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Annual Report & Accounts 2015 - NOTES
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24. accoUntinG estimates and JUdGements the directors discuss the development, selection and disclosure of the Group's critical accounting policies and estimates and the application of these policies and estimates. in the application of the accounting policies, which are detailed in this note, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. the estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. actual results may differ from these estimates. the estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. the estimates and assumptions, which have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below. 24.1 intangible assets For all acquisitions management has recognised separately identifiable intangible assets on the statement of Financial Position. these intangible assets have been valued based on expected future cash flow projections from existing customers. the calculations of the value and estimated future economic life of the assets involve, by the nature of the assets, significant judgement. 24.2 impairment of Goodwill and trademarks determining whether goodwill and trademarks with an indefinite useful life are impaired requires an estimation of the value-inuse of the cash-generating units. the value-in-use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and select a suitable discount rate in order to calculate present value. Note 8.2 provides information on the assumptions used in these financial statements. the valuation work to assess the impairment of goodwill and intangible assets was conducted internally by management. 24.3 available for sale asset Where an entity holds, directly or indirectly through subsidiaries, less than 20 per cent of the voting power of an investee, it is presumed that the entity does not have significant influence and therefore an investment does not qualify as an associate unless such influence can be clearly demonstrated. although the Group has a director on the Board of Bhl and has influence through its shareholding over the payment of dividends the director does not participate in policy making decisions, and the entity is unlikely to be in a dividend paying position over the lifetime of the investment. the Group does not believe there is evidence to rebut the presumption it does not have significant influence over Bhl and therefore the investment is not considered to be an associate and has been accounted for as an available for sale asset. management apply judgement in evaluating the fair value of the available for sale asset, and any impairment to the value which is recognised in the income statement. 24.4 receivables management apply judgement in evaluating the recoverability of receivables including balances with payment processors. to the extent that the Board believes receivables not to be recovered they have been provided for in the financial statements. 24.5 Winunited in 2015 GVC contracted with Winunited limited for the day-to-day back office operations of the Winunited business. the Group are responsible for setting the odds and running the games, using internal expertise and based on the GVC platform. in addition, GVC take on proportionately more of the credit risk than Winunited. in management's opinion, the Group is acting as principal as it has exposure to the significant risks and rewards of the business and consequently recognise the full transactions within revenue. Under the terms of the contract, the Group has a call option to purchase the Winunited assets. this has been valued based on a discounted cash flow and a multiples based calculation. management have exercised judgement in forecasting the future cash flows of the business and the appropriate discount rates in arriving at the valuation. the Group does not have any current shareholding in Winunited limited and does not exercise managerial control over the business. management have applied judgement in determining that the Group does not control Winunited and therefore does therefore not treat it as a subsidiary or an associate. 24.6 open Bets the directors review the scale and magnitude of open bets frequently, and in particular at the reporting date. management exercise judgement in assessing the fair value of the open bets position based on the actual or expected outcome of such events. 84 GVC HOLDINGS PLC ANNUAL REPORT 2015 notes to the consolidated financial statements continued for the year ended 31 december 2015