the. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Any contingent consideration is measured at fair value at the date of acquisition and is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss. Subsidiaries Subsidiaries are entities controlled by the. The controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the financial statements from the date on which control commences until the date on which control ceases. Forward purchase agreements There is diversity in practice as to how a forward purchase agreement with non-controlling interests (NCIs) is accounted for. While it is clear that having a forward purchase agreement with NCIs gives rise to a liability, what is not clear is what impact the recognition of a liability has on NCIs. There is extensive published guidance which indicates that, given the lack of guidance in IFRS, where the NCI has present access to returns, there is an accounting policy choice to use either: the present access method in which the NCI continues to be recognised. The NCI continues to be recognised because the NCI shareholders still have present access to the returns associated with the underlying ownership interests; therefore, the debit entry is to other equity; or the anticipated acquisition method in which the NCI is derecognised. The forward purchase agreement is accounted for as an anticipated acquisition of the underlying NCI - i.e. as if the forward had been satisfied by the NCI shareholders. The has elected to use the anticipated acquisition method as the accounting policy choice as it best represents the intention of the to exit the NCI shareholders. Where the NCI shareholder has the right to require the to acquire the shares of a subsidiary, the records a financial liability for its obligation to pay the forward purchase price, and de-recognises the related NCI. This recognition occurs when the forward purchase agreement is signed. 23

25 Significant accounting policies 1.2 Basis of consolidation (continued) Forward purchase agreements (continued) Where the forward purchase agreement is entered into as part of a business combination, the forward purchase is accounted for as a financial liability and is recognised as a component of the consideration transferred. No NCI is recorded. Subsequent to this recognition, the forward purchase liability is re-measured as a financial liability at fair value through profit or loss, with changes in the carrying amount of the liability recorded in profit or loss. When the forward purchase agreement is exercised, the amount paid by the will be recognised as a reduction in the forward purchase liability. A shareholders' agreement between the and the NCI shareholder of a subsidiary within the for which a forward exists, may require the relevant subsidiary to declare dividends in terms of a specific dividend policy. The estimated future dividends payable to the NCI until acquisition of the NCI shareholding, is recognised as a liability in the 's financial statements. This liability is re-measured as a financial liability through profit or loss. Structured entities A structured entity shall be consolidated when the substance of the relationship between the and the structured entity indicates that the structured entity is controlled by the. Non-controlling interests (NCIs) NCIs are initially measured at their proportionate share of the acquiree s identifiable net assets at the date of acquisition. Changes in the s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Investments in subsidiaries are carried at cost less impairment adjustments in the separate financial statements of the. Interests in associates Associates are those entities in which the has significant influence, but not control or joint control, over the financial and operating policies. Interests in associates are accounted for using the equity-method. They are initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, the financial statements include the s share of the changes in net assets of the equity-accounted investees less any impairments, until the date on which significant influence ceases. The s share of the profit or loss and other comprehensive income (OCI) of equity-accounted investees is recognised in profit or loss and OCI respectively. When the 's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. At the commencement of the prior year, the elected to early adopt the amendments to IAS 27 Equity Method in the Separate Financial Statements. As a result, investments in associates are accounted for using the equity-method in the separate financial statements of the investor entity in the directly holding the interest in the associate. Prior to this date, investments in associates were carried at cost less impairment adjustments in the investor entity's separate financial statements. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. 24

26 Significant accounting policies 1.2 Basis of consolidation (continued) Common control transactions A business combination involving entities or businesses under common control is a business combination in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the combination, and control is not transitory. Common control transactions are accounted for using book-value accounting whereby all assets acquired and all liabilities assumed are recognised at their carrying amounts in the financial statements of the, at the acquisition date. Any excess or premium paid for the acquisition of the net assets of the business acquired shall be recognised directly in equity. 1.3 Use of judgements and estimates The preparation of the and financial statements necessitates the use of estimates, assumptions and judgements that affect the reported amounts of assets and liabilities at the reporting date, as well as the reported income and expenses for reporting periods. Although estimates are based on management's best knowledge and judgment of current facts at the reporting date, the actual outcome may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. Judgements Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the consolidated financial statements is included in the following notes: Notes 5 and 6 - Consolidation and equity-accounting: Whether the has de facto control or significant influence over an investee. Assumptions and estimation uncertainties Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment during the current year is included in the following notes: Notes 3, 5, 6 and 21 - Impairment testing: Key assumptions underlying the measurement of recoverable amounts; Notes 9 and 23 - Recognition of deferred tax assets: Availability of future taxable profit against which tax losses carried forward can be used; and Notes 15.2, 15.3 and Remeasurement of liabilities at fair value through profit or loss: Key assumptions and variables underlying the calculation of the forward purchase liabilities, dividend liability and contingent consideration liabilities. Measurement of fair value A number of the 's accounting policies and disclosures require the measurement of fair values, for both financial and nonfinancial assets and liabilities. The has an established control framework with respect to the measurement of fair values. Management has overall responsibility for overseeing all significant fair value measurement. Management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified. Significant valuation issues are reported to the Audit Committee. When measuring the fair value of an asset or liability, the uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2: Inputs, other than quoted prices included in Level 1, that are observable for assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3: Inputs for assets or liabilities that are not based on observable market data. 25

