Accounting policies

Norsk Tipping’s subsidiaries are of no relevance when assessing the Group’s financial position or performance. For this reason, and pursuant to section 3-8 of the Accounting Act, consolidated accounts are not prepared.

The senior management team has used estimates and assumptions that have influenced the income statement and the valuation of assets and liabilities. Service life assumptions first and foremost affect valuations of fixed assets and intangible assets and the associated depreciation. Valuations have also been made of any unsecured assets and liabilities on the balance sheet date in connection with closure of the annual accounts in line with good accounting practice.  The senior management team is unaware of any material uncertainty associated with the accounts and capitalised assets.

Transactions in foreign currencies are translated based on the exchange rate on the date of the transaction. Monetary items in foreign currencies are translated to Norwegian kroner using the exchange rate on the balance sheet date. The effects of changes in exchange rates are recognised in the income statement on a continuous basis under other financial items.

The term gaming revenue refers to the gross stakes risked by players.  In the case of gaming terminals (Belago and Multix) and online gaming, players will normally play multiple times during a single gaming session and reuse any prizes as stakes. For accounting purposes, each individual game, involving a stake followed by a draw with possible payment of a prize, is regarded as a separate transaction regardless of the number of gaming sessions.

The recognition of gaming revenue and related prizes and commissions in the accounts does not fully correspond with the calendar year rather it is adjusted to conform to the subdivision of the year into numbered weeks. In 2020, gaming-related revenue and expenses were from 53 gaming periods/weeks. Gaming stakes and the associated anticipated prizes for multi-week games are accrued for each of the relevant gaming periods/weeks. Commissions are distributed on the same basis.

Revenue from other sales is recognised once delivery has taken place and most of the risk and return has been transferred.

The company is exempt from tax.

Current assets and current liabilities include items that fall due for payment within a year of the date of acquisition, as well as items linked to goods circulation. Other items are classified as non-current assets/non-current liabilities.

Current assets are valued at the lower of acquisition cost and fair value. Current liabilities are capitalised at their nominal value on the date they are incurred.

Non-current assets are valued at acquisition cost, less depreciation, and write-downs. Non-current liabilities are capitalised at their nominal value on the date they are incurred.

The company complies with the exemption rule set out in the provisions of section 5-6 of the Accounting Act when recognising expenses related to basic research and development. The company’s activities in this area are very limited.

Fixed assets are capitalised and depreciated on a straight-line basis over their expected service life. Direct maintenance of fixed assets is expensed on an ongoing basis as operating expenses, while upgrades or improvements are capitalised and depreciated over the expected service life. If the fair value of an asset is less than its book value, the asset is written down to its fair value. The fairvalue is the higher of net sales value and utility value. The term ‘utility value’ is understood to mean the net present value of future cash flows that the asset is expected to generate, either directly or as a prerequisite for the company’s other cash flow items.

The company’s development activitiesinvolvingits own development of software, gaming concepts, distribution channels and systems are valued in line with Norwegian Accounting Standard 19– Intangible assets. Development activities that meet the criteriaare capitalised and depreciated over their expected service life.

Subsidiaries and associated companies are valued using the cost method in the company’s accounts. Investments are valued at the shares’ acquisition cost unless a write-down has been deemed necessary. Investments are written down to fair value when the reasons behind a fall in value cannot be assumed to be temporary in nature and good accounting practice necessitates it. Write-downs are reversed when the basis for the write-down no longer exists.

Dividends, group contributions and other disbursements from subsidiaries and affiliated companies are recognised as income in the same year they are approved by the companies’ general meetings.

Sales agent receivables, trade receivables and other receivables are recognised on the balance sheet at their nominal value less provisions for expected losses. Provisions for losses are made on the basis of individual valuations of the individual receivables. An unspecified provision is also made to cover expected losses on other trade receivables.

The company has defined benefit pension plans that are valued at the present value of their future pension benefits which, for accounting purposes, are regarded as earned on the balance sheet date. Pension assets are valued at fair value.

Changes to defined benefit pension liabilities resulting from changes to pension plans are distributed over the estimated average remaining accrual period.

The company uses the corridor method to recognise the effects of pension assumptions. The cumulative effect of changes in estimates and financial and actuarial assumptions (actuarial gains and losses) equal to less than 10 per cent of the greater of pension liabilities and pension assets at the start of the year are not included. If, at the start of the year, the cumulative effect exceeds 10 per cent, the excess amount is recognised over the estimated average remaining accrual period. Net pension expenses for the period are classified as payroll and personnel expenses.

The cash flow statement is prepared using the indirect method. Cash and cash equivalents include cash, bank deposits and other short-term, liquid investments.

Norsk Tipping AS’s ordinary activities are exempt from value added tax pursuant to section 5(b), paragraph one no. 6, of the Value Added Tax Act. As a general rule, expenses and investments are inclusive of VAT.

In the allocation of the surplus funds for 2019, a lower amount was allocated to the Bingo Operators’ surplus funds for good causes than the surplus funds calculation pursuant to the Norwegian Gaming Act dictates. The difference of NOK 10.92 million in the annual accounts presented for 2019 was corrected directly against equity in 2020. See note 13. The change had no effect on the surplus funds.

The allocation of other operating expenses in note 3 has been adjusted compared with previous years. The comparative figures for 2019 have been updated accordingly.