Communisis 2016 AGM

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED)15. INVENTORIES Raw materials ££ Work in progress Finished goods ,, ,,All inventories are held at the lower of cost and net realisable value. ,16. TRADE AND OTHER RECEIVABLES ,,Trade receivables ££Prepayments, accrued income and other receivables ,, ,,Current ,,Non-current ,, ,,Trade receivables are non-interest bearing and generally on 30-90 days’ credit terms with an average of 48 days. The carrying valueof trade receivables is considered a reasonable approximation of fair value. All of the Group’s trade and other receivables have beenreviewed for indicators of impairment.The doubtful debt provision has moved as follows:At January £ £Provisions made during the year –Released during the year , ()At December ,In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the trade receivablefrom the date credit was initially granted up to the reporting date. The Group trades only with recognised, creditworthy third parties.The top 10 customers make up 44% of the receivables balance (2015 57%). Generally, customers who wish to trade on credit terms aresubject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that theGroup’s exposure to bad debts is not significant.The Group has in place trade credit insurance arrangements which cover 31% of the Group’s turnover up to a maximum aggregateclaim in any one year of £4,000,000. The concentration of credit risk is therefore limited to the carrying value of trade debtors notcovered by the credit insurance. The directors believe that there is no further credit provision required in excess of the allowancefor doubtful debts, in respect of the portion not covered by the credit insurance and an excess of £40,000 in respect of the portioncovered by the credit insurance. Certain trade receivables were found to be impaired and a provision of £1,404,000 (2015 £306,000)is carried at the year end. Trade receivables are shown net of this doubtful debt provision. 101

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED) 16. TRADE AND OTHER RECEIVABLES (CONTINUED) In addition, some of the unimpaired trade receivables are past due as at the reporting date. The age of financial assets past due but not impaired is as follows: Overdue by less than days ££ – days overdue ,, – days overdue + days ,, Management have considered the unimpaired receivables past due and do not consider there is any change in credit risk that requires any additional provisions to be required. 17. FINANCIAL ASSETS AND LIABILITIES 17.1 FINANCIAL ASSETS BY CATEGORY The IAS 39 categories of financial asset included in the Consolidated Balance Sheet and the headings in which they are included are as follows: Current assets ££ Trade and other receivables – loans and receivables Cash and cash equivalents ,, ,, ,, 17.2 FINANCIAL LIABILITIES BY CATEGORY The IAS 39 categories of financial liability included in the Consolidated Balance Sheet and the headings in which they are included are as follows: Non-current liabilities £ £ Interest-bearing loans and borrowings – Financial liabilities measured at amortised cost , , Unamortised loan arrangement fees () () Trade and other payables – Financial liabilities measured at amortised cost , Financial liabilities , , Hire purchase commitments , , Provisions – , Current liabilities Trade and other payables – Financial liabilities measured at amortised cost , , Financial liabilities Hire purchase commitments Provisions102

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED)18. CASH AND CASH EQUIVALENTS ££Cash at bank and in hand ,,Cash at bank earns interest at floating rates based on daily bank deposit rates. The fair value of cash and cash equivalents is£38,294,000 (2015 £32,719,000).19. EQUITY SHARE CAPITAL AND RESERVES Number of £ Number of £ shares sharesAllotted and fully paid ,, , ,, ,Ordinary shares of p eachAt the year end the Group had one class of ordinary shares which carry no right to fixed income.During the year, the Group issued and subsequently cancelled £15,080,119.50 of B ordinary shares of £0.01 each (“capital reductionshares”), as part of a capital reduction exercise.The Group has two share option schemes under which options to subscribe for the Company’s shares have been granted toemployees (Note 13).SHARE PREMIUM RESERVEThis represents the share premium attaching to those shares issued upon the exercise of certain share options.In December 2016 the whole of the share premium reserve was cancelled as part of a capital reduction exercise to create additionaldistributable reserves. At 31 December 2016 the share premium reserve was £nil (2015 £5,986,000).During 2015 the year a transfer of £2,170,000 had been made to the merger reserve to more accurately present the premium attachedto shares issued for the acquisitions carried out in 2013 and 2014.MERGER RESERVEThis represents the share premium attaching to those shares issued upon the acquisition of subsidiaries.In December 2016 £15,081,000 of the merger reserve, reflecting the reserve within Communisis plc Company accounts, wascapitalised as capital reduction shares and subsequently cancelled as part of a capital reduction exercise to create additionaldistributable reserves. At 31 December 2016 the merger reserve on consolidation was £519,000 (2015 £15,600,000).During 2015 a transfer of £2,170,000 had been made from the share premium reserve to more accurately present the premiumattached to shares issued for the acquisitions carried out in 2013 and 2014. A further movement of £2,003,000 in 2015 related to theacquisition of Life.ESOP RESERVEThe ESOP reserve is used to record the investment in Communisis plc shares held by the employee share ownership plan (“ESOP”).The ESOP is for the benefit of all employees and can be used in conjunction with any of the Group’s share schemes. The ESOP reserveholds 806,319 shares at 31 December 2016 (2015 18,722) with an average cost of 36.83p (2015 53.16p) and the market value of theseshares is £349,781 (2015 £7,676).CAPITAL REDEMPTION RESERVEThe capital redemption reserve is used to record the effect of share capital buy-backs made by the Company where the nominalvalue of share capital acquired is transferred to this reserve.In December 2016 the whole of the capital redemption reserve was cancelled as part of a capital reduction exercise to createadditional distributable reserves. At 31 December 2016 the capital redemption reserve was £nil (2015 £1,375,000).CUMULATIVE TRANSLATION ADJUSTMENTThe cumulative translation adjustment reserve is used to record exchange differences arising from the translation of the financialstatements of foreign subsidiaries. 103

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED) 20. INTEREST-BEARING LOANS AND BORROWINGS Maturity £ £ August Current Hire purchase contracts Non-current £, , ) August , Hire purchase contracts March ,, £ , , bank loan ( ,, Hire purchase See Note 25 for full details. Bank overdrafts The bank overdrafts are principally denominated in sterling and bear interest at rates set by reference to the UK Base Rate. The overdrafts are secured by cross guarantee arrangements with the relevant banks. At 31 December 2016 and 31 December 2015 bank overdraft facilities of £5,000,000 were available but not utilised. £65,000,000 Bank loan This loan is secured by a cross guarantee arrangement and is repayable in March 2018. Interest is charged at LIBOR plus a rate of between 1.75% and 2.5% depending on the ratio of net debt to EBITDA in the preceding performance period. The Group is subject to a number of covenants in relation to its borrowing, which, if breached, would result in its loans becoming immediately repayable. These covenants specify certain maximum limits in terms of net debt as a multiple of EBITDA and interest payable as a multiple of EBITA. At the year end, and throughout the year, the Group was not in breach of any bank covenants. At 31 December 2016, the Group had available £7,000,000 (2015 £4,000,000) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met. With the exception of hire purchase agreements, early repayment is possible under the terms of all the borrowing facilities listed above at no cost by giving more than five days’ notice.104

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED)21. PROVISIONS Onerous Litigation Dilapidation Total leases provisions provisions £ At January £ £ Arising during year – £ () Utilised – () Released during the year () – – At December – () () –Current –Non-current ––At December –Current – –Non-current ––At December –Onerous leasesThe exceptional property provisions related primarily to the estimated costs for the rental obligations in respect of the exits fromBangalore and Chiswell Street, London. The provisions reflected the estimated net cost to the Group over the remainder of the leaseperiod. At 31 December 2016 the provision for Chiswell Street, London had been settled in full.Litigation provisionsThis provision represented management’s best estimate of the outcome of potential historical contractual liabilities.At 31 December 2016 this provision has been settled in full with the remaining balance being released to the Income Statement.Dilapidation provisionsThe dilapidation provisions represent the estimated costs required to reinstate premises to a state as required under the lease.At the year end, provisions existed for premises in London and Edinburgh which expire in 2017 and 2021 respectively.22. TRADE AND OTHER PAYABLESTrade payables ££Other payables ,,Taxation and social security ,,Accruals and deferred income ,, ,,Current ,,Non-current ,, ,, ,,Trade and other payables are non-interest bearing and generally on 30-90 days’ credit terms. The carrying values are considered tobe a reasonable approximation of fair value. 105

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED) 23. FINANCIAL LIABILITIES £ £ – Current liabilities: Interest rate swaps Non-current liabilities: Interest rate swaps INTEREST RATE SWAPS At 31 December 2016 the Group has two arrangements each of a notional amount of £10,000,000 with maturity dates being in 2018. The Group pays fixed rates of interest of 3.13% and 2.27% respectively on each arrangement and on both the Group receives a variable rate equal to LIBOR + 2.0% on the notional amount. FAIR VALUE HIERARCHY The Group used the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities; Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable either directly or indirectly; Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. As at 31 December 2016, the Group held the following financial instruments measured at fair value: Level Level Level ££££ Financial liabilities at fair value through profit or loss –– Interest rate swaps During the year there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into or out of Level 3 fair value measurements. As disclosed within Note 27, the fair value of loans has been calculated using Level 2 valuation techniques. 24. OBLIGATIONS UNDER OPERATING LEASES OPERATING LEASE COMMITMENTS – GROUP AS LESSEE Motor vehicles and machinery leases The Group has entered into commercial leases on motor vehicles and items of machinery. These leases have a remaining life of between one and seven years. Future minimum rentals payable under non-cancellable operating leases as at 31 December are as follows: No later than one year ££ After one year but no more than five years ,, After five years ,, ,,106

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED)24. OBLIGATIONS UNDER OPERATING LEASES (CONTINUED)Land and building leasesThe Group has entered into commercial land and building leases. These leases have a remaining life of between one and ten years.Future minimum rentals payable under non-cancellable operating leases as at 31 December are as follows:No later than one year ££After one year but no more than five yearsAfter five years ,, ,, ,, ,,OPERATING LEASE COMMITMENTS – GROUP AS LESSORSurplus land and building leasesThe Group has entered into commercial land and building leases consisting of the Group’s surplus office and manufacturingbuildings. These properties have been sublet and the leases have a remaining life of seven years.Future minimum rentals receivable under non-cancellable operating leases as at 31 December are as follows:No later than one year ££After one year but no more than five yearsAfter five years ,, ,, ,, ,,25. HIRE PURCHASE COMMITMENTSThe Group has entered into hire purchase contracts for various items of plant and machinery with a purchase option at the end ofthe lease term, for a nominal fee. Future minimum lease payments under finance leases and hire purchase contracts together withthe present value of the net minimum lease payments are as follows: Minimum Present Minimum Present payments value of payments value of payments payments £ (Note ) £ (Note ) £ £Within one year , , ,,After one year but no more than five years () – ,,Total minimum lease payments , , () –Less amounts representing finance charges ,,Present value of minimum lease payments 107

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED) 26. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s principal financial instruments comprise bank loans and overdrafts (Note 20), cash and short-term deposits (Note 18), forward currency contracts and interest rate swaps (Note 23). The main purpose of these financial instruments is to raise finance for the Group’s operations and to manage exchange rate and interest rate risk. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. It is, and has been throughout the year under review, the Group’s policy that no trading in financial instruments shall be undertaken. The main risks arising from the Group’s financial instruments are cash flow interest rate risk, foreign currency risk, liquidity risk and credit risk. CASH FLOW INTEREST RATE RISK The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s medium-term debt obligations with a floating interest rate. All borrowings are held on floating rate terms and so the Group is exposed to interest rate movements on these borrowings. The Group’s policy is to monitor interest rate exposure on this floating rate debt and maintain interest rate swaps through separate financial instruments where appropriate. At the end of 2016 the Group has two arrangements each with a notional amount of £10,000,000, covering 100% of the year end bank debt (2015 71%). At 31 December 2016, if interest rates had been 100 basis points higher for the full financial year, with all other variables held constant, this would have resulted in a reduction of pre-tax profits of £380,000 and a post-tax reduction in equity of £304,000; if interest rates had been lower by 25 basis points throughout the financial year the pre-tax profits would have been £95,000 higher and the post-tax impact on equity would have been an increase of £76,000. FOREIGN CURRENCY RISK The Group operates principally in the UK with approximately 26% (2015 18%) of sales denominated in currencies other than sterling and of this figure, 24% (2015 16%) of sales arising from companies operating with functional currencies other than sterling. The majority of foreign currency transactions are naturally hedged from buying and selling within the same currency. Where this is not the case, and Communisis is entering into a significant foreign currency transaction with no natural hedge in place, the Group enters into forward foreign exchange contracts to control these risks. There were no foreign currency contracts outstanding at the year end (2015 none). LIQUIDITY RISK The Group regularly monitors its risk to a shortage of funds, taking account of the maturity profile of its financial assets and liabilities and the projected cash flows from operations. The Group’s objective is to maintain a balance between continuity of funding and flexibility through a mix of medium-term funding of committed floating rate facilities supplemented by uncommitted bank overdraft facilities. In 2013 the Group refinanced its borrowings which are repayable in March 2018. At 31 December 2016 none of the Group’s medium- term debt matures in less than twelve months (2015 £nil), 100% matures between one and two years from the Balance Sheet date (2015 £nil) and none matures between two to five years from the Balance Sheet date (2015 100%). The directors consider this funding structure to be adequate for the Group’s current requirements. The maturity profile of the Group’s financial liabilities at 31 December 2016 is shown in Note 27. CREDIT RISK The Group trades only with recognised, creditworthy third parties. Generally, customers who wish to trade on credit terms are subject to credit verification procedures. During the year the Group has entered into trade credit insurance arrangements which cover 31% of the Group’s turnover up to a maximum aggregate claim in any one year of £4,000,000. The concentration of credit risk is therefore limited to the carrying value of trade receivables not covered by the credit insurance as disclosed in Note 16. The Group’s exposure to credit risk arises from the default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. As at the Balance Sheet date there are no significant concentrations of credit risk within the Group. The credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, is managed by Group treasury in accordance with Group policy. Investments of surplus funds are only made with established banks approved by the Board. The Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. CAPITAL MANAGEMENT The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support the business and maximise shareholder value. The Group monitors capital using a gearing ratio, being bank debt divided by equity plus bank debt. The policy is to maintain the gearing ratio below 50%. Within bank debt the Group includes all interest-bearing bank loans and borrowings, less cash and cash equivalents.108

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED)26. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)Interest-bearing bank loans and borrowings £ £Less cash and cash equivalents , ,Bank Debt (, ) (, )Equity , ,Capital and Bank Debt , ,Gearing ratio , , .% .%For the purposes of capital management, the Group considers undiscounted interest-bearing loans and borrowings as theappropriate measure for the purposes of determining bank debt.27. FINANCIAL INSTRUMENTSThe following table sets out the maturity of the Group’s financial liabilities, based on contractual undiscounted payments.At December Within - - - - More Total year years years years years than £ £ £ £ £ £ years £Trade and other payables , ,£ , , bank loan ,, – – – –,Interest rate swaps ––––Provisions ,, ––––Hire purchase – – –, ,At December Within - - - - More Total year years years years years than £ £ £ £ £ £ years £Trade and other payables ,, ,£ , , bank loanInterest rate swaps ,,, – – –,ProvisionsHire purchase ––– –––– – –, ,,, ,Carrying value is considered to approximate fair value for all of the Group’s financial instruments other than bank loans, whichhave a carrying value of £57,824,000 (2015 £60,648,000) and a fair value of £59,470,000 (2015 £64,244,000). The fair value of loanshas been calculated using Level 2 valuation techniques reflecting the borrowing rate at the end of the reporting period and anyunamortised arrangement fees relating to those borrowings. The known non-performance risk at 31 December 2016 was assessedto be insignificant. 109

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED) 28. CAPITAL COMMITMENTS At 31 December 2016, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to £494,000 (2015 £38,000). 29. CONTINGENT LIABILITIES The Group has contingent liabilities where it has provided rental guarantees to landlords in respect of certain leasehold properties occupied by companies that were formerly subsidiaries in the Group, but have subsequently been sold. The principal risk is that current leasehold occupants will become insolvent and that guarantees will be called, resulting in a material cash cost to the Group. To the extent that they have not already been called, these guarantees represent contingent liabilities of the Group. Other than those leases for which the liability is considered to be remote, the Group has guaranteed rentals on a lease with remaining terms of seven years, with an annual rental of £1,135,000. No provision for this guarantee has been made in the Financial Statements because, at the Balance Sheet date, the directors believe that it is not probable that it will be called. 30. CASH GENERATED FROM OPERATIONS Continuing operations £ £ Profit before tax Adjustments for: , , Amortisation of intangible assets arising on business acquisitions , , Depreciation and other amortisation , , Exceptional items (, ) Loss / (profit) on sale of property, plant & equipment , Share-based payment charge (, ) () Net finance costs (, ) Additional contribution to the defined benefit pension plan , Cash cost of exceptional items (, ) (, ) Changes in working capital: , (, ) Decrease in inventories , (Increase) / Decrease in trade and other receivables , Increase / (Decrease) in trade and other payables (, ) Cash generated from operations , 31. RELATED PARTY TRANSACTIONS During the year the directors were remunerated for services provided to the Group. This is disclosed in the Directors’ Remuneration Report on pages 50 to 68. The directors are included within key management personnel, for whom details of compensation are disclosed in Note 5.3. There were no other related party transactions in the year.110

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED)32. INVESTMENTSThe Consolidated Financial Statements include the Financial Statements of Communisis plc, the ultimate parent undertaking, and allsubsidiary undertakings. The Group’s subsidiary operations are listed in the following table. The registered offices for each subsidiaryare referenced in the table and listed on page 113.Name Country of Registered % Equity % Equity Immediate parent incorporation office interest interestAbsolute Data Solutions Limited England & Wales Communisis Data Intelligence LimitedArt Master of Chelsea Limited England & Wales Wakefield Holdings LimitedB E Consulting Limited England & Wales Communisis Data Intelligence LimitedBangquote Limited England & Wales Dataform (Northern) LimitedCanada Limited England & Wales Communisis Dataform LimitedChorley Direct Mail Limited England & Wales Waddingtons House LimitedCommunisis Limited England & Wales Communisis plcCommunisis BBF Limited England & Wales Robot No. LimitedCommunisis Broadprint Limited England & Wales Robot No. LimitedCommunisis Capital Partner Limited England & Wales Communisis UK LimitedCommunisis Chorleys Limited England & Wales Waddingtons House LimitedCommunisis-CRM Limited England & Wales Waddingtons House LimitedCommunisis Data Intelligence Limited England & Wales Communisis UK LimitedCommunisis Dataform Limited England & Wales Communisis plcCommunisis Dataform South West Limited England & Wales Communisis Dataform LimitedCommunisis Digital Limited England & Wales Communisis UK LimitedCommunisis Europe Limited England & Wales Communisis plcCommunisis Group StrategicPartnerships Limited England & Wales Communisis UK LimitedCommunisis International Limited England & Wales Communisis plcCommunisis One Limited England & Wales Communisis Chorleys LimitedCommunisis Security Products Limited England & Wales Robot No. LimitedCommunisis Trustee Company Limited England & Wales Waddington LimitedCommunisis Trustee ( ) Company Limited England & Wales Communisis plcCommunisis UK Limited England & Wales Communisis plcDataform (Digital) Limited England & Wales Communisis Dataform LimitedDataform (Midlands) Limited England & Wales Communisis Dataform LimitedDataform (Northern) Limited England & Wales Communisis Dataform LimitedE.K. Lickfold Limited England & Wales Waddingtons House LimitedGeronimo Marketing and England & Wales The Meaningful Marketing GroupCommunications Limited LimitedHouse of Dubreq Limited England & Wales Waddington LimitedImagio Limited England & Wales Wakefield Holdings LimitedIntuistic Limited England & Wales Communisis Data Intelligence LimitedJacaranda Productions Limited England & Wales Robot No. LimitedJaypak Limited England & Wales Waddington LimitedJohn Mansfield Timber Limited England & Wales Communisis plcJohn Waddington Properties England & Wales Imagio LimitedJohnsen & Jorgensen Plastic Limited England & Wales Waddington LimitedKen Stokes Limited England & Wales Robot No. Limited 111

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED) . INVESTMENTS (CONTINUED) Name Country of Registered % Equity % Equity Immediate parent incorporation office interest interest Waddington Limited Kieon Limited England & Wales – Robot No. Limited Communisis plc Laser Image Limited England & Wales Robot No. Limited Waddington Limited Life Marketing Consultancy Limited England & Wales Communisis plc Communisis One Limited McCorquodale Colour Display Limited England & Wales Communisis Dataform Limited Psona Group Limited Mono-Web Limited England & Wales Psona Group Limited Psona Group Limited NEWJMTCO Limited England & Wales Communisis plc Psona Group Limited PFB Advertising Limited England & Wales Psona Limited Communisis plc Print Directive Limited England & Wales Robot No. Limited Robot No. Limited Psona Limited England & Wales Waddington Limited Waddington Limited Psona Films Limited England & Wales Waddington Limited Communisis Limited Psona Glasgow Limited England & Wales Psona Group Limited Communisis plc Psona Group Limited England & Wales Waddington Limited Waddington Limited Psona Limited England & Wales Waddington Limited Waddington Limited Public Creative Limited England & Wales Communisis plc Waddington Limited Robot No. Limited England & Wales Communisis UK Limited Robot No. Limited Robot No. Limited England & Wales Communisis Europe Limited Communisis Europe Limited Standard Check Book Company Limited England & Wales Communisis Digital Limited Communisis Europe Limited Subbuteo Sports Games Limited England & Wales Communisis Europe Limited Communisis I nternational Limited Supervision Entertainment Limited England & Wales Communisis UK Limited Communisis Europe Limited The Communications Agency One Limited England & Wales Communisis International Limited Communisis Europe Limited The Garden Marketing Limited England & Wales Robot No. Limited The Meaningful Marketing Group Limited England & Wales Waddington Limited England & Wales Waddingtons Business Forms Limited England & Wales Waddingtons Games Limited England & Wales Waddingtons House Limited England & Wales Waddingtons Playing Card Company Limited England & Wales Waddingtons Security Print Limited England & Wales Waddingtons Videomaster Limited England & Wales Wakefield Holdings Limited England & Wales Yomego Limited England & Wales Communisis Belgie NV Belgium Communisis Deutschland GmbH Germany Communisis Digital Private Limited India Communisis France SARL France Communisis Hellas Marketing Services EPE Greece Communisis Inc. USA Communisis Ireland Limited Ireland Communisis Italia Srl Italy Communisis Marketing Services LLC United Arab Emirates Communisis Nederland B.V. Netherlands Communisis NI Limited Northern Ireland112

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED). INVESTMENTS (CONTINUED)Name Country of Registered % Equity % Equity Immediate parent incorporation office interest interestCommunisis Pension Funding Limited Scotland Communisis Capital Partner Limited /Partnership GDE Limited / Communisis Trustee ( ) Scotland Company LimitedGDE Limited Scotland Communisis UK LimitedM.Y.E Limited Poland Waddingtons House LimitedCommunisis Poland Sp.z.o.o Portugal Communisis International LimitedCommunisis Portugal LDA Romania Communisis Europe LimitedCommunisis Romania S.R.L Spain Communisis Europe LimitedCommunisis Spain SL Switzerland Communisis Europe LimitedCommunisis Suisse Sàrl Sweden Communisis Europe LimitedCommunisis Sverige AB Communisis Europe LimitedCommunisis Turkey Ofis Hizmetleri TurkeyPazarlama Ticaret Limited Sirketi Scotland Communisis Europe LimitedEditions Publishing Limited Communisis UK LimitedReference Registered Office(from table above) Communisis House, Manston Lane, Leeds LS AH Pegasus Park, De Kleetlaan A, Diegem, Belgium Am Kronberger Hang , , Schwalbach am Taunus, Germany # , Patalamma Temple Street, Near South End Circle, Basavanagudi, Bangalore, Karnataka, India – rue Boissiere, Paris, France Patroklou & Paradissou, Athens, , Greece Orange Street, Wilmington, Delaware , USA Suite , One Earlfort Centre, Dublin, Ireland Via Monte Napoleone n. , Milan, Italy Standard Chartered Tower, Level , Emmar Square, DownTown Burj Khalifa, Dubai, United Arab Emirates Monfor Offices – th floor, Sir Winston Churchilllaan , DC Rijswijk, The Netherlands Marlborough House, Victoria Street, Belfast BT GG Rutland Court, Edinburgh EH EY ul. Mila , - , Warszawa, Poland Av. Do Brasil, - °, - , Lisbon, Portugal Bulevardul Dimitrie Pompei nr. - , Cladirea Hermes Business, Etaj , Biroul, , Sector , Bucuresti, , Romania Calle Gurtubay , ° derecha, Madrid, Spain chemin du Faubourg-de-Cruseilles, Carouge, , Geneva, Switzerland Berga Backe , Box , Danderyd, Sweden Kucukbakkalkoy Mahallesi, Vedat Gunyol Caddesi, Defne Sokak No: Flora Residence Kat: Daire: - - , Atas,ehir / Istanbul, , Turkey Lothian Road, Edinburgh, Midlothian EH WL 113

COMPANY BALANCE SHEET 31 DECEMBER 2016 Note £ £ ASSETS ,, Non-current assets ,, Property, plant and equipment Intangible assets Investments Deferred tax assets ,, Current assets ,, Trade and other receivables Cash and cash equivalents ,, TOTAL ASSETS ,, EQUITY AND LIABILITIES , , Equity share capital – , Share premium – , Merger reserve ESOP reserve () () Capital redemption reserve – , Retained earnings , , Total equity ,, Non-current liabilities ,, Interest-bearing loans and borrowings , Trade and other payables Financial liability ,, Loans due to group undertakings ,, Retirement benefit obligations ,, Current liabilities ,, Interest-bearing loans and borrowings ,, Trade and other payables Financial liability – Provisions ,, Total liabilities ,, TOTAL EQUITY AND LIABILITIES ,, The Company has taken advantage of the exemption provided by section 408 of the Companies Act 2006 not to publish its individual Income Statement. The loss for the year attributable to the members of the Company was £658,000 (2015 £6,364,000). The Financial Statements on pages 114 to 126 were approved by the Board on 9 March 2017 and signed on its behalf by: Andy Blundell Mark Stoner Directors The accompanying notes are an integral part of these Financial Statements.114

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSSTATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2016As at January Issued Share Capital Merger ESOP Capital Retained TotalLoss for the year capital premium reduction reserve reserve redemption earnings equityOther comprehensive loss £ £ shares £ £ reserve £ £Total comprehensive loss £ £ , , – , () , ,Employee share option schemes – – – – – , (, ) (, )– value of services provided – – – – –Shares issued – exercise of options – – () ()Shares issued from ESOP – – – –Acquisition of subsidiary – (, ) (, )Transfer between reservesDividends paid –– –– – – –– – – ()As at December –– –– – () – ,– –, – – –,Loss for the year –, – – ––Other comprehensive loss – (, ) –– – – (, ) (, ) ––Total comprehensive loss –, () , ,, ,, –Employee share option schemes –– –– – – () ()– value of services provided –– ––Shares issued – exercise of options – – (, ) (, )Shares issued from ESOP –– ––Purchase of own shares – (, ) (, )Issue of capital reduction sharesCapital reduction –– – – – – () -Dividends paid – – - – () () –– – – –As at December –– – – () – – – –– , (, ) – – – – – (, ) (, ) – – (, ) , (, ) –– – – – – (, ) , ,– – – () – ,The accompanying notes are an integral part of these Financial Statements. 115

NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 1. AUTHORISATION OF FINANCIAL (e) the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, STATEMENTS AND STATEMENT OF 38C, 38D, 40A, 40B, 40C, 40D, 111 and 134 to 136 of IAS 1 COMPLIANCE WITH FRS 101 Presentation of Financial Statements; The Financial Statements of Communisis plc (the “Company”) (f) the requirements of IAS 7 Statement of Cash Flows; for the year ended 31 December 2016 were authorised for issue on 9 March 2017 and the Balance Sheet was signed on the (g) the requirements of paragraphs 30 and 31 of IAS 8 Board’s behalf by Andy Blundell and Mark Stoner. Communisis Accounting Policies, Changes in Accounting Estimates and plc is incorporated and domiciled in England and Wales. Errors; The Company Financial Statements are prepared in (h) the requirements of paragraph 17 of IAS 24 Related Party accordance with Financial Reporting Standard 101 Reduced Disclosures; Disclosure Framework (FRS 101) and in accordance with applicable United Kingdom law and accounting standards. (i) the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between The Company’s Financial Statements are presented in sterling two or more members of a group, provided that any and all values are rounded to the nearest thousand pounds subsidiary which is a party to the transaction is wholly (£000) except where otherwise indicated. owned by such a member; and The results of Communisis plc are included in the Consolidated (j) the requirements of paragraphs 130(f)(ii), 130(f)(iii), Financial Statements of Communisis plc which are available 134(d)-134(f) and 135(c)-135(e) of IAS 36 Impairment of from Communisis House, Manston Lane, Leeds LS15 8AH. Assets as the disclosures are included in the Consolidated Financial Statements of the Group in which the entity is The principal accounting policies adopted by the Company consolidated. are set out in note 2. The Company has taken advantage of the exemption 2. ACCOUNTING POLICIES provided by section 408 of the Companies Act 2006 not to publish its individual Income Statement and related notes. 2.1 BASIS OF PREPARATION The accounting policies which follow set out those policies The Company has net current liabilities of £15,486,000 as at which apply in preparing the Financial Statements for the year 31 December 2016 (2015 net current liabilities of £11,271,000). ended 31 December 2016. The Company’s objectives, policies and processes for managing its liquidity risk, as well as potential exposure to The Company has taken advantage of the following cash flow interest rate risk, are described in Note 26 in the disclosure exemptions under FRS 101: Consolidated Financial Statements. (a) the requirements of paragraphs 45(b) and 46-52 of IFRS 2 Through the Group, the Company has considerable financial Share based Payment, because the share-based payment resources and as a consequence, the directors believe that arrangement concerns its own equity instruments and its the Company is well placed to manage its business risks separate Financial Statements are presented alongside successfully. the Consolidated Financial Statements of the Group and the disclosures are included in the Consolidated After making enquiries, the directors have a reasonable Financial Statements of the Group in which the entity is expectation that the Company has adequate resources to consolidated; continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis (b) the requirements of IFRS 7 Financial Instruments: Disclosures, in preparing the Financial Statements. as the disclosures are included in the Consolidated Financial Statements of the Group in which the entity is 2.2 SIGNIFICANT ACCOUNTING JUDGEMENTS AND consolidated; ESTIMATES (c) the requirements of paragraphs 91-99 of IFRS 13 Fair ESTIMATION UNCERTAINTY Value Measurement as the disclosures are included in the The key assumptions concerning the future and other key Consolidated Financial Statements of the Group in which sources of estimation uncertainty at the Balance Sheet date the entity is consolidated; that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the (d) the requirement in paragraph 38 of IAS 1 Presentation of next financial year are discussed below. Financial Statements to present comparative information in respect of: PENSIONS The actuarial valuation involves making assumptions about (i) paragraph 79(a)(iv) of IAS 1; discount rates, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates (ii) paragraph 73(e) of IAS 16 Property Plant and Equipment; are subject to significant uncertainty. Additional information is included in Note 18. (iii) paragraph 118(e) of IAS 38 Intangible Assets;116

