The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) and interpretations by the International Financial Reporting Interpretations Committee (IFRIC) as endorsed by the European Union (EU) for application within the EU, subject to the exceptions indicated below. Also, the Annual Accounts Act and the recommendations of the Swedish Financial Reporting Board entitled RFR 1 "Additional Accounting Regulations for Groups", have been applied. The Parent Company applies RFR 2 "Accounting for Legal Entities", and applies the same accounting policies as the Group except as specified under "Parent Company’s accounting policies".
The reporting currency of the Group and the functional currency of the Parent Company is SEK. All amounts, unless otherwise stated, are rounded to the nearest million Swedish krona.
The consolidated financial statements comprise the Parent Company AB Svenska Spel and all companies in which the Parent Company directly or indirectly holds all of the voting rights.
A subsidiary’s income and expenses and its assets and liabilities are recognised in the consolidated financial statements as of the date when the Parent Company gains a controlling influence over the Company until the time that the controlling influence ceases.
All Group companies have a calendar-based financial year and apply uniform accounting policies. Inter-company receivables and liabilities, inter-company transactions and related profits and losses are eliminated in their entirety in the preparation of the consolidated financial statements.
Deliveries of services and products among Group companies are subject to commercial terms and conditions and market pricing.
Svenska Spel’s consolidated financial statements for 2014 were approved for publication by the Board of Directors on 3 March 2015.
Operations are controlled by set targets, which are followed in line with the organisation’s division into the business areas: Customer Interaction and Casino Cosmopol, which correspond to operating segment reporting. The subdivision into segments has changed since last year’s annual report. The change comprised the merger of the former result areas Sports Games & Lotteries and Vegas, which now form the business area Customer Interaction. The Group management is Svenska Spel’s highest decision-making body.
The Group management has identified the following risk factors as regards uncertainty in estimates and assessments that could affect Svenska Spel’s financial position and profit.
At year-end, the Svenska Spel Group had capitalised development expenditures totalling SEK 299 million (205). The expenditures pertained to the Group’s development of gaming systems and gaming products. If the assessed lifetime and forecast revenue for these investments should not prove reasonable, this could significantly impact their carrying amounts.
Certain products have winnings schedules based on statistical probability calculations for the payout of winnings. Chance is a factor that affects the actual outcome. The follow-up of outcomes is conducted continuously and the statistical calculations are scrutinised in the event of the emergence of major deviations.
The Group’s gaming revenue comprises a net amount (net gaming revenue) based on the amounts staked by gamers (gross gaming revenue) less winners’ shares. Net gaming revenue together with the Group’s other revenue less commissions to retailers and business partners as well as direct sale-related costs are reported in the income statement under "Net revenues from gaming operations, etc."
Revenue from gaming and video lottery terminals (VLTs) is generated virtually at the time the stakes are paid. Revenue from lottery tickets arises when a retailer activates tickets for sale. In certain cases, multi-week games occur, whereby the revenue is allocated to the week to which it pertains. Casino revenue arises when gaming tables or slot machines are closed.
All gaming revenue is reported on a daily basis. Poker revenue comprises the percentage share of the stakes credited to Svenska Spel, known as the rake, which is also settled on a daily basis.
Other revenue consists mainly of sales revenue from restaurants, leasing income for retailer terminals, revenues for the responsible gaming tool Playscan, store registration fees and casino entrance fees. These revenues are recognised in the period to which they pertain.
Note 2 describes the Group’s distribution of net revenues from gaming operations, etc.
Assets and liabilities are recognised at cost, with the exception of inflation-indexed bonds, treasury bonds, currency futures and unpaid winnings pertaining to Triss Månadsklöver, which are measured at fair value.
The Group’s intangible assets consist primarily of capitalised development expenditure for new gaming products and new gaming systems that are considered to be of material economic value for the business in future years.
The carrying amount in the balance sheet includes material costs, direct salary costs and indirect costs that can be attributed to the asset. Other development costs are recognised in profit and loss as incurred. Activities during feasibility study phases, as well as entertainment, support and education initiatives, are expensed on an ongoing basis. Other intangible assets pertain to licences and goodwill.
Capitalised development expenditure and licences are reported at cost less deductions for amortisation and impairment. Goodwill is reported at the purchase value with deductions for accumulated impairment.
Amortisation is applied on a straight-line basis over the expected useful life of the asset, starting from the date the asset is first put into use. The useful life and any residual value of assets are tested at each balance sheet date to establish whether there are any indications of impairment. Impairment is recognised in profit and loss when the carrying amount of an asset exceeds the estimated recoverable amount. The recoverable amount represents value in use and is calculated by discounting future estimated cash flows. For assets that do not generate a direct cash flow, the recoverable amount is calculated for the cash-generating unit (CGU) to which the asset belongs. In the event of any change in the assumptions underlying the calculation of the recoverable amount, the impairment is reversed.
|Depreciation periods||Number of years|
|New applications for gaming products||3 (3)|
|System platforms||5–10 (5–10)|
The item property, plant and equipment is recognised in the balance sheet insofar as it is probable that future financial benefits will accrue to the Company and that the cost of the asset can be calculated reliably. The cost includes the purchase price and any costs directly attributable to the asset. Property, plant and equipment is recognised at cost with deductions for accumulated depreciation as well as any impairment loss.
Additional costs are added to the carrying amount of the asset or recognised as a separate asset. If an additional cost pertains to payment for an already existing component, the carrying amount for the replaced component is derecognised from the balance sheet. Repairs and maintenance are recognised as costs in profit and loss for the period to which they pertain.
Property, plant and equipment comprising parts with different useful lives are treated as separate items.
The carrying amount for an item of property, plant and equipment is derecognised from the balance sheet on disposal or sale. Profit or loss arising from the sale or disposal of an asset represents the difference between the selling price and the carrying amount of the asset, less direct selling costs.
Depreciation is applied on a straight-line basis over the expected useful life of the asset, starting from the date the asset is first put into use. In 2014, the depreciation periods for the Group’s buildings was changed after new assessments were made regarding the useful lives of the components.
The carrying amounts and useful life of the Group’s assets are tested at each balance sheet date to establish whether there are any indications of impairment. Impairment is recognised in profit and loss when the carrying amount of an asset exceeds the estimated recoverable amount. In the event of any change in the assumptions underlying the calculation of the recoverable amount, the impairment is reversed.
|Depreciation periods||Number of years|
|Buildings||50 –100 (50)|
|Freehold improvements||5–50 (5–50)|
|Leasehold improvements||5–30 (5–30)|
|Land improvements||20 (20)|
|Retailer and lottery terminals||5 (5)|
The acquisition of subsidiaries is reported according to the acquisition method. The purchase price for the acquired operation is measured at fair value on the acquisition date. Acquisition-related expenses are recognised in profit and loss as they arise. In conjunction with corporate acquisitions in which the purchase price exceeds the fair value of the assets acquired and liabilities assumed on the acquisition date, the difference is reported as goodwill.
All leasing agreements entered into by the Svenska Spel Group are operating leases. Leasing fees related to operating leasing agreements are recognised as an income/expense in profit and loss in the period to which they belong.
Leasing agreements under which the Group is the lessee relate essentially to leased premises. Leasing agreements under which the Group is the lessor relate primarily to the leasing of retailer and lottery terminals.
Financial instruments are every form of contract that causes a financial asset or liability to arise. Financial instruments recognised on the asset side of the balance sheet include cash and cash equivalents, trade receivables, investments and loan receivables.
Liabilities and equity mainly comprise trade payables and unpaid or funded winnings.
Financial instruments are initially recognised at cost, representing the fair value of the instrument with transaction costs added, for all financial instruments except those defined as financial instruments measured at fair value in profit and loss with transaction costs recognised in profit and loss.
A financial asset or financial liability is recognised in the balance sheet when the Company becomes party to the contractual conditions of the instrument. Financial assets are derecognised from the balance sheet when the right to receive cash flows from the instrument has expired or been transferred and the Group has transferred all risks and benefits connected with the right of ownership. A financial liability is derecognised from the balance sheet when the contractual undertakings have been fulfilled or are otherwise extinguished.
The Group’s financial instruments are classified in the following categories:
This category consists of two sub-groups:
Svenska Spel enters into currency future contracts in compliance with the Group’s finance policy to hedge flows in foreign currencies. Svenska Spel mainly employs currency future contracts to hedge purchases denominated in EUR and USD. Svenska Spel does not apply hedge accounting pursuant to IAS 39. Derivative instruments are recognised in the balance sheet on the contract date and are measured at fair value, both initially and in connection with subsequent remeasurement. Gains or losses arising from remeasurement are recognised in profit and loss under financial income or financial expenses, respectively.
Svenska Spel has financial investments in inflation-indexed and treasury bonds intended to provide funds for future payments of winnings in Triss Månadsklöver, these are shown in the balance sheet as "financial assets" and "current investments," respectively. Future payments to winners of Triss Månadsklöver are recognised as non-current and current liabilities, respectively, under unpaid winnings.
Trade and other receivables are classified under this category since they have determined or determinable payments and are not quoted on an active market. Recognition is at amortised cost less any allowance for any value decline. As the expected maturity is short, these assets are valued at the nominal amount expected to be received. Individual testing is carried out if there is any impairment requirement. Impairment of trade receivables is recognised under operating costs.
Cash and cash equivalents are classified as loan receivables and consist of cash, immediately accessible balances at banks and equivalent institutions and current investments with a maturity from the acquisition date of less than three months, which are exposed to an insignificant risk of value changes. Value changes are reported under financial items in the income statement.
This category comprises financial assets with determined or determinable payments and determined maturity, which are held with the intention of being held to maturity.
In accordance with the Group’s finance policy, surplus liquidity is invested in zero-coupon bonds and commercial paper. Current investments with a maturity of less than three months at the acquisition date, which are subject to insignificant risk of value fluctuation and can easily be converted to bank funds, are classified and measured as cash and cash equivalents. Other current investments are classified under this category in cases where they are intended to be held to maturity.
Available-for-sale financial assets are non-derivative assets. Assets in this category are measured at fair value with changes in value charged to equity. The Group has no financial assets in this category.
Trade and other payables have short expected due dates and are measured without discounting at the nominal amount. All Group funds are measured at accrued cost. Funds are accumulated under the framework of the winnings schedules to boost various winning categories in conjunction with win guarantees, jackpots and campaigns. Funded winnings may vary greatly over time depending on when winnings are actually paid.
Svenska Spel’s settlement fund includes expired lottery and game winnings that are not claimed within the set period and also payment rounding amounts. The redemption period for winnings for the Vegas gaming form is 30 days, and for lotteries up to 1.5 years. For other games, the redemption period for winnings was 90 days until the first quarter of 2013, but was extended thereafter to one year. Paid winnings are rounded down to the nearest SEK and the excess amount transferred to the settlement fund. The funds in the settlement fund are used to cover the future payments of winnings for approved claims, and to return funds to winning participants by, for example, increasing the frequency of winnings or topping up certain winning categories during campaigns.
Foreign currency transactions are translated using the exchange rates prevailing on the transaction dates. At the end of the month, assets and liabilities in foreign currencies are translated at the closing exchange rate. Exchange-rate differences on operating receivables and liabilities are included in operating profit, while exchange-rate differences on financial receivables and liabilities are recognized among financial items. Payment flows in foreign currencies are limited.
|Closing rate||Closing rate|
|Currency||31 December 2014||31 December 2013|
The Parent Company, AB Svenska Spel, and its subsidiary, Casino Cosmopol AB, are exempt from corporate tax, lottery tax and, largely, value added taxes. However, all companies in the sub-group Svenska Spels Förvaltnings AB have a tax liability and are also largely required to pay value added tax.
Income tax is recognised directly in profit and loss and comprises current and deferred tax. Deferred tax is calculated using the temporary differences between the recognised and taxable values of assets and liabilities. Deferred income tax is calculated based on application of the tax rates in effect on the balance sheet date. Deferred tax assets relating to deductible temporary differences and loss carryforwards are recognised only insofar as it is probable that they can be utilised.
The Group’s provisions pertain mainly to pensions. Provisions are recognized in the balance sheet when the Group has a future obligation that can be calculated in a reliable manner and when it is probable that payment will be required to settle the obligation. When the effect of the payment timing is significant, provisions are calculated through the discounting of the anticipated future cash flow.
Employees in the Svenska Spel Group receive remuneration in the form of basic salary, benefits and occupational pension. Variable remuneration is paid to employees for work performed during, for example, unsociable working hours. Bonus-based remuneration or remuneration in the form of financial instruments is not paid.
In addition to salary, employees receive benefits, which depend to some extent on the position in the Company held by the employee. All employees are entitled to a subsidised lunch and to certain compensation for fitness care and healthcare. Group management and sales representatives are also entitled to a benefit in the form of access to a company car and subsidised fuel.
Salaried employees in the Svenska Spel Group are covered by the ITP plan administered by Collectum. Pension obligations pertaining to remuneration from the ITP plan after terminated employment are classified as either defined-contribution or defined-benefit. According to a statement from the Swedish Financial Reporting Board UFR 3, pension plans secured in accordance with the ITP plan are to be classified as defined-benefit plans. However, Collectum, which insures the ITP plan, has not been able to provide Svenska Spel or other companies with sufficient information to be able to determine the Company’s share of the plan’s total assets and liabilities. This information can only be provided to the insured beneficiaries. Accordingly, these obligations are recognised under UFR 3 as a defined-contribution pension plan.
The Svenska Spel Group’s employees who are collectively covered by agreements in the LO agreement area are affiliated to the defined-contribution pension plan named the SAF-LO Pension Agreement, which is administrated by Fora.
Within the Parent Company Svenska Spel, there are a few older pension obligations to former employees. These obligations amount to insignificant sums and are secured in part through allocations to the Company’s pension liability and in part through Svenska Spel’s Pension Foundation. AB Svenska Spel makes ongoing pension payments pursuant to these obligations, whereupon annual crediting from Svenska Spel’s Pension Foundation occurs.
A provision is recognised in conjunction with termination of employment only if the Company is demonstrably committed to terminating the employment of an employee before the retirement date. The provision is recognised when no service is required in return from the employee.
Svenska Spel does not receive any Government or other financial grants.
The cash-flow statement is prepared pursuant to the indirect method. Cash and cash equivalents in the cash-flow statement consist of cash and bank balances and investments with a maturity of less than three months, which are not subject to any material risk of value fluctuation.
AB Svenska Spel is a limited liability company registered in Sweden with Corporate Reg No.: 556460-1812. Its registered office is in Visby, Sweden. The Ministry of Finance manages the shares in the Parent Company. The address of the head office is Norra Hansegatan 17, SE-621 80 Visby, Sweden. The Parent Company has prepared its annual financial statements in conformity with the Annual Accounts Act (1995:1554) and the Recommendations of the Swedish Financial Reporting Board in RFR 2 Accounting for Legal Entities. This implies that in the annual financial statements of the legal entity, the Parent Company is to apply all EU-approved IFRSs and statements from IFRIC to the extent possible within the framework of the Annual Accounts Act and the Pension Obligations Vesting Act, and in consideration of the relationship between accounting and taxation. The recommendations state the exceptions to be made from, and supplements to, IFRS. The Parent Company applies the same accounting policies as the Group except as specified on the following page.