27 Significant accounting policies 1.3 Use of judgements and estimates (continued) If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of fair value hierarchy as the lowest level input that is significant to the entire measurement. The recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Further information about the assumptions made and inputs used in measuring fair values is included in the following notes: Note 7 - Other investments; Note 8 - Loans receivable; Note 15 - Loans and borrowings; Note 34 - Share-incentive schemes; and Note 36 - Analysis of financial assets and liabilities. 1.4 Goodwill Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses and is tested for impairment at least annually. 1.5 Intangible assets Internally developed intangible assets Development expenditure is capitalised only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the intends to and has sufficient resources to complete development and to use or sell the asset. Subsequent to initial recognition, development expenditure is measured at cost less accumulated amortisation and any accumulated impairment losses. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred. Expenditure on research activities is recognised in profit or loss as incurred. Acquired through business combinations Intangible assets acquired through business combinations include trade, customer and marketing-related intangible assets, and have finite useful lives. These intangible assets are measured at cost less accumulated amortisation and any accumulated impairment losses. Amortisation Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives, and is recognised in profit or loss. The estimated useful lives in years for the current year and prior year are as follows: Trade names 3 to 20 years Customer contracts and customer relationships 10 to 20 years Computer software 4 to 7 years Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. 26

28 Significant accounting policies 1.6 Property and equipment Recognition and measurement Items of equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Property (land and buildings) is recognised at cost. Buildings are subsequently carried at a revalued amount being its fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Land is subsequently carried at a revalued amount being its fair value at the date of the revaluation less any subsequent accumulated impairment losses. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the. Any gain or loss on disposal of an item of property and equipment is recognised in profit or loss. Upon revaluation of the 's property, any increases in the carrying amount of the property due to its fair value is recorded directly in equity in the revaluation reserve, through other comprehensive income. Any decreases in the carrying amount of the property to its fair value is recorded directly in equity in the revaluation reserve, through other comprehensive income to the extent that there is a cumulative increase in the property's value recognised in the revaluation reserve. Where there is no cumulative increase in recognised in the revaluation reserve or where a decrease in the carrying amount of the property due to revaluation exceeds previous increases recognised in the revaluation reserve, such a decrease is recognised in profit or loss as an impairment loss. Where an impairment loss has been previously recognised in profit or loss on the 's property and the carrying amount of the property increases to its fair value, such an increase is first recognised in profit or loss as a reversal of previous impairment losses recognised. Once the increase recognised in profit or loss approximates previous impairment losses recognised, any additional increase in the carrying amount to its revalued amount is recognised directly in equity in the revaluation reserve, through other comprehensive income. When property is revalued, the property's accumulated depreciation is eliminated against the gross carrying amount of the property and the net carrying amount is restated to the property's fair value (revalued amount). Cumulative revaluation adjustments recognised in the revaluation reserve are transferred to accumulated income when the property is disposed of or is no longer classified as owner-occupied in the 's financial statements. Depreciation Depreciation is calculated to write off the cost of items of equipment and buildings less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognised in profit or loss. Land and assets under construction are not depreciated. The estimated useful lives in years of property, plant and equipment for current year and prior year are as follows: Furniture, fixtures and office equipment Computer equipment Leasehold improvements Buildings Other assets (electricity generators) 3 to 6 years 3 years 5 years 30 years 5 years Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. 27