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSNOTES TO THE COMPANY FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 20162. ACCOUNTING POLICIES (CONTINUED) INVESTMENTS Investments are shown at cost less provision for impairment.2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The cost of an investment is measured as the aggregate of the consideration transferred, measured at acquisition dateINTANGIBLE ASSETS fair value. Any contingent consideration will be recognised at fair value at the acquisition date. Subsequent changes to theIntangible assets are carried at cost less accumulated fair value of the contingent consideration which is deemedamortisation and accumulated impairment losses. Intangible to be an asset or a liability will be recognised in accordanceassets created within the business are not capitalised (unless with IAS 39 either in profit and loss or in other comprehensivespecific conditions are met) and expenditure is charged to income. If the contingent consideration is classed as equity,the Income Statement in the year in which the expenditure is it is not remeasured until it is finally settled within equity.incurred. Investments are reviewed for impairment annually or moreAcquired computer software and licenses are capitalised. frequently if events or changes in circumstances indicateThese costs are amortised over their estimated useful lives that its carrying value may be impaired. Investments are(three to eight years). allocated to the related cash-generating units monitored by management for the purpose of impairment testing.Costs associated with maintaining computer softwareprograms are recognised as an expense as incurred. Costs TRADE AND OTHER RECEIVABLESthat are directly associated with the production of identifiable Trade and other receivables, which generally have 30-90and unique software products controlled by the Company, days’ credit terms, are recognised and carried at originaland that will generate probable economic benefits exceeding invoice amount less an allowance for any uncollectablecosts beyond one year, are recognised as intangible assets. amounts. An estimate for doubtful debts is made. Bad debtsDirect costs include the costs of software development are written off when identified.employees. These costs are amortised over their estimateduseful lives (three to eight years). CASH AND CASH EQUIVALENTS Cash and cash equivalents in the Balance Sheet compriseUseful lives are also examined on an annual basis and cash at bank and in hand and short-term deposits with anadjustments, where applicable, are made on a prospective original maturity of three months or less.basis. TRADE AND OTHER PAYABLESPROPERTY, PLANT AND EQUIPMENT Trade and other payables, which generally have 30-90 days’ credit terms, are recognised and carried at original invoiceProperty, plant and equipment in the Financial Statements of amount.the Company are stated at cost, less aggregate depreciationand any provision for impairment. INCOME TAX Current tax, being UK corporation tax, is provided at amountsDepreciation is calculated on a straight-line basis over the expected to be paid (or recovered) using the tax rates andestimated useful life of the asset as follows: laws that have been enacted or substantively enacted by the Balance Sheet date.Short leasehold property 5 to 20 years Deferred income tax is provided, using the liability method, onPlant, equipment and motor vehicles 3 to 10 years all temporary differences at the Balance Sheet date between the tax bases of assets and liabilities and their carryingThe carrying values of property, plant and equipment amounts for financial reporting purposes.are reviewed for impairment when events or changes incircumstances indicate the carrying value may not be Deferred income tax liabilities are recognised for all taxablerecoverable. If any such indication exists, and where the temporary differences except in respect of taxable temporarycarrying values exceed the estimated recoverable amount, differences associated with investments in subsidiaries, wherethe assets are written down to their recoverable amount. the timing of the reversal of the temporary differences can beThe recoverable amount of property, plant and equipment controlled and it is probable that the temporary differencesis the greater of fair value less costs to sell and value in use. will not reverse in the foreseeable future.In assessing value in use, the estimated future cash flows arediscounted to their present value using a pre-tax discount Deferred tax assets and liabilities are not recognised if therate that reflects current market assessments of the time temporary differences arise from the initial recognition ofvalue of money and the risks specific to the asset. Useful goodwill, or from the initial recognition (other than in aeconomic lives, depreciation methods and residual values business combination) of other assets and liabilities in aare reviewed annually. For an asset that does not generate transaction that affects neither the taxable profit nor thelargely independent cash inflows, the recoverable amount is accounting profit.determined for the cash-generating unit to which the assetbelongs. Impairment losses are recognised in the IncomeStatement. 117

NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED) 2. ACCOUNTING POLICIES (CONTINUED) In accordance with the Company policy in respect of the defined benefit pension scheme, a proportion equating to Deferred income tax assets are recognised for all deductible 12.3% of all movements on the defined benefit scheme is temporary differences, carry-forward of unused tax assets recognised within the Company accounts. This proportion is and unused tax losses, to the extent that it is probable that based on the number of members employed by the Company taxable profit will be available against which the deductible at the time that the Scheme was closed to future accrual. The temporary differences and the carry-forward of unused tax proportionate split is applied to all costs, settlements and assets and unused tax losses can be utilised. In respect of actuarial gains and losses as detailed below. deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognised to the The cost of administering the defined benefit pension scheme extent that it is probable that the temporary differences will are recognised in employee benefits expense in the Income reverse in the foreseeable future and taxable profit will be Statement. available against which the temporary differences can be utilised. When a settlement (eliminating all obligations for benefits already accrued) or a curtailment (reducing future The carrying amount of deferred income tax assets is obligations as a result of a material reduction in the scheme reviewed at each Balance Sheet date and reduced to the membership or a reduction in future entitlement) occurs, the extent that it is no longer probable that sufficient taxable obligation and the related plan assets are re-measured using profit will be available to allow all or part of the deferred current actuarial assumptions and the resultant gain or loss income tax asset to be utilised. is recognised in the Income Statement during the period in which the settlement or curtailment occurs. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when All actuarial gains and losses that arise in calculating the the asset is realised or the liability is settled, based on tax present value of the defined benefit obligation and the rates (and tax laws) that have been enacted or substantively fair value of plan assets are recognised immediately in the enacted at the Balance Sheet date. Statement of Comprehensive Income. Income tax relating to items recognised in other LEASES comprehensive income or directly in equity is also recognised in other comprehensive income or directly in equity. The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at FOREIGN CURRENCIES inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the The Company’s functional currency and presentation arrangement conveys a right to the use of assets currency is pounds sterling. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Operating lease payments are recognised as an expense in Monetary assets and liabilities denominated in foreign the Income Statement on a straight-line basis over the lease currencies are retranslated at the rate of exchange ruling term or in accordance with utilisation of the leased asset if at the Balance Sheet date. All differences are taken to the more appropriate. Income Statement. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated EMPLOYEE SHARE OWNERSHIP PLAN using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in Communisis plc shares held by the Company are classified in a foreign currency are translated using the exchange rates at shareholders’ equity as the ‘ESOP reserve’ and are recognised the date when the fair value was determined. at cost. Consideration received for the sale of such shares is also recognised in equity, with any difference between PENSION COSTS the proceeds from sale and the original cost being taken to retained earnings. No gain or loss is recognised in the Income The Company operates defined contribution and defined Statement on the purchase, sale, issue or cancellation of benefit pension plans. equity shares. Payments to defined contribution pension plans are charged BORROWINGS as an expense to the Income Statement as incurred when the related employee service is rendered. The Company has no Borrowings are recognised initially at fair value, net of further legal or constructive payment obligations once the transaction costs incurred. Borrowings are subsequently contributions have been made. stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value The defined benefit pension plan is a Group scheme, as is recognised in the Income Statement over the period of the detailed in the Group accounting policies note in the Group borrowings using the effective interest method. Consolidated Financial Statements on pages 78 to 79. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least twelve months after the Balance Sheet date.118

