Aplicaciones de MPLS

ON 9 December 2014, the Group was reorganised, through the estab- lishment of a new Parent Company (Evolution Gaming Group AB). The reorganisation was carried out through a non-cash issue, where each share in the previous parent company (Evolution Core Holding Limited) was exchanged for a share in the newly established Swedish parent company, Evolution Gaming Group AB (publ).

IFRS 3 “Business Combinations” does not apply to the reorganisation of groups, as they are common control transactions. A generally accept- able accounting policy for common control transactions is predecessor basis accounting. This method means that the existing Group’s carrying amounts prior to the merger are transferred to the newly formed company’s consolidated financial statements, as no significant financial change has occurred. Consequently, the consolidated financial state- ments for Evolution Gaming Group AB show the carrying amounts from the previous Group, where Evolution Core Holding Limited was the parent company. Comparative information is presented for all periods included in the financial statements.

The most important principles that form the basis for the consol- idated financial statements are described below. These accounting principles have been applied consistently for all years presented, unless otherwise stated.

1.1 BASIS OF PREPARATION

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations by the Financial Reporting Interpretations Committee (IFRIC) applicable to companies reporting under IFRS. The consolidated financial statements are based on historical cost, as modified by the revaluation of land and buildings, available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through the income statement. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the executive management to

exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consoli- dated financial statements, are disclosed under Accounting principles.

The Parent Company’s functional currency, as well as the Parent Company’s and the Group’s presentation currency, is Euro. Accordingly, the statements were prepared in Euro. Amounts are expressed in thousands of Euro (EUR) unless otherwise indicated. Amounts or figures in parentheses indicate comparative figures for the corresponding period last year. Assets and liabilities are reported at historical cost, with the exception of certain financial assets and liabilities, which are measured at fair value. The most important principles on which the consolidated financial statements have been based are described below. These accounting principles have been applied consistently for all years presented, unless otherwise stated. The Parent Company uses the same accounting principles as the Group, with the addition of the Swedish Financial Reporting Board’s recommendation RFR 2 “Accounting for Legal Entities.” This gives rise to certain differences due to requirements in the Swedish Annual Accounts Act or the tax situation. The accounting principles of the Parent Company are described in the section “Parent company’s accounting principles” below.

Standards, interpretations and changes to standards that came into force in 2014

The following standards have material impact on the Group and will be applied by the Group for the first time in the financial year starting 1 January 2014:

• Amendment to IAS 32 “Financial instruments: Presentation” regarding the offsetting of financial assets and financial Liabilities. This amend- ment clarifies that the right to offset must not be contingent on a future event. It must also be legally enforceable upon all counterparties, both in the normal course of business and in the event of default, insolvency or bankruptcy. The amendment also applies to settlement systems. The amendment has not had any material impact on the Group’s financial statements. The Annual Report is affected to a lesser extent. • Amendments to IAS 36 “Impairment of Assets” regarding recoverable

amount disclosures for non-financial assets. The amendment removes the recoverable amount disclosures for cash-generating units required according to IFRS 13. The Annual Report is affected to a lesser extent. • Amendments to IAS 39 “Financial instruments: Recognition and

measurement” regarding the novation of derivatives and the continu- ation of hedge accounting. The amendment is made due to legislative changes related to OTC derivatives and the establishment of central counterparties. According to IAS 39, the novation of derivatives to central counterparties would result in the discontinuation of hedge accounting. According to this change, there is no need to discontin- ue hedge accounting if the novation of a hedging instrument meets certain criteria. The Group has applied the amendment, which has not entailed any material impact on its financial statements. The Annual Report is not affected.

• IFRIC 21 concerns the recognition of a liability to pay a levy included in IAS 37 “Provisions”. The interpretation deals with the timing of obligating events. This has no material impact on the Group, as it is not currently subject to any material levies.

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NOTES

Other standards, interpretations and amendments applicable to the financial year that started 1 January 2014 have no material impact on the Group.

New standards, interpretations and amendments that have not yet been applied

• IFRS 9 “Financial Instruments” deals with the classification, measure- ment and recognition of financial assets and liabilities. The Group does not believe that the Annual Report will be affected.

• IFRS 15 “Revenue from Contracts with Customers” concerns the rec- ognition of revenue and establishes the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows. Revenue is to be recognised when a customer gains con- trol of a product or service and, accordingly, may govern its use and derive benefit from it. The Group does not believe that the Annual Report will be affected.

• No other IFRS standards or IFRIC interpretations that have not yet entered into force are expected to have material impact on the Group.

1.2 CONSOLIDATION

Subsidiaries are all entities over which the Group has the power to gov- ern the financial and operating policies generally due to a shareholding that confers a majority of the voting rights. Subsidiaries are fully consoli- dated from the date on which control is transferred to the Group. Group companies cease to be consolidated on the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition, recognised directly in the income statement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the purchase price is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Intra-Group transactions, balances and unrealised gains on trans- actions between Group companies are eliminated. Unrealised losses are also eliminated, unless the loss corresponds to an impairment loss. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

If the Group ceases to have control, any remaining holdings are meas- ured at fair value at the time when control ceases, which is recognised as a change in value in the income statement. Fair value is used initially and forms the basis for the continued accounting of the remaining holding as an associated company, a joint venture and/or a financial asset. In addition, amounts are recognised for companies that were previously included in other comprehensive income, if the Group divested the related assets or liabilities directly. This may mean that amounts that were previously recognised in total comprehensive income have been reclassified to the income statement.

