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Annual Report & Accounts 2013 - NOTES
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10. INTANGIBLE ASSETS Trade- Non- Leased Owned Total marks & contractual Software Software Software Trade Consulting Customer Licence Licence Licence Goodwill Name & Magazine Relationships Total €000's €000's €000's €000's €000's €000's €000's €000's Cost At 1 January 2012 - 17,625 17,625 81,946 16,119 4,919 1,704 122,313 Additions - 628 628 - - - - 628 Disposals - (873) (873) - - - - (873) At 1 January 2013 - 17,380 17,380 81,946 16,119 4,919 1,704 122,068 Additions 827 4 831 - - - - 831 Acquisitions - Sportingbet PLC - 5,601 5,601 84,221 946 - 675 91,443 Acquisitions - Gomifer S.A. - 17 17 - - - - 17 Exchange differences - 7 7 - - - - 7 At 31 December 2013 827 23,009 23,836 166,167 17,065 4,919 2,379 214,366 Amortisation and Impairment At 1 January 2012 - 15,306 15,306 33,274 526 4,919 1,065 55,090 Amortisation - 1,729 1,729 - 256 - 426 2,411 Disposal - (873) (873) - - - - (873) At 1 January 2013 - 16,162 16,162 33,274 782 4,919 1,491 56,628 Amortisation 243 2,203 2,446 - 313 - 477 3,236 Acquisitions - Sportingbet PLC - 645 645 - - - - 645 Acquisitions - Gomifer S.A. - 6 6 - - - - 6 Exchange differences - 1 1 - - - - 1 At 31 December 2013 243 19,017 19,260 33,274 1,095 4,919 1,968 60,516 Net Book Value At 31 December 2012 - 1,218 1,218 48,672 15,337 - 213 65,440 At 31 December 2013 584 3,992 4,576 132,893 15,970 - 411 153,850 10.1 Amortisation The amortisation for the year is recognised in the following line items in the income statement. 2013 2012 €000's €000's Net operating expenses 3,236 2,299 Discontinued activities - 112 3,236 2,411 10.2 Impairment Tests for Cash-Generating Units Containing Goodwill and Trademarks An Impairment Review of the Group's goodwill was carried out for the year ended 31 December 2013. The goodwill relates to Betboo, CasinoClub and Sportingbet. The carrying values of the assets were compared with the recoverable amounts, the recoverable amount was estimated based upon a value in use calculation, based upon management forecasts for the years ending 31 December 2014 and up to 31 December 2018. The assumptions detailed below have been determined based on past experience in this market which the Group's management believes is the best available input for forecasting this market. Betboo Significant growth is expected in the short-term reducing to 20% annual growth by 2017, a long-term growth rate of 2% was used from 2018 to reflect the likely competitive pressures. A discount rate of 35% was used, based on the internal rate of return of the Betboo acquisition. It was concluded that the carrying value of the goodwill and trademarks was not impaired. CasinoClub A long-term growth rate of 2% was used to reflect the increasing competitive pressures from large online gaming companies. A discount rate of 17.2% was used, based on company specific pre-tax weighted average cost of capital. Having performed appropriate sensitivity analysis on the key assumptions (including reducing the growth rate to nil and increasing the discount rate to 22%), it was concluded that the carrying value of the goodwill and trademarks was not impaired. GVC HOLDINGS PLC ANNUAL REPORT 2013 45 NOTES TO THE FINANCIAL STATEMENTS