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSNOTES TO THE COMPANY FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED)2. ACCOUNTING POLICIES (CONTINUED) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTINGPROVISIONS Initial recognition and subsequent measurementProvisions are recognised when the Company has a presentobligation (legal or constructive) as a result of a past event; The Company uses derivative financial instruments such asit is probable that an outflow of resources embodying forward currency contracts and interest rate swaps to hedgeeconomic benefits will be required to settle the obligation its foreign currency and interest rate risks respectively. Suchand a reliable estimate can be made, but there is some derivative financial instruments are initially recognised at fairuncertainty about the timing of the future expenditure value on the date on which a derivative contract is entered intorequired in settlement. If the effect of the time value of money and are subsequently remeasured at fair value. Derivatives areis material, provisions are determined by discounting the carried as financial assets when the fair value is positive and asexpected future cash flows at a pre-tax rate that reflects financial liabilities when the fair value is negative.current market assessments of the time value of money and,where appropriate, the risks specific to the liability. Where Any gains or losses arising from changes in fair value ondiscounting is used, the increase in the provision due to the derivatives during the year that do not qualify for hedgepassage of time is recognised as a finance cost. accounting and the ineffective portion of an effective hedge, are taken directly to the Income Statement.SHARE-BASED PAYMENT TRANSACTIONS The fair value of interest rate swaps is the difference betweenCertain directors and management are eligible to participate the fixed rate and the one month LIBOR rate implied at thein share-based payment schemes all of which are equity- Balance Sheet date, calculated monthly, and discounted tosettled, in return for services provided to Communisis plc. present value.The cost of equity-settled transactions with employees is For the purpose of hedge accounting, hedges are classifiedmeasured by reference to the fair value at the date on which as cash flow hedges when hedging exposure to variabilitythey are granted. The fair value is determined by an external in cash flows, that is either attributable to a particular riskvaluer using an appropriate model. In valuing equity-settled associated with a recognised asset or liability or a highlytransactions, no account is taken of any vesting conditions, probable forecast transaction, or when hedging the foreignother than conditions linked to the price of the shares of currency risk in an unrecognised firm commitment.Communisis plc (‘market conditions’). For those derivatives designated as hedges and for whichThe cost of equity-settled transactions is recognised, together hedge accounting is desired, the hedging relationship iswith a corresponding increase in equity, over the period in formally designated and documented at its inception. Thiswhich the performance or service conditions are fulfilled, documentation identifies the risk management objective andending on the date on which the relevant employees become strategy for undertaking the hedge, the hedging instrument,fully entitled to the award (‘vesting date’). The cumulative the hedged item or transaction, the nature of the risk beingexpense recognised for equity-settled transactions at each hedged and how effectiveness will be measured throughoutreporting date reflects the extent to which the vesting period its duration. Such hedges are expected to be highly effectivehas expired and the Company’s best estimate of the number in offsetting changes in fair value or cash flows and areof equity instruments that will ultimately vest. assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reportingNo expense is recognised for awards that do not ultimately periods for which they were designated.vest, except for awards where vesting is conditional upon amarket or non-vesting condition, which are treated as vesting Cash flow hedgesirrespective of whether or not the market or non-vestingcondition is satisfied, provided that all other performance or The effective portion of the gain or loss on the hedgingservice conditions are satisfied. instrument is recognised directly in equity, while any ineffective portion is recognised immediately in the IncomeWhere an equity-settled award is cancelled, it is treated as Statement.if it had vested on the date of cancellation, and any costnot yet recognised in the Income Statement for the award is Amounts taken to equity are transferred to the Incomeexpensed immediately. This includes any award where non- Statement when the hedged transaction affects profit orvesting conditions within the control of the Company or the loss, such as when the hedged financial income or financialemployee are not met. Any compensation paid up to the fair expense is recognised or when a forecast sale occurs. Wherevalue of the award at the cancellation or settlement date is the hedged item is the cost of a non-financial asset or non-deducted from equity, with any excess over fair value being financial liability, the amounts taken to equity are transferredtreated as an expense in the Income Statement. to the initial carrying amount of the non-financial asset or liability.Where an equity-settled award is forfeited, the total costrecognised in the Income Statement to date for the award is If the forecast transaction or firm commitment is no longerreversed. expected to occur, amounts previously recognised in equity are transferred to the Income Statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in equity remain in equity until the forecast transaction or firm commitment occurs. 119

NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED) 3. OPERATING COSTS AND INCOME AUDITOR’S REMUNERATION The auditor’s remuneration charge relating to the year was £20,500 (2015 £20,000). The Company is exempt from disclosing remuneration for non-audit services as the Group accounts are required to include the information required by Regulation 4(1)(b) of the Companies Regulations 2005 in respect of the Group. EMPLOYEE BENEFITS EXPENSE Wages and salaries ££ Social security costs ,, Pension costs Expense of share-based payments () Redundancy costs ,, Number Number The average number of persons employed by the Company during the year was: United Kingdom DIRECTORS’ REMUNERATION Details of individual directors’ remuneration, pension entitlements and interests of the directors in Communisis plc are provided within the Directors’ Remuneration Report on pages 50 to 68. 4. DIVIDENDS PAID AND PROPOSED Declared and paid during the year £ £ Amounts recognised as distributions to equity holders in the year: – , Final dividend of the year ended December of . p per share – , Interim dividend of the year ended December of . p per share , Final dividend of the year ended December of . p per share , – Interim dividend of the year ended December of . p per share , – , Proposed for approval at AGM (not recognised as a liability as at December) , Final equity dividend on ordinary shares of . p ( . p) per share , (based on issued share capital at the date of approval of the Financial Statements) 5. DEFERRED TAX Deferred tax included in the Balance Sheet is as follows: Depreciation in excess of capital allowances / (Accelerated capital allowances) ££ Temporary differences () Share-based payments Pension , Financial liability ,, Deferred tax asset The provision for deferred tax at 31 December 2016 has been made at rates between 17% and 20% depending upon the anticipated time of reversal. This reflects the legislation included in Finance Act 2015 and Finance Act 2016 reducing the rate of Corporation Tax to 19% from 1 April 2017 and 17% from April 2020. The changes in Finance Act 2016 were substantively enacted in September 2016.120

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSNOTES TO THE COMPANY FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED)6. PROPERTY, PLANT AND EQUIPMENT Short Plant and Total leasehold equipment £ Cost property , January £ () £ , Additions Disposals – , () , December () – Depreciation – , January – Charge for year Disposals () – Impairment – –, December – Net book value at December – Net book value at DecemberOn the exit from Chiswell Street, London and the consolidation of operations into Little Portland Street, the remaining net book valueof plant and equipment in Chiswell Street was fully impaired.7. INTANGIBLE ASSETS Computer software £Cost JanuaryAdditions DecemberAmortisation JanuaryCharge for year DecemberNet book value at DecemberNet book value at December 121

NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED) 8. INVESTMENTS Shares Provisions Total £ £ £ Subsidiaries As at January , (, ) , Additions , – , Fair value adjustment () – () , December , (, ) The addition relates to the Company’s investment in Communisis Europe Limited. On 8 December 2016 the Company waived and released the rights and entitlement to repayment of the outstanding intercompany loan in exchange for an allotment of £13,287,929 ordinary shares of £1.00 each. The allotment of shares was deemed to be paid upon the capitalisation taking place. On the same day, the additional share capital of Communisis Europe Limited was subsequently cancelled by way of a capital reduction with £13,287,929 being credited to the reserves of Communisis Europe Limited. The carrying value of the investment in Communisis Europe Limited was unaffected by the capital reduction. On 5 January 2015 the Company acquired 100% of the voting shares of Life Marketing Consultancy Limited (“Life”), a private company based in England. Communisis plc acquired Life for consideration of £14,000,000 plus a contingent earn-out element with a fair value of £500,000 at 31 December 2015. The fair value of the contingent consideration was reassessed during the year and adjusted to £300,000 as described within Note 7 to the Consolidated Financial Statements. Details of the Company’s investments are outlined in Note 32 in the Consolidated Financial Statements. 9. TRADE AND OTHER RECEIVABLES Trade receivables ££ Amounts owed by group undertakings Other receivables ,, Prepayments and accrued income VAT receivable – Corporation tax ,, ,, Current Non-current – ,, 10. CASH AND CASH EQUIVALENTS ££ Cash at bank and in hand 11. INTEREST BEARING LOANS AND BORROWINGS Current Maturity £ £ Bank overdrafts On demand , , Non-current £, , ) March , , £ , , bank loan ( , , , ,122

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSNOTES TO THE COMPANY FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED)11. INTEREST BEARING LOANS AND BORROWINGS (CONTINUED)Bank overdraftsThe bank overdrafts are principally denominated in sterling and bear interest at rates set by reference to the UK Base Rate.The overdrafts are secured by cross guarantee arrangements with the relevant banks.£65,000,000 Bank loanThis loan is secured by a cross guarantee arrangement and is repayable in March 2018. Interest is charged at LIBOR plus a rate ofbetween 1.75% and 2.5% depending on the ratio of net debt to EBITDA in the preceding performance period.The Company is subject to a number of covenants in relation to its borrowing, which, if breached, would result in its loans becomingimmediately repayable. These covenants specify certain maximum limits in terms of net debt as a multiple of EBITDA, and interestpayable as a multiple of EBITA. At the year end and throughout the year the Company was not in breach of any bank covenants.At 31 December 2016, the Company had available £7,000,000 (2015 £4,000,000) of undrawn committed borrowing facilities inrespect of which all conditions precedent had been met.Early repayment is possible under the terms of all the borrowing facilities listed above at no cost by giving more than five days’ notice.12. TRADE AND OTHER PAYABLESTrade and other payables £ £Amounts due to group companies ,Other payables ,Corporation tax payable – ,Taxation and social security , ,Accruals and deferred income , , , ,Current , ,Non-current , ,13. FINANCIAL LIABILITIES £ £ –Current liabilities:Interest rate swapsNon-current liabilities:Interest rate swapsINTEREST RATE SWAPSAt 31 December 2016 the Company has two arrangements each of a notional amount of £10,000,000 with maturity dates being in2018. The Company pays fixed rates of interest of 3.13% and 2.27% respectively on each arrangement and on both the Companyreceives a variable rate equal to LIBOR + 2.0% on the notional amount. 123

NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED) 14. PROVISIONS Onerous Litigation Dilapidation Total leases provisions provisions £ At January £ £ Arising during the year – £ – () Utilised () Released during the year () – – At December – () – – () – Onerous leases The property provision related primarily to the estimated costs for the rental obligations, dilapidations and other costs in respect of the exit from Chiswell Street, London. The provision reflected the estimated net cost to the Company over the remainder of the lease period. At 31 December 2016 the premises had been exited and the provision settled in full. Litigation provisions This provision represented management’s best estimate of the outcome of potential historical contractual liabilities. At 31 December 2016 this provision has been settled in full with the remaining balance being released to the Income Statement. Dilapidation provisions The dilapidation provision represents the estimated costs required to reinstate the Chiswell Street, London premises to a state as required under the lease. It is expected that the costs will be incurred within one year of the Balance Sheet date. 15. CALLED UP SHARE CAPITAL Allotted and fully paid Number of Number of £ Ordinary shares of p each shares £ shares , , ,, ,, The Company has one class of ordinary shares which carry no right to fixed income. During the year the Company issued 170,112 ordinary shares with a nominal value of £42,528. 155,659 of the shares, with a nominal value of £38,915, were issued in respect of Sharesave options for consideration of £49,314. The difference of £10,399 between the consideration received and the nominal value has been taken to the share premium reserve. The remaining 14,453 shares were issued at nominal value in respect of the long term incentive plan with an amount of £3,613 debited to retained earnings. During the year, the Company also issued and subsequently cancelled £15,080,119.50 of B ordinary shares of £0.01 each (“capital reduction shares”), as part of a capital reduction exercise, detailed in Note 16. The Company has two share option schemes under which options to subscribe for the Company’s shares have been granted to employees (Note 19). 16. RESERVES SHARE PREMIUM This represents the share premium attaching to those shares issued upon the exercise of certain share options. In December 2016 the whole of the share premium reserve was cancelled as part of a capital reduction exercise to create additional distributable reserves. At 31 December 2016 the share premium reserve was £nil (2015 £5,986,000). During 2015 a transfer of £2,170,000 had been made to the merger reserve to more accurately present the premium attached to shares issued for the acquisitions carried out in 2013 and 2014. MERGER RESERVE This represents the share premium attaching to those shares issued upon the acquisition of subsidiaries. In December 2016 the whole of the merger reserve was capitalised as capital reduction shares and subsequently cancelled as part of a capital reduction exercise to create additional distributable reserves. At 31 December 2016 the merger reserve was £nil (2015 £15,081,000).124

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSNOTES TO THE COMPANY FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED)16. RESERVES (CONTINUED)During 2015 a transfer of £2,170,000 had been made from the share premium reserve to more accurately present the premiumattached to shares issued for the acquisitions carried out in 2013 and 2014. A further movement of £2,003,000 in 2015 related to theacquisition of Life.ESOP RESERVEThe ESOP reserve is used to record the investment in Communisis plc shares held by the employee share ownership plan (“ESOP”).The ESOP is for the benefit of all employees and can be used in conjunction with any of the Group’s share schemes. The ESOP reserveholds 806,319 shares at 31 December 2016 (2015 18,722) with an average cost of 36.83p (2015 53.16p) and the market value of theseshares is £349,781 (2015 £7,676).CAPITAL REDEMPTION RESERVEThe capital redemption reserve is used to record the effect of share capital buy-backs made by the Company where the nominalvalue of share capital acquired is transferred to this reserve.In December 2016 the whole of the capital redemption reserve was cancelled as part of a capital reduction exercise to createadditional distributable reserves. At 31 December 2016 the capital redemption reserve was £nil (2015 £1,375,000).17. RETAINED EARNINGSAs at January £ £Loss for the financial year ,Ordinary dividends paid ,Adjustment in respect of prior years due to change in tax rate () (, )Net (loss) / gain on cash flow hedges taken directly to equity (, ) (, )Actuarial losses on defined benefit pension plansIncome tax on items taken directly to Comprehensive Income () ()Employee share option schemes – value of services provided ()Shares options exercised (, ) ()Shares issued from ESOPCapital reduction () () () ()As at December , – , ,18. RETIREMENT BENEFIT PLANSThe Company operates the Communisis Pension Plan which comprises a defined contribution and defined benefit section.DEFINED CONTRIBUTION SECTIONThe Company operates UK defined contribution arrangements. The assets of the arrangements are held separately from those ofthe Company.The Company is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits.The only obligation of the Company with respect to the retirement benefit scheme is to make the specified contributions.The total cost charged to income of £165,000 (2015 £194,000) represents contributions payable to these arrangements by theCompany at specified rates. As at 31 December 2016, there were no contributions due in respect of the current reporting period thathad not been paid over to the arrangements (2015 none).The Company expects to contribute £0.1m (2015 £0.2m) to the defined contribution pension arrangements in 2017.DEFINED BENEFIT SECTIONThese Financial Statements include a proportion of the Group pension deficit and charge which has been allocated to the Companybased on the number of members employed by the Company at the time the Scheme was closed to future accrual.Defined benefit obligation £ £Fair value of plan assets (, ) (, )Net pension deficit , , (, ) (, )Detailed disclosure can be found in Note 14 to the Group Consolidated Financial statements on pages 97 to 100. 125

NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED) 19. SHARE-BASED PAYMENTS The Company operates two schemes, details of which can be found in Note 13 to the Group Consolidated Financial Statements on pages 95 to 96. The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year. Exercised during the year Number WAEP Number WAEP Outstanding at the end of the year , .p ,, .p .p ,, .p ,, 1 The weighted average share price at the date of exercise for the options exercised in the year ended 31 December 2016 was 45p (2015 44p). The weighted average remaining contractual life for the share options outstanding as at 31 December 2016 is 1.70 years (2015 2.08 years). The range of exercise prices for options outstanding at the end of the year was nil – 57.5p (2015 nil – 57.5p). The number of share options for which the exercise price is nil total 5,906,359 (2015 6,048,291). 20. OTHER FINANCIAL COMMITMENTS At 31 December 2016 the Company had annual commitments under non-cancellable operating leases for assets as set out below: Land and buildings ££ Operating leases which expire: – within one year – in two to five years Other ££ Operating leases which expire: – within one year – in two to five years 21. CONTINGENT LIABILITIES The Company has contingent liabilities where it has provided rental guarantees to landlords in respect of certain leasehold properties occupied by companies that were formerly subsidiaries in the Group, but have subsequently been sold. The principal risk is that current leasehold occupants will become insolvent and that guarantees will be called, resulting in a material cash cost to the Group. To the extent that they have not already been called, these guarantees represent contingent liabilities of the Company. Other than those leases for which the liability is considered to be remote, the Company has guaranteed rentals on a lease with remaining terms of seven years, with an annual rental of £1,135,000. No provision for this guarantee has been made in the Financial Statements because, at the Balance Sheet date, the directors believe that it is not probable that it will be called. 22. RELATED PARTY TRANSACTIONS The Company has taken advantage of the exemption under paragraph 8(k) of FRS 101 not to disclose related party transactions with its wholly owned subsidiaries. Remuneration of key management personnel is disclosed in the Directors’ Remuneration Report on pages 50 to 68.126

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSINDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OFCOMMUNISIS PLCFOR THE YEAR ENDED 31 DECEMBER 2016OUR OPINION ON THE FINANCIAL STATEMENTSIn our opinion:the Financial Statements give a true and fair view of the the parent company Financial Statements have beenstate of the Group’s and of the parent company’s affairs as properly prepared in accordance with United Kingdomat 31 December 2016 and of the Group’s profit for the year Generally Accepted Accounting Practice including Financialthen ended; Reporting Standard 101 ‘Reduced Disclosure Framework’; andthe Group Financial Statements have been properly the Financial Statements have been prepared inprepared in accordance with IFRSs as adopted by the accordance with the requirements of the Companies ActEuropean Union; and 2006 and, as regards the Group Financial Statements, Article 4 of the IAS Regulation.WHAT WE HAVE AUDITEDCommunisis plc’s Financial Statements comprise:Group Parent companyConsolidated Balance Sheet as at 31 December 2016 Company Balance Sheet as at 31 December 2016Consolidated Income Statement for the year then ended Company Statement of Changes in Equity for the year then endedConsolidated Statement of Comprehensive Income for Related notes 1 to 22 to the Financial Statementsthe year then endedConsolidated Statement of Changes in Equity forthe year then endedConsolidated Statement of Cash Flows for the yearthen endedRelated notes 1 to 32 to the Financial StatementsThe financial reporting framework that has been applied in the preparation of the Group Financial Statements is applicable law andInternational Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that hasbeen applied in the preparation of the parent company Financial Statements is applicable law and United Kingdom AccountingStandards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 101 ‘ReducedDisclosure Framework’.OVERVIEW OF OUR AUDIT APPROACHRisks of material misstatement Revenue recognition Valuation of goodwill Management override (New in 2016) Accounting for a change in segmentsAudit scope We performed an audit of the complete financialMateriality information of five components and audit procedures on specific balances for a further components. The components where we performed full or specific audit procedures accounted for 100% of adjusted profit before tax* and 100% of revenue. Overall Group materiality was £780,000 which represents 5% of adjusted profit before tax*.* Profit before tax adjusted for non-recurring items as defined in the ‘Our application of materiality’ section of this report 127

