BrightView EXEMPT Consolidated Financial Statements l

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BrightView Acquisition Holdings, Inc. Notes to the Consolidated Financial Statements For the Years Ended December 31, 2016 and 2015 (in thousands) Retainage receivables represent amounts that are billed or billable to our customers, but are retained by the customer until completion of the project or as otherwise specified in the contract. Retainge percentages typically range from 5-10% of the total contract value. Inventories Inventories consist primarily of trees, landscape and irrigation materials and snow removal products and are valued at the lower of cost (first in, first out) or market. When market values are below the Company’s costs, the Company records an expense to increase cost of services provided. No significant expenses were recorded to write down inventory for the years ended December 31, 2016 and 2015, respectively. Property and Equipment Property and equipment is recorded at cost, including the cost of internal labor for software for internal use, less accumulated depreciation, except for those assets acquired through a business combination, in which case they have been stated at estimated fair value as of the date of the business combination. Costs of major additions and improvements are capitalized. Costs of replacements, or maintenance and repairs that do not improve or extend the life of the related assets are expensed as incurred.Depreciation is computed using the straight line method over the estimated useful lives of the assets (2 to 40 years). Leases The Company leases office space, branch locations, vehicles, and operating equipment. Lease agreements are evaluated to determine whether they are capital or operating leases. When substantially all of the risks and benefits of property ownership have been transferred to the Company, the lease then qualifies as a capital lease. Capital leases are capitalized at the lower of net present value of the total amount of rent payable under the leasing agreement (excluding finance charges) or the fair market value of the leased asset. Capital lease assets are depreciated on a straight-line basis, over a period consistent with the Company's normal depreciation policy for property and equipment, but not exceeding the lease term. Interest charges are expensed over the period of the lease in relation to the carrying value of the capital lease obligation. Deferred Charges Deferred charges, consisting of fees and other expenses associated with borrowings are amortized over the terms of the related borrowings using the effective interest rate method (See Note 7). Deferred charges are presented in the balance sheet as a direct reduction from the carrying amount of the related borrowings. Amortization of deferred charges in the amounts of $9,000 and $8,698 for the years ended December 31, 2016 and 2015, respectively, have been included in interest expense in the accompanying Consolidated Statements of Operations. Goodwill and Other Intangible Assets Goodwill represents the excess of cost over fair value of net assets of businesses acquired. Goodwill is not amortized, but instead is tested for impairment at least annually. The Goodwill impairment standard provides entities with the option to perform a qualitative assessment to determine whether the two-step impairment testing is necessary. The two-step impairment test is required only if the Company concludes that it is more likely than not that a reporting unit’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. The two steps are as follows: First, the Company determines the fair value of the reporting units and compares it to its carrying amount. Second, if the carrying amount of a reporting unit exceeds its fair value, the goodwill of that reporting unit is potentially impaired, and the Company would then be required to measure and record an impairment loss equal to the excess of the carrying amount of the reporting unit's goodwill over its implied fair value. The Company estimates fair value using the best information available, including market information and discounted cash flow projections. If the test indicates that goodwill has become impaired, the Company would record a charge to earnings in the accompanying Consolidated Statement of Operations during the period in which the impairment is determined. The Company performs its annual impairment test as of November 30th each year. In 2016 and 2015, the Company completed its annual assessment of goodwill at the reporting unit level, and determined that there has been no impairment of goodwill. 8 Confidential