1.3 TRANSLATION OF FOREIGN CURRENCY

(a) Functional currency and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the

“functional currency”). The consolidated accounts are presented in Euro. (b) Transactions and balances

Foreign currency transactions are translated into the functional cur- rency for each Group company, using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange differences resulting from such transactions and from the translation of exchange rates of monetary assets and liabilities denominated in foreign currencies on the balance sheet date are recog- nised in the income statement.

(c) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the Group’s presentation currency as follows:

(a) Assets and liabilities for all statements of financial position are trans- lated at the rate at the balance sheet date.

(b) Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions).

(c) All resulting exchange differences are recognised in other compre- hensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. All resulting exchange differences are recognised in other comprehensive income.

1.4 INTANGIBLE ASSETS

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Costs associated with maintaining computer software programmes are rec- ognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met:

• It is technically feasible to complete the software product so that it will be available for use;

• The executive management intends to complete the software product and use it;

• There is an ability to use or sell the software product;

• it can be demonstrated how the software product will generate prob- able future economic benefits;

• The expenditure attributable to the software product during its devel- opment can be reliably measured;

• Adequate technical, financial and other resources to complete the development and to use or sell the software product are available. Note 1. Accounting and valuation principles (cont.)

NOTES

Directly attributable costs that are capitalised as part of the software product primarily include software development employee costs.

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Computer software development costs recognised as assets are amortised over an estimated useful life of three years. The cost of developing Core Gaming Platform is amortised over an estimated useful life of five years. Licences recognised as assets are amortised over an estimated useful life of five years.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1.6).

1.5 PROPERTY, PLANT AND EQUIPMENT

All other property, plant and equipment are initially measured at the acquisition cost and thereafter at the acquisition cost after deductions for depreciation and write-downs. The acquisition value includes costs that are directly related to the acquisition of the assets.

Subsequent costs are included in the asset’s carrying amount or rec- ognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised from the balance sheet. General repairs and maintenance costs are charged to the income statement during the financial period in which they are incurred.

Depreciation is calculated using the straight-line method to allocate costs are allocated to their residual value over the estimated useful lives, according to the following:

%

Office equipment, computers and technical equipment 20–50% Leasehold improvements on third-party property are depreciated based on the shortest period of the lease term and estimates time of utilisation.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1.6).

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the income statement.

1.6 IMPAIRMENT OF NON-FINANCIAL ASSETS

Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the car- rying amount may not be recoverable. An impairment loss is recog- nised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating

units). Non-financial assets other than goodwill that previously suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting date.

Intangible assets that are not yet ready for use are also tested for impairment when events or changed circumstances indicate that the recognised value may not be recoverable. As at 31 December, intan- gible assets that were not yet available for use amounted to EUR 0 (2013: EUR 156 thousands).

1.7 FINANCIAL ASSETS

1.7.1 Classification

The Group classifies its financial assets as loans or receivables. The classification depends on the purpose for which the financial assets were acquired. The executive management determines the classification of its financial assets at initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money or services directly to a debtor without the intention of selling an asset. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. In that case, they are classified as non-current assets. The Group’s loans and accounts receivables comprise “Accounts receivables and other receivables” and “Cash and cash equivalents” in the balance sheet (see notes 1.8 and 1.9).

1.7.2 Recognition and measurement

The Group recognises financial assets in the balance sheet when it becomes a party to the instruments’ contractual terms and conditions. Loans and receivables are initially recognised at fair value plus transac- tion costs. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Amortised cost is the initial value after adjustments for differences between the amount reported initially and the amount due when using the effective interest method.

Financial assets are derecognised from the balance sheet when the right to receive cash flows from them has expired or been transferred and the Group has transferred nearly all risk and benefits associated with the ownership or is no longer in control of the assets. 1.7.3 Impairment

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more loss events that occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. First, the Group determines whether there is objective evidence of an impairment loss. The following criteria are applied in the assessment:

• Significant financial difficulty of the issuer or debtor;

• A breach of contract, such as a default or delinquency in interest or principal payments;

• The probability that the borrower will enter bankruptcy or other financial reorganisation.

Note 1. Accounting and valuation principles (cont.)

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NOTES

For financial assets carried at amortised cost, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The asset’s carrying amount is reduced and the amount of the loss is recognised in the income statement. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the income statement.

1.8 ACCOUNTS RECEIVABLES AND OTHER RECEIVABLES

Accounts receivables are amounts due from customers for services performed in the ordinary course of business. If payment is expected in one year or less (or in the normal operating cycle of the business, if longer), they are classified as current assets. If not, they are presented as non-current assets.

Accounts receivables and other receivables are initially recognised at fair value and subsequently measured at amortised cost, with a deduction for doubtful receivables (1.7.3). The recognised value of the asset is reduced by the use of an account for doubtful receivables, and the loss is recognised in the income statement. If a bad debt loss has been established, it is written off in the account for doubtful receivables. If a previously impaired receivable is collected, it will be credited in the income statement.

1.9 CASH AND CASH EQUIVALENTS

Cash and cash are recognised a nominal value in the balance sheet. In