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COMMUNISIS PLC FOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED) OUR ASSESSMENT OF RISK OF MATERIAL MISSTATEMENT We identified the risks of material misstatement described below as those that had the greatest effect on our overall audit strategy, the allocation of resources in the audit and the direction of the efforts of the audit team. In addressing these risks, we have performed the procedures below which were designed in the context of the Financial Statements as a whole and, consequently, we do not express any opinion on these individual areas. Key observations communicated to Risk Our response to the risk the Audit and Risk Committee REVENUE RECOGNITION At each full and specific scope audit Based on the procedures performed, Refer to the Audit Committee Report (pages 46 to 47); and Notes 2 and 4 to the location with significant revenue streams: we did not identify any evidence of Group Financial Statements We performed walkthroughs of each material misstatement in the revenue The Group has reported revenues of significant class of revenue transactions recognised in the year or revenue deferred £361.9m (2015 £354.2m). We identified and assessed the design effectiveness at 31 December 2016. three specific risks of fraud and error in respect of improper revenue recognition of key controls. For two components we given the nature of the Group’s products and services as follows: tested the operating effectiveness of Inappropriate cut-off of revenue. controls. Inappropriate accounting for complex For revenue recognised close to the contractual arrangements. period end, we vouched transactions above our testing threshold to Inappropriate recording of accrued documentation supporting recognition income. of revenue. There is no change in the risk profile in the For revenue accrued but unbilled at the current year. period end, we vouched transactions above our testing threshold to documentation supporting recognition of revenue on a stage of completion basis. Our procedures in relation to inappropriate accounting for complex contractual arrangements ensured that the policies adopted were appropriate and consistently applied. We performed other substantive, transactional testing and analytical procedures to validate the recognition of revenue throughout the year. Where practicable, at component level we performed testing over full populations of transactions using data analysis. For revenue recorded through journal entries outside of normal business processes, we performed testing to establish whether a service had been provided or a sale had occurred in the financial year to support the revenue recognised. We also considered the adequacy of the Group’s disclosure of accounting policies for revenue recognition in Notes 2 and 4 to the Financial Statements respectively. At each full and specific scope audit location with significant revenue streams (16 components) we performed audit procedures which covered 100% of the Group’s revenue. All procedures were performed by the primary team.128

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSINDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OFCOMMUNISIS PLCFOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED)Risk Our response to the risk Key observations communicated to the Audit and Risk CommitteeVALUATION OF GOODWILL We challenged management’s Based on the results of our work, we agreeRefer to the Audit Committee Report assumptions used in its impairment with management’s conclusion that no(pages 46 to 47); and Notes 2 and 12 to the models for assessing the recoverability impairment of goodwill is required in theGroup Financial Statements of the carrying value of goodwill. current year. We agree with management’s We focused on the appropriateness of assessment of the reasonably possibleWe focused on this area due to the size CGU identification, the method applied changes in key assumptions that wouldof the goodwill balance (£164m) (2015 to estimate recoverable values, discount result in an impairment in any CGU and the£164m) and because the directors’ rates and forecast cash flows. disclosure given in Note 12 to the Financialassessment of ‘value in use’ of the Statements.Group’s Cash Generating Units (“CGUs”) Specifically:involves assumptions about the futureperformance of the business and the We have validated that the CGUsdiscount rates applied to future cash flow identified are the lowest level at whichforecasts. management monitors goodwill.The risk level has remained the same as We tested the method applied in thethe prior period despite changes to CGUs value in use calculation as compared toon re-segmentation, as indicators of the requirements of IAS 36 Impairmentimpairment in the Design CGU remained of Assets and the mathematicalin place for the first half of the year before accuracy of management’s model.re-segmentation. We obtained an understanding of, and assessed the basis for, key underlying assumptions for the 2017 budget. We have validated that the cash flow forecasts used in the valuation are consistent with information approved by the Board and have reviewed the historical accuracy of management’s forecasts. We challenged management on its cash flow forecasts and the implied growth rates for 2017 and beyond by considering evidence available to support these assumptions and their consistency with findings from other areas of our audit. The discount rates and long term growth rates applied within the model were assessed by an EY business valuation specialist, including comparison to economic and industry forecasts where appropriate. For all CGUs, we performed sensitivity analyses by stress testing key assumptions in the model with downside scenarios to understand the parameters that, should they arise, could lead to a different conclusion in respect of the carrying value of goodwill. We considered the appropriateness of the related disclosures provided in Note 12 to the Group Financial Statements. The entire goodwill balance was subject to full scope audit procedures. 129

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COMMUNISIS PLC FOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED) Key observations communicated to Risk Our response to the risk the Audit and Risk Committee (NEW IN 2016) ACCOUNTING FOR A We have reviewed internal reporting Based on the work we have performed CHANGE IN SEGMENTS to the Chief Operating Decision Maker we have concluded that the change to Refer to the Audit Committee Report (pages 46 to 47); and Notes 3 to the Group (CODM) and determined that this is in two segments is reported and disclosed Financial Statements line with the new operating structure. appropriately in the Annual Report and In 2016 the Group reorganised its reportable segments, creating two new We have reviewed the impact of this Accounts in accordance with IFRS 8 segments from the previous three. change on the allocation of goodwill to Operating Segments. As a result of this, the level of disclosure CGUs as has been reported by the Group. We have concluded that the goodwill in the 2016 Financial Statements has decreased. The change in segments is We have considered the resultant impact allocated on reorganisation was not also reflected in the various statements on the carrying value of goodwill through impaired at the time of the reorganisation. from members of the board that are included within this Annual Report and a review of impairment testing performed Accounts. at the time of the reorganisation. There is significant risk of error in disclosures within a year of change. We have considered the appropriateness of the disclosure of these changes included in the Group Financial Statements. FRAUD AND MANAGEMENT OVERRIDE We performed general procedures at We concluded on revenue separately. Refer to the Audit Committee Report each in-scope location and at Group level We concluded that the intangible asset (pages 46 to 47) in relation to the risk, including: projects tested satisfied the recognition There are incentives and pressures to Testing the appropriateness of a sample criteria in IAS 38 Intangible assets and that meet market consensus. As a result, of journal entries, following defined there is a risk that balances in the no impairment was identified. Financial Statements which are subject to criteria, recorded in the general ledger. estimation or management judgement We have reviewed the key pension may be manipulated to present an Understanding material accounting assumptions used in determining the improved result. estimates and corroborating to pension liability and confirm that they are supporting documentation. within an appropriate range. We have three specific areas of focus: We performed specific procedures to Revenue recognition is concluded on Revenue recognition relating to specific transactions under the terms of respond to our areas of focus. We: separately above. complex customer arrangements, such as transition fees (primarily covered Understood the nature of material through the response to the revenue recognition risk). intangible assets through inquiry and We identified no matters from the results of The capitalisation of internally inspection of output. our general procedures performed. generated intangible assets. Costs may be capitalised that do not specifically Challenged management on significant relate to the relevant project or may intangible assets as to whether the be irrecoverable from an identifiable costs incurred meet the recognition project. criteria set out in IAS 38 Intangible Assets. Manipulation of results through Tested a sample of intangible asset accounting for the pension scheme additions to supporting documents through selecting favourable to confirm the nature of the cost and assumptions. value capitalised. Intangible assets are primarily recorded in two of the full scope locations. Our general procedures were performed across all in-scope locations. The defined benefit pension liability is reviewed and challenged with reference to the key assumptions made by management. We determined an appropriate range for each key assumption for the specific scheme and compared to those provided by management. Revenue recognition is concluded on separately above.130

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSINDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OFCOMMUNISIS PLCFOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED)THE SCOPE OF OUR AUDIT we selected 16 components covering entities within the UK, Europe and the Middle East, which represent the principalTailoring the scope business units within the Group.Our assessment of audit risk, our evaluation of materiality Of the components selected, we performed an audit ofand our allocation of performance materiality determine the complete financial information of five components (“fullour audit scope for each component within the Group. scope components”) which were selected based on their sizeTaken together, this enables us to form an opinion on the or risk characteristics. For a further components (“specificConsolidated Financial Statements. We take into account size, scope components”), we performed audit procedures onrisk profile, the organisation of the Group and effectiveness specific accounts within that component that we consideredof Group-wide controls, changes in the business environment had the potential for the greatest impact on the significantand other factors such as recent internal audit results when accounts in the Financial Statements either because of theassessing the level of work to be performed at each entity. size of these accounts or their risk profile. For the remaining nine components, audit procedures were undertaken asIn assessing the risk of material misstatement to the Group set out in Note below to respond to any potential risks ofFinancial Statements, and to ensure we had adequate material misstatement to the Group Financial Statements.quantitative coverage of significant accounts in the FinancialStatements, of the 25 reporting components of the Group,Reporting components Number % Group % Group See note Number % Group % Group adjusted revenue adjusted revenueFull scope ,Specific scope profit % , profit %Full and specific scope coverage before tax % before tax %Remaining components % % % % % % % % % % % %Total reporting components %% %%Notes1. One of the five full scope components relates to the parent company whose activities include the Group’s treasury management and consolidation adjustments. The Group audit risk in relation to the carrying value of goodwill was subject to audit procedures on the entire balance.2. The Group audit risk in relation to revenue recognition was subject to full audit procedures at each of the full and specific scope locations with significant revenue streams.3. The audit scope of these components may not have included testing of all significant accounts of the component but will have contributed to the coverage of significant accounts selected for testing by the primary audit team.4. The remaining nine components contributed less than a net 0.5% of adjusted profit before tax and none are individually more than 0.5% of the Group’s adjusted profit before tax.INVOLVEMENT WITH COMPONENT TEAMS We determined materiality for the Group to be £780,000In establishing our overall approach to the Group audit, we (2015 £560,000), which is 5% (2015 5%) of profit before taxdetermined the type of work that needed to be undertaken adjusted for non-recurring items reported by the Group.at each of the components by us as the primary audit team. We believe that adjusted profit before tax provides us with aAll audit work performed for the purposes of the audit of the consistent year on year basis for determining materiality andGroup Financial Statements was undertaken by the primary is the most relevant performance measure to the stakeholdersaudit team. of the entity. Non-recurring items are set out in Note 5.4 of the Group’s Financial Statements.OUR APPLICATION OF MATERIALITYWe apply the concept of materiality in planning and Starting Profit before tax – £ . mperforming the audit, in evaluating the effect of identified basismisstatements on the audit and in forming our audit opinion. Adjustment for non-recurring items Adjustments Exceptional costs of £4.3mMaterialityThe magnitude of an omission or misstatement that, individually Materiality Profit before tax adjusted for non-recurring items ofor in the aggregate, could reasonably be expected to influence £ . m (materiality basis)the economic decisions of the users of the Financial Statements. Materiality of £ , ( % of materiality basis)Materiality provides a basis for determining the nature and extentof our audit procedures. 131

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COMMUNISIS PLC FOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED) During the course of our audit, we reassessed initial materiality or materially inconsistent with, the knowledge acquired by us and the only change in the final materiality from our original in the course of performing the audit. If we become aware of assessment at planning was to reflect the actual reported any apparent material misstatements or inconsistencies we performance of the Group in the year. consider the implications for our report. Performance materiality RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITOR The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately As explained more fully in the Directors’ Responsibilities low level the probability that the aggregate of uncorrected and Statement set out on pages 48 to 49, the directors are undetected misstatements exceeds materiality. responsible for the preparation of the Financial Statements and for being satisfied that they give a true and fair view. On the basis of our risk assessments, together with our Our responsibility is to audit and express an opinion on the assessment of the Group’s overall control environment, Financial Statements in accordance with applicable law and our judgement was that performance materiality was International Standards on Auditing (UK and Ireland). Those 75% (2015 75%) of our planning materiality, namely £580,000 standards require us to comply with the Auditing Practices (2015 £420,000). We have set performance materiality at Board’s Ethical Standards for Auditors. this percentage to ensure that uncorrected and undetected misstatements in all accounts do not exceed our materiality This report is made solely to the Company’s members, level. as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken Audit work at component locations for the purpose of so that we might state to the Company’s members those obtaining audit coverage over significant financial statement matters we are required to state to them in an auditor’s report accounts is undertaken based on a percentage of total and for no other purpose. To the fullest extent permitted by performance materiality. The performance materiality set law, we do not accept or assume responsibility to anyone for each component is based on the relative scale and risk of other than the Company and the Company’s members as a the component to the Group as a whole and our assessment body, for our audit work, for this report, or for the opinions we of the risk of misstatement of that component. In the current have formed. year, the range of performance materiality allocated to full and specific scope components was £117,000 to £350,000 OPINION ON OTHER MATTERS PRESCRIBED BY THE (2015 £84,000 to £252,000). COMPANIES ACT 2006 Reporting threshold In our opinion: An amount below which identified misstatements are considered the part of the Directors’ Remuneration Report to be as being clearly trivial. audited has been properly prepared in accordance with the Companies Act 2006; and We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £39,000 based on the work undertaken in the course of the audit: (2015 £28,000), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, – the information given in the Strategic Report and the warranted reporting on qualitative grounds. Directors’ Report for the financial year for which the Financial Statements are prepared is consistent with the We evaluate any uncorrected misstatements against both the Financial Statements. quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming – the Strategic Report and the Directors’ Report have our opinion. been prepared in accordance with applicable legal requirements. SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS An audit involves obtaining evidence about the amounts and disclosures in the Financial Statements sufficient to give reasonable assurance that the Financial Statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s and the parent company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the Financial Statements. In addition, we read all the financial and non-financial information in the Annual Report and Accounts 2016 to identify material inconsistencies with the audited Financial Statements and to identify any information that is apparently materially incorrect based on,132

Communisis plc Annual Report and Financial Statements FINANCIAL STATEMENTSINDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OFCOMMUNISIS PLCFOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED)Matters on which we are required to report by exceptionISAS (UK AND IRELAND) REPORTING We are required to report to you if, in our opinion, We have no exceptions to financial and non-financial information in the Annual report.COMPANIES ACT 2006 REPORTING Report is:LISTING RULES REVIEW materially inconsistent with the information in theREQUIREMENTS audited Financial Statements; or apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the course of performing our audit; or otherwise misleading. In particular, we are required to report whether we have identified any inconsistencies between our knowledge acquired in the course of performing the audit and the directors’ statement that they consider the Annual Report and Accounts taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the entity’s performance, business model and strategy; and whether the Annual Report appropriately addresses those matters that we communicated to the Audit Committee that we consider should have been disclosed. In light of the knowledge and understanding of the We have no exceptions to Company and its environment obtained in the course of report. the audit, we have identified no material misstatements in the Strategic Report or Directors’ Report. We are required to report to you if, in our opinion: adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company Financial Statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or certain disclosures of directors’ remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. We are required to review: We have no exceptions to report. the directors’ statement in relation to going concern and longer-term viability, both set out on pages 20 to 21; and the part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. 133

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COMMUNISIS PLC FOR THE YEAR ENDED 31 DECEMBER 2016 (CONTINUED) Statement on the directors’ assessment of the principal risks that would threaten the solvency or liquidity of the entity ISAS (UK AND IRELAND) REPORTING We are required to give a statement as to whether we We have nothing material to have anything material to add or to draw attention add or to draw attention to. to in relation to: the directors’ confirmation in the Annual Report that they have carried out a robust assessment of the principal risks facing the entity, including those that would threaten its business model, future performance, solvency or liquidity; the disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated; the directors’ statement in the Financial Statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the entity’s ability to continue to do so over a period of at least twelve months from the date of approval of the Financial Statements; and the directors’ explanation in the Annual Report as to how they have assessed the prospects of the entity, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the entity will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Christabel Cowling (Senior statutory auditor) for and on behalf of Ernst & Young LLP, Statutory Auditor Leeds 9 March 2017 Notes: 1. The maintenance and integrity of the Communisis plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the Financial Statements since they were initially presented on the website. 2. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.134

Communisis plc Annual Report and Financial Statements 2016 SHAREHOLDER INFORMATIONSHAREHOLDER INFORMATION2017 FINANCIAL CALENDAR9 March 2017 Preliminary results announcement27 April 2017 Ex-dividend date for the final dividend28 April 2017 Record date to be eligible for the final dividend11 May 2017 Annual General Meeting26 May 2017 Final dividend payment date3 August 2017 Interim results announcement14 September 2017 Ex-dividend date for the interim dividend15 September 2017 Record date to be eligible for the interim dividend13 October 2017 Interim dividend payment dateANNUAL GENERAL MEETING (“AGM”) Ropemaker Street, London EC Y LYThis year’s AGM will be held at the offices of Liberum Capital Limited, Ropemaker Place,on Thursday May .The meeting will start at noon and registration will be available from . am.HOW TO GET IN TOUCH ADVISORSRegistered Office AuditorCommunisis plc Ernst & Young LLPCommunisis HouseManston Lane Bridgewater PlaceLeeds Water LaneLS AH LeedsTel: + ( ) LS QRFax: + ( )Registered in England and Wales StockbrokersNumber Liberum Capital Limited Ropemaker PlaceCompany SecretarySarah Caddy Ropemaker Street LondonHead Office EC Y LYCommunisis plc Corporate Lawyers Little Portland Street Eversheds LLPLondon Clarion Solicitors LLPW W JG Pinsent Masons LLPTel: + ( ) Ward Hadaway LLP Principal Bankers Barclays Bank PLC HSBC Bank plc Lloyds Banking Group plc Royal Bank of Scotland plc 135

CONTENTS REGISTRAR AND SHAREHOLDING DIVIDENDS ENQUIRIES We encourage shareholders to have dividends paid directly Administrative enquiries about the holding of Communisis into their bank account to ensure efficient payment and shares, such as change of address, change of ownership and cleared funds on the payment date. If you have a UK bankHIGHLIdAGisvsHiedteTSnSed rvpiaceysm: ents should be directed to our registrar, Capita abcyccoliucknitnygoounc‘aynousirgd4nivuidpefnodr tohpistisoenrvs’icaenodnfothlleowShinagrethPeortal on-screen instructions or by contacting Capita Asset Services By phone on the number above.CHAIRMPleAasNe’cSaSll TATEMENT and calls will be charged at p per 7 minute plus your phone company’s access charge. If you are ELECTRONIC COMMUNICATIONSSTRATEoaGuntdIsCicdaeRlltsEhwePiUlOl bnReitTecdh aKringgeddoamt t,hpeleaapspeliccaalbl +le international rate. Sehleacrterohnoilcdaelrlys.cRaengirset9geirsintegr to receive shareholder informationRISKS ALNinDesUaNreCoEpReTnAbIeNtwTeIEeSn . to . Monday to Friday for electronic communications isCORPOeRxAclTuEdinSgOpCuIbAliLc hRoElSidPaOysNinSEIBnIgLlIaTnYd RanEdPOWRalTe s. very straightforwa2rd2. Just visit www.capitashareportal.com By email rYeocuewntiltlarexqvuoiurechyoeru2or6rinovnesytoourrcsohdaerewcheicrhtificcaanteb.e located on aGOVERsNhaAreNhColEde [email protected] BOILER ROO3M2 SCAMS sUhnaforerhtuonldaeterslyw, weree3atar2ergaewteadrebtyhfartaiundtshteerpsawsthsoommaedoef ourBOARDOOnFlinDeIRECTORS AND EXECUTIVE BOARD offers toDIRECTYOoRuSc’aRnEuPseOtRheT Share Portal at www.capitashareportal.comCORPOTwRohAricTehgEicsGatenOr bfVoerEltoRhcNisaAtseeNdrvCoicEnea,RyEroePucOewnRitllTtrae xqvuoiruecyhoeurroinrvoenstyoorucrode buy their shares at3p5rices substantially in excess of the market prerpicoer.tGaesnuesrpael cintfeodr4ms0caatmio,nisoanvbaoilialebrleroforommstchaemFsCaA’nsdwheobwsitteoAUDIT CshOaMreMceIrTtiTficEaEteR.EPORT at www.fca.org.uk4/c6onsumers/scamsSTATEMFEoNr aTll OotFheDr IeRnEqCuiTriOesR, pSl’eRasEeScPoOntNaSctIBCIaLpITitIaESA sset Services 48 50 by post at the following address: 69DIRECTCOaRpSit’aRAEsMseUt SNeErvRicAeTs ION REPORT 70 71 The RegistryFINANCBeIAcBkeLecnSkheTanAmhTaEmMRoEaNdTS CONSOKLeInDtATED INCOME STATEMENT CONSOBLRIDATTUED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED BALANCE SHEET 72CONSOLIDATED CASH FLOW STATEMENT 73CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 74NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 75COMPANY BALANCE SHEET 114STATEMENT OF CHANGES IN EQUITY 115NOTES TO THE COMPANY FINANCIAL STATEMENTS 116INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COMMUNISIS PLC 127SHAREHOLDER INFORMATION 135136



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