Purchase price allocation Fair Value concepts for intangible assets in acquisition accounting

PricewaterhouseCoopers Page 2 The premise of value used in the valuation of intangibles for a PPA Fair Value Concept Definition Fair Value Source: IFRS 3 Appendix A Fair value is: “The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.” is

PricewaterhouseCoopers Page 3 Fair Value per IAS / IFRS = Investment Value In-use Value Liquidation Value Book Value … Purchase Price Fair Value Concept Demarcation of Values

PricewaterhouseCoopers Page 4 Investment Value Premise / Standard Synergistic or strategic value Willing buyer is not a hypothetical marketplace buyer but rather is a particular buyer with specific expectations about future events, cost of capital, tax circumstances, and other issues. =, Investment Value Fair Value per IAS / IFRS

PricewaterhouseCoopers Page 5 In-use Value The asset is looked at, not on a piecemeal basis, but in concert with the other assets of the enterprise of which it is a part. Value for tangible assets including installation costs and sales tax. Value for intangible assets may include the contribution of the asset to the enterprise of which it is a part. In-use Value = Fair Value per IAS / IFRS Premise / Standard

PricewaterhouseCoopers Page 6 Liquidation Value The seller is compelled to sell. The buyer may be a willing buyer, but the seller must sell unwillingly. Liquidation Value = Fair Value per IAS / IFRS Premise / Standard

PricewaterhouseCoopers Page 7 Book Value Historical and capitalised cost of an asset less accumulated depreciation, depletion or amortisation as it appears on the account books of the business. Book Value = Fair Value per IAS / IFRS Premise / Standard

PricewaterhouseCoopers Page 8 Fair Value per IFRS Fair Value per IFRS Market Value per IVS* Market Value per IVS* “Fair value is the amount at which an item can be bought or sold in a current transaction between willing parties, that is, other than in a forced or liquidation sale.” “The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.” IVS 1, 3.1 (2003) = ^ *International Valuation Standards, 6th Ed. Underlying concepts are the same. Where the Market Value of an asset can be established, this value will equate to Fair Value. Underlying concepts are the same. Where the Market Value of an asset can be established, this value will equate to Fair Value. Fair Value versus Market Value

PricewaterhouseCoopers Page 9 Assets to be held and used Fair Value Assets held for sale (IFRS 5) Fair Value./. Costs to Sell Management’s intent of acquiring the company Management’s intent of acquiring the company Portion of the purchase price assigned to an asset Value Concept Management’s Intent Rules

PricewaterhouseCoopers Page 10 Price in a binding sales agreement in an arm’s length transaction ? Price in a binding sales agreement in an arm’s length transaction ? Current bid price, if an active market exists Current bid price, if an active market exists Approximation using present value techniques (e.g. Value in use estimation) Approximation using present value techniques (e.g. Value in use estimation) Removement from a marketplace IAS Price of the most recent comparable transaction within the same industry Price of the most recent comparable transaction within the same industry Value Concept Hierarchy for Estimating Fair Value less costs to sell