Dividends to the shareholders of the Parent Company are recognised as a liability in the financial reports of the Parent Company and the Group when the shareholders of the Parent Company adopt the distribution. The Parent Company anticipates dividends from subsidiaries.
Participations in subsidiaries are reported at cost in the Parent Company’s financial reporting.
There have been no changes to accounting policies compared with the preceding financial year.
The new and amended standards and interpretations that have been issued but which become effective for financial years starting after 1 January 2015 have not yet been applied by the Group.
|Standard||Becomes effective||Change and impact on the Group|
|IFRS 10 Consolidated Financial Statements||1 January 2014||Amendments pertaining to controlling influence in other companies have no impact on the Group since all Group companies are wholly owned.|
|IFRS 11 Joint Arrangements||1 January 2014||The Group’s joint arrangements have been reviewed and the amendments to the standard are assessed as not impacting the Group’s reporting.|
|IFRS 12 Disclosure of Interests in Other Entities||1 January 2014||The amendment of the standard’s disclosure requirement has been taken into consideration and, where needed, disclosures have been supplemented.|
|Guidance on the transition – amendments in IFRS 10, IFRS 11 and IFRS 12||1 January 2014||Has no impact on the Group at present.|
|IAS 27 Separate Financial Statements||1 January 2014||Has no impact on the Group at present.|
|IAS 28 Investments in Associates and Joint Ventures||1 January 2014||Has no impact on the Group at present.|
|IAS 32 Financial Instruments: Presentation||1 January 2014||The amendments to IAS 32, pertaining to the offsetting of financial assets and financial liabilities clarify how to apply the offsetting rules. The Group meets the requirements under the amendment.|
|IAS 36 Impairment of Assets||1 January 2014||The amendment pertains to recoverable amounts and has no impact on the Group’s reporting.|
|IAS 39 Financial Instruments: Recognition and Measurement||1 January 2014||Has no impact on the Group at present.|
|IFRIC 21 Levies||17 June 2014||The Group meets the requirement pertaining to when a liability should be recognised for any such levy.|
|IFRS Annual Improvements cycle 2010-2012||1 July 2014||Assessed as not impacting the Group at present.|
|IFRS Annual Improvements cycle 2011-2013||1 July 2014||Assessed as not impacting the Group at present.|
|IAS 19 Employee Benefits||1 July 2014||The amendment pertains to the recognition of fees from participants in defined-benefit plans and has no impact on the Group.|
|IFRS 11 Joint Arrangements||1 January 2016||This amendment, which pertains to the recognition of acquisitions of shares in joint ventures, will be analysed and the intent is to implement any changes.|
|IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets||1 January 2016||Clarifications regarding the permitted amortisation and depreciation methods will be analysed and the intent is to implement any changes.|
|Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41)||1 January 2016||Has no impact on the Group.|
|IAS 27 Separate Financial Statements||1 January 2016||This amendment, which permits use of the equity method in separate financial statements will be analysed and the intent is to implement any changes.|
|IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures||1 January 2016||Has no impact on the Group at present since the Group does not include any associates or joint ventures.|
|IFRS Annual Improvements cycle 2012-2014||1 January 2016||The improvements will be analysed and the intent is to implement any changes.|
|IFRS 14 Regulatory Deferral Accounts||1 January 2016||Has no impact on the Group.|
|IFRS 15 Revenue from Contracts with Customers||1 January 2017||The standard that will supersede IAS 18 Revenue and IAS 11 Construction Contracts will be analysed and the intent is to implement any changes.|
|IFRS 9 Financial instruments||1 January 2018||The standard that will supersede IAS 39 Financial Instruments will be analysed and the intent is to implement any changes.|