Investor Presentaiton

Appendix C Recent IFRIC agenda decisions Meeting date Issue discussed by the Committee June 2022 April 2022 IFRS 17 Transfer of insurance coverage under a group of annuity contracts: How does an entity determine the amount of the contractual service margin to recognise in profit or loss in a period because of the transfer of insurance coverage for survival in that period? IFRS 15 - Principal versus agent: Software reseller: Is a reseller of software licences a principal or agent? Summary of the Committee's conclusion on the issue The request sets out two methods of determining, for each annuity contract in the group, the quantity of the benefits of insurance coverage provided in the current period and expected to be provided in the future. The Committee concluded that, in applying IFRS 17 to determine the quantity of the benefits of insurance coverage provided under each annuity contract: (a) A method based on the amount of the annuity payment the policyholder can validly claim (method 1) meets the principle in paragraph B119 of IFRS 17 of reflecting the insurance coverage provided in each period by: i. assigning a quantity of the benefits only to periods in which an insured event (survival of the policyholder) can occur, resulting in a policyholder having a right to make a valid claim; and ii. aligning the quantity of the benefits provided in a period with the amount the policyholder can validly claim if an insured event occurs in that period. (b) A method based on the present value of expected future annuity payments (method 2) does not meet the principle in paragraph B119 of IFRS 17 of reflecting the insurance coverage provided in each period because it would: i. assign a quantity of the benefits to periods in which no insured event occurs; and ii. misrepresent the quantity of the benefits provided in a period by considering amounts the policyholder can claim and benefit from only in future periods. In the fact pattern described, the promised goods in the reseller's contract with the customer are the standard software licences rather than the pre- sales advice the reseller provides, as the reseller has already provided the advice at the time of entering into the contract. Those licences are therefore the specified goods to be provided to the customer as described in paragraph B34A(a) of IFRS 15. The reseller assesses whether it obtains control, in accordance with paragraph 33 of IFRS 15, of the standard software licences from the software manufacturer before they are transferred to the customer. If-after applying the principles and requirements on control in IFRS 15-it is unclear whether the reseller is a principal or agent, the reseller considers the indicators in paragraph B37 of IFRS 15. The Committee observed that the conclusion as to whether the reseller is a principal or agent depends on the specific facts and circumstances, including the terms and conditions of the relevant contracts. The reseller would apply judgement in making its overall assessment-including considering the relevance of the indicators and the degree to which they provide evidence of control-within the context of the framework and requirements set out in paragraphs B34-B38 of IFRS 15. The Committee also observed that the reseller would disclose material accounting policy information in accordance with IAS 1 and information required by IFRS 15, including information about its performance obligations (paragraph 119) and the significant judgements made (paragraph 123). C6 © 2023 KPMG, a Hong Kong partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited ("KPMG International"), a private English company limited by guarantee. All rights reserved.

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