29 Significant accounting policies 1.7 Share capital Ordinary shares Repurchase and reissue of ordinary shares (treasury shares) 1.8 Financial instruments Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of income tax. When shares recognised as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the treasury share reserve. When treasury shares are subsequently sold or reissued, the amount received is recognised as an increase in equity and the resulting surplus or deficit on the transaction is presented within share premium. The classifies financial assets and liabilities into the following categories at initial recognition: Financial assets at fair value through profit or loss; Available-for-sale investments; Loans and receivables; Financial liabilities at fair value through profit or loss; and Other financial liabilities at amortised cost. Recognition and derecognition The initially recognises loans and receivables and debt securities issued on the date when they are originated. All other financial assets and financial liabilities are initially recognised on the trade date when the becomes a party to the contractual provisions of the instrument. The derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by the is recognised as a separate asset or liability. The derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. Offsetting Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the currently has a legally enforceable right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. Measurement Financial assets at fair value through profit or loss A financial asset is classified as at fair value through profit or loss if it is classified as held-for-trading or is designated as such on initial recognition. Directly attributable transaction costs are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value and changes therein, including any interest or dividend income, are recognised in profit or loss. 28

30 Significant accounting policies 1.8 Financial instruments (continued) Measurement (continued) Available-for-sale investments These assets are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on debt instruments, are recognised in other comprehensive income and accumulated in the fair value adjustment reserve directly in equity. When these assets are derecognised, the gain or loss accumulated in equity is reclassified to profit or loss, as a realised fair value adjustment. Loans and receivables These assets are initially measured at fair value plus any directly attributable transaction costs and include loans receivable, trade and other receivables and cash and cash equivalents. Subsequent to initial recognition, they are measured at amortised cost using the effective interest method. Trade receivables are presented net of an impairment provision (allowance for credit losses) which is raised when indicators of impairment suggest that the receivable might not be collected. Movements in the impairment provision are recognised in profit or loss and uncollectable receivables are written off against the impairment provision. Recoveries of amounts previously written off are credited to profit or loss. Financial liabilities at fair value through profit or loss A financial liability is classified as at fair value through profit or loss if it is classified as held-for-trading or is designated as such on initial recognition. Directly attributable transaction costs are recognised in profit or loss as incurred. Financial liabilities at fair value through profit or loss are measured at fair value and changes therein, including any interest expense, are recognised in profit or loss. 1.9 Impairment Other financial liabilities at amortised cost Other financial liabilities are initially measured at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method. Where the carrying amount of financial instruments approximates their fair values and where the effects of discounting are not considered to be material, no such discounting is applied. The holds no derivative financial instruments. Financial assets Financial assets not classified as at fair value through profit or loss, including an interest in an equity-accounted investee, are assessed at each reporting date to determine whether there is objective evidence of impairment. Objective evidence that financial assets are impaired includes: Default or delinquency by a debtor; Restructuring of an amount due to the on terms that the would not consider otherwise; Indications that a debtor or issuer will enter bankruptcy; Adverse changes in the payment status of borrowers or issuers; The disappearance of an active market for a security because of financial difficulties; and Observable data indicating that there is a measurable decrease in the expected cash flows from a group of financial assets. 29

31 Significant accounting policies 1.9 Impairment (continued) Financial assets (continued) Financial assets measured at amortised cost The considers evidence of impairment for these assets at both an individual asset and a collective level. All individually significant assets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that has been incurred but not yet individually identified. Assets that are not individually significant are collectively assessed for impairment. Collective assessment is carried out by grouping together assets with similar risk characteristics. In assessing collective impairment, the uses historical information on the timing of recoveries and the amount of loss incurred, and makes an adjustment if current economic and credit conditions are such that the actual losses are likely to be greater or lesser than suggested by historical trends. An impairment loss is calculated as the difference between an asset s carrying amount and the present value of the estimated future cash flows discounted at the asset s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account. When the considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss. Available-for-sale investments Impairment losses on available-for-sale investments are recognised by reclassifying the losses accumulated in the fair value adjustment reserve to profit or loss. The amount reclassified is the difference between the acquisition cost (net of any principal repayment and amortisation) and the current fair value, less any impairment loss previously recognised in profit or loss. If the fair value of an impaired available-for-sale investment subsequently increases and if the increase can be related objectively to an event occurring after the impairment loss was recognised, the impairment losses recognised in profit or loss for the investment is reversed through profit or loss. Non-financial assets At each reporting date, the reviews the carrying amounts of its non-financial assets (other than deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset s recoverable amount is estimated. This includes the 's investments in equity-accounted associates. Goodwill is tested annually for impairment. For impairment testing, assets (including intangible assets) are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating-units (CGUs). Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination. The recoverable amount of an asset or CGU is the greater of its value-in-use and its fair value less costs to sell. Value-in-use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis. An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Refer to accounting policy 1.6 for more detail regarding impairment losses on revalued property. 30