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Annual Report & Accounts 2015 - NOTES
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1. siGnificant accoUntinG policies continued 1.9 employee Benefits 1.9.1 Pension Costs in some jurisdictions in which the Group has employees, there are government or private schemes into which the employing company or branch must make payments on a defined contribution basis, the contributions are shown in the profit or loss account in the year. 1.9.2 share options the Group has share option schemes which allow Group employees and contractors 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 are measured using either a binomial or monte Carlo valuation model. this valuation method takes into account the terms and conditions upon which the options were granted. the amount recognised as an expense is adjusted to reflect the actual number of share options that vest and market conditions if applicable. Payments made to repurchase or cancel vested awards are accounted for with the fair value of the options cancelled, measured at the date of cancellation being taken to retained earnings; the balance is taken to the income statement. also on cancellation an accelerated charge would be recognised immediately. see note 20 for further details of the schemes. 1.10 provisions a provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. if the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. 1.11 revenue recognition Net Gaming Revenue ('NGR') is measured at the fair value of consideration received or receivable and comprises the following elements: Casino: net win in respect of bets placed on casino games that have concluded in the year, stated net of promotional bonuses. sportsbook: gains and losses in respect of bets placed on sporting events in the year, stated net of promotional bonuses. open positions are carried at fair market value and gains and losses arising on this valuation are recognised in revenue, as well as gains and losses realised on positions that have closed. Poker: net win in respect of rake for poker games that have concluded in the year, stated net of promotional bonuses. Bingo: net win in respect of bets placed on bingo games that have concluded in the year, stated net of promotional bonuses. Where promotional bonuses apply to customers playing a variety of products through the same wallet, bonuses are allocated pro-rata to the net win. B2B income comprises the amounts receivable for services to other online gaming operators. income is recognised when a right to consideration has been obtained through performance and reflects contract activity during the year. 1.12 financial expenses Financial expenses comprise interest payable on borrowings, calculated using the effective interest rate method which discounts the expected cash flows over the life of the financial instrument, and foreign exchange differences arising on loans and finance leases. 1.13 exceptional items exceptional items are those that in the judgement of the directors need to be disclosed by virtue of their size or incidence in order for the user to obtain a proper understanding of the financial information. 58 GVC HOLDINGS PLC ANNUAL REPORT 2015 notes to the consolidated financial statements continued for the year ended 31 december 2015