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Annual Report & Accounts 2006 - Notes to the Consolidated Financial Statements
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Gaming VC Annual Report 2006 (iv) Amortisation Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are inde˘nite. Goodwill and intangible assets with an inde˘nite useful life are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows: . consulting agreements 3-5 years . capitalised development costs 2-4 years . software licence agreements 2-3 years (g) Impairment At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes an estimate of the recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is written down to its recoverable amount. Recoverable amount is the higher of fair value less costs to sell and value in use and is determined for an individual asset. If the asset does not generate cash inŁows that are largely independent of those from other assets or groups of assets the recoverable amount of the cash generating unit to which the asset belongs is determined. Discount rates reŁecting the asset speci˘c risks and the time value of money are used for the value in use calculation. For goodwill and trademarks that have an inde˘nite useful life, the recoverable amount is estimated at each balance sheet date. (h) Share capital (i) Dividends Dividends are recognised as a liability in the period in which they are declared. (i) Employee bene˘ts (i) De˘ned contribution plans The Group operates a de˘ned contribution plan. Obligations for contributions to de˘ned contribution pension plans are recognised as an expense in the income statement as incurred. (ii) Share-based payment transactions The share option programme allows Group employees to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using a black-scholes valuation model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reŁect the actual number of share options that vest except where forfeiture is only due to share prices not achieving the threshold for vesting. (j) Provisions A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outŁow of economic bene˘ts will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash Łows at a pre-tax rate that reŁects current market assessments of the time value of money and, where appropriate, the risks speci˘c to the liability. (k) Trade and other payables Trade and other payables are stated at cost. (l) Revenue Revenue comprises proceeds from gaming activities. In accordance with industry practice, gaming revenue represents ‘‘customer drop’’ or net revenue which comprises amounts staked net of customer winnings and not the handle or wagered amount. (m) Expenses (i) Operating lease payments Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease.