Notification of Transfer to a Premium Listing

THIS ANNOUNCEMENT DOES NOT CONSTITUTE A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT AND NEITHER THIS ANNOUNCEMENT NOR ANYTHING HEREIN FORMS THE BASIS FOR ANY OFFER TO PURCHASE OR SUBSCRIBE FOR ANY SHARES OR OTHER SECURITIES IN JACKPOTJOY PLC NOR SHALL IT FORM THE BASIS FOR ANY CONTRACT OR COMMITMENT WHATSOEVER.

27 June 2018

Jackpotjoy plc

Notification of Transfer to a Premium Listing

Jackpotjoy plc (the "Company" and, together with its subsidiary undertakings, the "Group") (LSE: JPJ), a leading global bingo-led operator, announces that it is proposing to transfer the listing category of its entire issued and to be issued ordinary share capital from a Standard Listing to a Premium Listing on the Official List of the Financial Conduct Authority (the "FCA") in accordance with paragraph 5.4A of the FCA's Listing Rules (the "Listing Rules") (the "Transfer").

The provision of a minimum 20 business days' notice (which period commenced by way of today's announcement) is required to effect the Transfer. No shareholder approval is required in connection with the Transfer. It is currently anticipated that the Transfer will take effect at 8.00 a.m. on 26 July 2018, conditional on the approval of the FCA.

1. Background to the Transfer

The Company's ordinary shares were listed on the Standard Listing Segment of the Official List and admitted to trading on London Stock Exchange plc's Main Market for listed securities on 25 January 2017 ("Admission").

Prior to 25 January 2017, the parent company of what is now the Company's business was The Intertain Group Limited ("Intertain"), a Canadian corporation. On 25 January 2017, the Company became the parent company of the Group following a share for share exchange, details of which were outlined in the Company's prospectus published on 20 January 2017 in connection with Admission (the "Prospectus").

The Group is an online gaming operator that provides gaming and entertainment to a global customer base through its subsidiaries. The Group markets its bingo and casino products under a number of consumer facing brands:

• Jackpotjoy, Botemania and Starspins (collectively the "Jackpotjoy Brands") which run on a platform provided by Gamesys Limited and its subsidiaries (together, the "Gamesys Group"), a privately held third party gaming group, with gaming licenses held in the UK, Spain and Gibraltar (registered to the Gamesys Group);

• Costa Bingo.com, Crocodile Bingo, Sparkly Bingo, Sing Bingo, City Bingo and Rio Bingo, amongst others, which run on the Dragonfish platform provided by 888 Holdings plc ("888"), with licenses held in the UK and Gibraltar (registered to members of 888's group) (together forming the "Jackpotjoy Segment"1); and

• Vera&John and InterCasino (forming the "Vera&John Segment") which runs on the Group's own proprietary software platform, with licenses held in the UK, Malta and Denmark.

1 As noted in the Company's Q1 results published on 15 May 2018, effective 1 January 2018, the Mandalay segment has been amalgamated with the Jackpotjoy segment.

The board of directors of the Company (the "Board") believes that the Company has now reached an appropriate stage in its development to undertake the Transfer.

The Company has therefore requested that the FCA approve the Transfer with effect from 8.00 a.m. on 26 July 2018. All of the Company's ordinary shares in issue at such time shall be subject to the Transfer. As at 27 June 2018, the Company had 74,258,930 ordinary shares in issue.

2. Reasons for and effect of the Transfer

No changes to the Company's business have been or are proposed to be made in connection with the Transfer.

The Board believes that the Transfer will bring with it a number of benefits to the Company and its shareholders. In particular, the Board believes the Transfer will:

• benefit the Company's shareholders by illustrating its commitment to corporate governance of the highest standard through its adherence to Premium Listing standards which include governance, regulatory and reporting compliance requirements;

• provide an appropriate platform for the continued growth of the Group and allow exposure to a wider investor base, enhancing the liquidity of the Company's shares; and

• enable the Company's ordinary shares to be considered for inclusion in the FTSE UK Index Series which are widely utilised investment benchmarks for institutional investors.

Following the Transfer, certain additional provisions of the Listing Rules will formally apply to the Company. These provisions, which are set out under Chapters 7-13 (inclusive) of the Listing Rules relate to the following matters:

• the application of the Premium Listing Principles set out in Listing Rule 7.2.1AR (Chapter 7);

• the requirement to appoint a sponsor in certain circumstances (Chapter 8);

• the requirement to comply with various continuing obligations, including to comply with all relevant provisions of the UK Corporate Governance Code published in April 2016 by the Financial Reporting Council (the "Code") (or provide an explanation for any non-compliance, if applicable, in its annual report) and requirements relating to notifications and contents of financial information (Chapter 9);

• the requirement to announce, or obtain shareholder approval for, transactions of a certain size or with "related parties" of the Company (Chapters 10 and 11);

• certain restrictions in relation to the Company dealing in its own securities and treasury shares (Chapter 12); and

• various specific form and contents requirements that will apply to circulars issued by the Company to its shareholders (Chapter 13).

3. Working capital

The Company is of the opinion that the Group has sufficient working capital for its present requirements, that is for at least the next 12 months from the date of publication of this announcement (the "Transfer Announcement").

4. Corporate governance

The Board is committed to, and recognises the importance and value of good corporate governance. Since the Company has been listed on the Standard Listing Segment of the Official List of the FCA, the Board has based its corporate governance approach on voluntarily reporting its compliance with the Code.

On 30 April 2018, the Company announced Andria Vidler's appointment as a non-executive director, who joined the Board following the Company's AGM on 7 June 2018. Andria also joined the Company's remuneration committee.

The Company continually reviews its policies and procedures to ensure its continued compliance with the Code. Following the Transfer, the Board will be required to report against the provisions of the Code, and to the extent the Company is unable to comply with any relevant provisions of the Code, it will seek to explain fully to its shareholders the reasons for such non-compliance in accordance with Listing Rule 9.8.6R(6).

The Company continues to be a "reporting issuer" under applicable Canadian securities laws. It is therefore obligated to comply with continuous and other timely disclosure requirements and other requirements under such laws in addition to complying with its other obligations. The Company's obligations under applicable Canadian securities laws are expected to continue for so long as more than 10% of the ordinary shares (on a fully-diluted basis) are held by Canadian resident shareholders.

5. City Code on Takeovers and Mergers ("UK Takeover Code")

As the Company has its registered office in the UK and its ordinary shares are admitted to trading on the Main Market of the London Stock Exchange plc, it is currently and, following the Transfer, will remain subject to the UK Takeover Code.

6. Appointment of Sponsor

The Company has appointed Canaccord Genuity Limited ("Canaccord Genuity") to act as its sponsor in relation to the Transfer pursuant to the requirement of Listing Rule 8.2.1AR(1) of the Listing Rules (the "Sponsor"). Canaccord Genuity is currently joint corporate broker to the Company.

7. Financial information of the Group

For the purposes of paragraphs 7, 8 and 9 of this Transfer Announcement, the "Group" shall mean Intertain and its subsidiary undertakings prior to Admission and Jackpotjoy plc and its subsidiary undertakings from Admission.

The Company released its audited financial statements for the year ended 31 December 2017 on 20 March 2018. The associated annual report was published on 27 April 2018. As such, the Company's historical financial information period for the purposes of this Transfer Announcement comprises the three years ended 31 December 2015, 2016 and 2017, respectively (the "Track Record Period").

The historical financial information for the Group for the Track Record Period is presented as follows:

1) the Group's historical financial information for the years ended 31 December 2017 and 2016, in pounds sterling, which is accompanied by an accountant's report (see Section A and B of this Transfer Announcement);

2) the Group's historical financial information for the year ended 31 December 2015, in Canadian dollars, together with the accompanying accountant's report. This is presented in Part 7 of the Prospectus which can be viewed on the Company's website via the link: http://www.jackpotjoyplc.com/investors/financial-reports-presentations/jackpotjoy-plc-prospectus/ and is incorporated by reference into the Transfer Announcement; and

3) a comparative table showing the Group's historical financial information for the years ended 31 December 2016 and 2015, in Canadian dollars (see Section C of this Transfer Announcement).

As referenced in 2) above, information incorporated by reference is as follows:

Other than the specific information indicated above, no other information from the Prospectus forms a part of this Transfer Announcement.

8. Further financial information

On 8 April 2015, Intertain completed the acquisition (the "Acquisition") of the entire issued share capital of Fifty States Limited ("Fifty States"), a wholly-owned subsidiary of Gamesys Limited. Fifty States was the then direct and indirect owner of the Jackpotjoy, Starspins and Botemania brands, together with associated rights in, or ownership of real money and social gaming player data related to such brands, trademarks, domain names and certain other related intellectual property rights (collectively, the "Jackpotjoy Business").

The Jackpotjoy Business was consolidated into the Group accounts from the time of the Acquisition. In order to provide a complete three-year track record of the Group, as required by Chapter 6 of the Listing Rules, audited historical carve-out financial information for the Jackpotjoy Business from at least the start of the Track Record Period is included in this Transfer Announcement. As such, further financial information for the period 1 April 2014 to 8 April 2015 (being the date on which the Jackpotjoy Business was acquired and on which it was consolidated into the Company's accounts), together with the year to 31 March 2014 (which was included in the Prospectus) as a comparative, accompanied by an accountant's report thereon, are set out within this Transfer Announcement in Sections D and E below. This financial information is prepared in accordance with the accounting policies adopted in the Group's own historical financial information.

9. Jackpotjoy Earn-Out Period

As a result of the acquisition by Intertain of the Jackpotjoy Business on 8 April 2015, the Company owns 100% of the Jackpotjoy Business. The Jackpotjoy Brands operate through proprietary software owned by the Gamesys Group. Subsidiaries of the Group have operating agreements in place with the Gamesys Group, namely, a real money gaming operating agreement and a social gaming operating platform (the "Operating Agreements"), under which the Gamesys Group provides platform services and gaming content for the Jackpotjoy Business. The Operating Agreements run until 2030 and there is a content licensing agreement between the parties which runs for 10 years after the platform services are terminated.

In addition to the initial purchase price paid by the Group as consideration for the Acquisition, Intertain agreed to pay further cash consideration pursuant to earn-outs based on the financial performance of the Jackpotjoy Business in various periods during the 5-year period following completion of the Acquisition (the "Jackpotjoy Earn-Out Payments"). These Jackpotjoy Earn-Out Payments comprised earn-out payments in relation to the Jackpotjoy and Starspins brands, the Botemania brand and an additional earn-out comprising performance-based milestone payments with the final such payment falling due in June 2020 (the "Additional Earn-Out").

The period in which the earn-outs were payable in respect of the Jackpotjoy Brands themselves, being the Jackpotjoy and Starspins Earn-Out, the First Botemania Earn-Out, and the Second Botemania Earn-Out (but not the Additional Earn-Out) formed the "Jackpotjoy Earn-Out Period". The last remaining payment in respect of the Jackpotjoy Earn-Out Period was the Second Botemania Earn-Out, which was paid to the Gamesys Group on 18 June 2018, and, as a result, the Jackpotjoy Earn-Out Period has ended.

As the Jackpotjoy Earn-Out Period has now ended, the Group has complete discretion and ultimate power of decisions regarding the overarching strategy to be adopted in relation to all branded sites of the Jackpotjoy Business (the Gamesys Group retains complete control in respect of the platform and the games of the Jackpotjoy Business). Therefore, the Group now has strategic control over the commercialisation of all its products and its strategy across the whole of the Group.

10. FTSE eligibility and qualification

The constituents of the FTSE UK Index Series, incorporating the FTSE 100, FTSE 250 and FTSE SmallCap indices are reviewed on a quarterly basis. It is anticipated that, subject to the Transfer becoming effective and other conditions being met, the Company will be considered for inclusion in the FTSE UK Index Series at its next quarterly review.

11. Consents

Canaccord Genuity has given and has not withdrawn its written consent to the inclusion of the reference to its name in the form and context in which it is included in this Transfer Announcement.

BDO LLP has given and has not withdrawn its written consent to the inclusion of its reports in Sections A and D of this Transfer Announcement, in the form and context in which they are included.

12. Change of name

The Board has resolved that the Company will change its name to JPJ Group plc effective on or around the date of this Transfer Announcement. The Company will retain its existing ticker, SEDOL and ISIN.

The change of name will not affect any shareholders' rights. No new share certificates will be issued in respect of existing ordinary shares held in certificated form. Shareholders should retain their existing share certificates, which will remain valid.

The name change has been approved by the Board, in accordance with the Company's articles of association.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain. The person responsible for arranging for the release of this announcement on behalf of the Company is Dan Talisman, Company Secretary.

Enquiries

For further information:

Jackpotjoy plc

Jackpotjoy Group

Canaccord Genuity Limited

Finsbury

About Jackpotjoy plc

Jackpotjoy plc is the parent company of an online gaming group that provides entertainment to a global consumer base through its subsidiaries. Jackpotjoy plc currently offers bingo and casino games to its customers through its subsidiaries using the Jackpotjoy (www.jackpotjoy.com), Starspins (www.starspins.com), Botemania (www.botemania.es), Vera&John (www.verajohn.com), Costa (www.costabingo.com) and InterCasino (www.intercasino.com) brands. For more information about Jackpotjoy plc, please visit www.jackpotjoyplc.com.

IMPORTANT NOTICE:

The contents of this Transfer Announcement have been prepared by and are the sole responsibility of the Company. The Company is not offering any ordinary shares or other securities in connection with the proposals described in this Transfer Announcement. This Transfer Announcement does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities in the Company or securities in any other entity, in any jurisdiction, nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction. This Transfer Announcement does not constitute a recommendation regarding any securities.

This Transfer Announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "projects", "assumes", "expects", "intends", "may", "will", "would" or "should", or in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Transfer Announcement and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Group's result of operations, financial condition, prospects, growth strategies and the industries in which the Group operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including without limitation: conditions in the markets, market position, the Company's earnings, financial position, return on capital, anticipated investments and capital expenditures, changing business or other market conditions and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this Transfer Announcement based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The contents of this paragraph relating to forward-looking statements are not intended to qualify the statement made as to the sufficiency of working capital in this Transfer Announcement.

Subject to the Company's regulatory obligations, including under the Listing Rules, the FCA's Disclosure Guidance and Transparency Rules, Regulation (EU) No 596/2014 (the "Market Abuse Regulation") and the Financial Services and Markets Act 2000 ("FSMA"), neither the Company nor Canaccord Genuity Limited undertakes any obligation to update publicly or revise any forward looking-statement whether as a result of new information, future events or otherwise. None of the statements made in this Transfer Announcement in any way obviates the requirements of the Company to comply with its regulatory obligations. The timetable to Transfer set out in this Transfer Announcement is subject to change and amendment. There can be no assurance that the Transfer will become effective in the timeframe set out in this Transfer Announcement or at all.

Save as expressly set out herein, the contents of the Company's website do not form part of this Transfer Announcement.

Canaccord Genuity Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting for the Company and for no one else in connection with the Transfer and will not be responsible to any person other than the Company for providing the protections afforded to clients of Canaccord Genuity Limited, nor for providing advice in relation to the Transfer, the content of this Transfer Announcement or any matter referred to in this Transfer Announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on Canaccord Genuity Limited by the FSMA or the regulatory regime established thereunder, neither Canaccord Genuity Limited nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Canaccord Genuity Limited in connection with this Transfer Announcement, any statement contained herein or otherwise, nor makes any representation or warranty, express or implied, in relation to, the contents of this Transfer Announcement, including its accuracy, completeness or verification or for any other statement purported to be made by Canaccord Genuity Limited, or on behalf of Canaccord Genuity Limited in connection with the Company or the Transfer. Canaccord Genuity Limited accordingly disclaims to the fullest extent permitted by law all and any responsibility or liability to any person who is not a client of Canaccord Genuity Limited, whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this Transfer Announcement or any such statement.

SECTION A: BDO REPORT ON THE CONSOLIDATED FINANCIAL INFORMATION OF THE GROUP FOR THE TWO YEARS ENDED 31 DECEMBER 2017

BDO LLP

55 Baker Street

London

W1U 7EU

 The Directors 27 June 2018

Jackpotjoy plc

35 Great St. Helen's

London, EC3A 6AP

United Kingdom

Canaccord Genuity Limited

88 Wood Street

London

EC2V 7QR

Dear Sir or Madam

Jackpotjoy plc (the "Company") and its subsidiary undertakings (together, the "Group")

Introduction

We report on the financial information set out in Section B. This financial information has been prepared for inclusion in the announcement dated 27 June 2018 of the Company (the "Announcement") on the basis of the accounting policies set out in notes 2 and 3 to the financial information. This report is required by item 6.2.4R(1) of the listing rules made by the Financial Conduct Authority for the purposes of part VI of the Financial Services and Markets Act 2000 (the "Listing Rules") and is given for the purpose of complying with that item and for no other purpose.

Responsibilities

The directors of the Company are responsible for preparing the financial information in accordance with International Financial Reporting Standards as adopted by the European Union.

It is our responsibility to form an opinion on the financial information and to report our opinion to you.

Save for any responsibility which we may have to those persons to whom this report is expressly addressed and which we may have to shareholders of the Company as a result of the inclusion of this report in the Announcement, to the fullest extent permitted by the law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report.

Basis of opinion

We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial information. It also included an assessment of significant estimates and judgements made by those responsible for the preparation of the financial information and whether the accounting policies are appropriate to the entity's circumstances, consistently applied and adequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial information is free from material misstatement whether caused by fraud or other irregularity or error.

Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in the United States of America or other jurisdictions outside the United Kingdom and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices.

Opinion

In our opinion, the financial information gives, for the purposes of the Announcement, a true and fair view of the state of affairs of the Group as at 31 December 2016 and 31 December 2017 and of its results, cash flows and changes in equity for the years then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

Yours faithfully

BDO LLP

Chartered Accountants

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127)

SECTION B: CONSOLIDATED FINANCIAL INFORMATION OF THE GROUP FOR THE TWO YEARS ENDED 31 DECEMBER 2017

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

The accompanying notes form an integral part of this financial information

CONSOLIDATED BALANCE SHEETS

The accompanying notes form an integral part of this financial information

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

The accompanying notes form an integral part of this financial information

CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying notes form an integral part of this financial information

SUPPLEMENTARY NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION FOR THE TWO YEARS ENDED 31 DECEMBER 2017

1. Corporate information

Jackpotjoy plc is an online gaming holding company and the parent company of The Intertain Group Limited ("Intertain"). Jackpotjoy plc was incorporated pursuant to the Companies Act 2006 (England and Wales) on 29 July 2016. Jackpotjoy plc's registered office is located at 35 Great St. Helen's, London, United Kingdom. Jackpotjoy plc became the parent company of Intertain on 25 January 2017, following a plan of arrangement transaction involving a one-for-one share exchange of all and the then outstanding common shares of Intertain shares for, at each shareholder's election, ordinary shares of Jackpotjoy plc or exchangeable shares of Intertain. Unless the context requires otherwise, use of "Group" in these accompanying notes means Jackpotjoy plc and its subsidiaries, as applicable, and use of the "Company" refers to Jackpotjoy plc.

The Group currently offers bingo, casino and other games to its customers using the Jackpotjoy, Starspins, Botemania, Vera&John, Costa Bingo, InterCasino, and other brands. The Jackpotjoy, Starspins, and Botemania brands operate off proprietary software owned by the Gamesys group, the Group's principal B2B software and support provider. The Vera&John and InterCasino brands operate off proprietary software owned by the Group. The Costa bingo and related brands operate off the Dragonfish platform, a software service provided by the 888 group.

The Consolidated Financial Statements for the year ended 31 December 2017 were authorised for issue by the Board of Directors of Jackpotjoy plc (the "Board of Directors") on 20 March 2018.

2. Basis of preparation

Basis of presentation

This consolidated financial information has been prepared under the historical cost convention, other than for the measurement at fair value of the Group's cross currency swap, contingent consideration, and certain hedged loan instruments.

This consolidated financial information has been prepared by management on a going concern basis, are presented in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU.

As detailed in note 1, Jackpotjoy plc became the parent company of Intertain on 25 January 2017 by issuing 73,718,942 shares at a stated transaction value of £5.97, representing the Sterling equivalent of Intertain's Canadian dollar share price on the Toronto Stock Exchange at close of business on 24 January 2017. This consolidated financial information has been prepared under the merger method of accounting as a continuation of the Intertain business. This method is commonly applied in such situations as the accounting for such transactions is not prescribed by IFRS 3 - Business Combinations, or other applicable IFRS, which instead prompts IFRS-reporting entities to look to alternative generally accepted accounting principles for guidance. The result of the application is to present the consolidated financial information as if Jackpotjoy plc has always been the parent company and owned all of the subsidiaries, and the comparatives have also been prepared on that basis. No fair value adjustments are made under the merger method of accounting. The balance on the Group's merger reserve of £6,111,000 arises on recognition of the Company's investment in Intertain recorded at the Intertain net asset value on 25 January 2017 as explained in note 1 above. This approach also gave rise to share premium recognised in the Company of £405.9 million, notwithstanding that the share premium on the basis of the transaction value of £5.97 above would have equated to £432.8 million.

On 1 February 2017, having been approved in the High Court, the Company's share premium was cancelled. Accordingly, the balance was reallocated within equity reserves to the Company's retained earnings account. This is now shown in the Statement of Changes in Equity and will be similarly reflected in the next financial statements of the Company. Neither the adoption of the merger method of accounting nor the cancellation of share premium had any impact on reported earnings per share.

The financial information for the year ended 31 December 2016 and the year ended 31 December 2017 does not constitute the Company's UK statutory accounts for those years.

The auditors' reports to the accounts for the year ended 31 December 2016 and year ended 31 December 2017 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under s498(2) or s498(3) of the Companies Act 2006.

As at 31 December 2017, the Group has consolidated current assets and current liabilities of £93.2 million and £98.5 million, respectively, giving rise to a net current liability of £5.3 million. Cash generated through future operating activities is sufficient to cover the net current liability.

Basis of consolidation

Jackpotjoy plc's consolidated financial information consolidate the Company and all of its subsidiaries. The parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All transactions and balances between companies are eliminated on consolidation.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which Jackpotjoy plc obtains control, and continue to be consolidated until the date that such control ceases.

Intercompany transactions, balances, income and expenses on transactions between Jackpotjoy plc's subsidiaries are eliminated. Profit and losses resulting from intercompany transactions that are recognised in assets are also eliminated.

The subsidiaries of Jackpotjoy plc, all of which have been included in this consolidated financial information, are wholly owned by the Group and constitute investment in subsidiaries on the Company's Balance Sheets, are as follows:

3. Summary of significant accounting policies

Business combinations and goodwill

The acquisition method of accounting is used to account for the acquisition of subsidiaries by Jackpotjoy plc, whereby the purchase consideration is allocated to the identifiable assets and liabilities on the basis of fair value at the date of acquisition. Provisional fair values allocated at a reporting date are finalised as soon as the relevant information is available, within a period not to exceed a year from the acquisition date.

Consideration transferred includes the fair values of the assets transferred, liabilities incurred, and equity interests issued by Jackpotjoy plc. Consideration also includes the fair value of any contingent consideration. Subsequent to the acquisition, contingent consideration that is based on an earnings target and classified as a liability is measured at fair value with any resulting gain or loss recognised in net income. Transaction related costs are expensed as incurred.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred over the net identifiable assets acquired and liabilities assumed. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to Jackpotjoy plc's cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers. The Chief Operating Decision Makers, who are responsible for allocating resources and assessing the performance of the operating segments, have been identified as the Executive Chairman and the Chief Financial Officer.

Revenue recognition

Jackpotjoy plc earns its revenue from operating online bingo and casino websites, social gaming, and affiliate services. Revenue from online bingo and casino consists of the difference between total amount wagered by players less all winnings payable to players, bonuses allocated, and jackpot contributions ("Net Revenue"). Social gaming revenues are recognised at the consideration receivable from players at the point of the transaction, gross of platform fees deducted by platform operators. Affiliate revenue is calculated in line with the contracts, typically based on fixed price per player and is recognised to the extent that its probable economic benefits will flow to Jackpotjoy plc and the revenue can be reliably measured. Revenue is recognised in the accounting periods in which the transactions occur.

Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market accessible by the Group for the asset or liability.

Jackpotjoy plc uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the consolidated financial information are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

The Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation at the end of each reporting period.

Foreign currency translation

Functional and presentation currency

Effective from 1 January 2017, the Group changed its presentation currency from Canadian dollars ("CAD" or "$") to pounds sterling ("GBP" or "£"). Comparative information has been restated in pounds sterling in accordance with the guidance defined in IAS 21 - The Effects of Changes in Foreign Exchange Rates and a statement of financial position as at the beginning of the previous financial year has been presented. The 2016 consolidated financial information has been retranslated from Canadian dollars to pounds sterling using the procedures outlined below:

• income and expenses were translated into pounds sterling at average quarterly rates of exchange ($:£ - 0.6036). Differences resulting from the retranslation on the opening net assets and the results for the year have been taken to reserves;

• assets and liabilities were translated at spot rates in effect at the balance sheet closing dates ($:£ 2016 - 0.6037 and 2015 - 0.4900);

• share capital and other reserves were translated at historic rates prevailing at the dates of transactions; and

• quarterly average exchange rates were used to convert changes in items not involving cash and cash provided by/(used in) operating activities, financing activities, and investing activities. Spot rates were used to convert cash balances, beginning of year and cash balances, end of year.

As a result of this change, no retranslation movement will be recorded in the Statements of Comprehensive Income for subsidiaries whose functional currency is GBP.

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency of the respective entity of Jackpotjoy plc, using the exchange rates prevailing at the dates of the transactions (spot rates). Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates as at the reporting date. Foreign exchange gains and losses resulting from the settlement or translation of monetary items are recognised in profit and loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item.

Financial instruments

Financial assets and financial liabilities are recognised when Jackpotjoy plc becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled, or when it expires.

The Group classifies its financial assets and liabilities under the following categories: fair value through profit or loss ("FVTPL"), loans and receivables, and financial liabilities at amortised cost. All financial instruments are recognised initially at fair value. Transaction costs that are directly attributable to the acquisition or issue of a financial instrument classified as other than at FVTPL are added to the carrying amount of the asset or liability.

The accretion of these costs is recognised over the life of the instrument in accretion on financial liabilities under the effective interest rate method described below.

Fair value through profit or loss

Financial instruments classified as FVTPL include contingent consideration and a cross currency swap derivative financial instrument. Any gains or losses are recorded in net income in the period in which they arise.

Loans and receivables

Loans and receivables are non-derivative financial instruments with fixed or determinable payments that are not quoted in an active market. After initial measurement, such instruments are subsequently measured at amortised cost using the effective interest rate ("EIR") method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in interest income or expense in the Consolidated Statements of Comprehensive Income. This category generally applies to cash, restricted cash, customer deposits, trade and other receivables, and other long-term receivables.

Financial liabilities at amortised cost

With the exception of contingent consideration and derivatives, all financial liabilities are measured at amortised cost using the effective interest rate method. This category generally applies to interest payable, accounts payable and accrued liabilities, other short-term payables, payable to customers, convertible debentures, long-term debt, and other long-term payables. All interest-related charges are reported in profit or loss within interest expense.

Impairment of financial assets

The Group assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. Financial assets are impaired when there is objective evidence that a financial asset or a group of financial assets is impaired.

Objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty;

• a breach of contract such as a default of interest or principal payment; or

• increased probability that the borrower will enter into a bankruptcy or financial reorganisation.

Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Impairment of receivables is presented in the Consolidated Statements of Comprehensive Income within administrative costs, if applicable.

Compound financial instruments

The Group's compound financial instruments comprise of convertible debentures that can be converted to equity at the option of the holder, and the number of shares to be issued does not vary with changes in fair value. As a result, the instrument is composed of a liability component and an equity component. The liability component is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The residual amount between the total fair value of the convertible debenture and the fair value of the liability component is allocated on initial recognition to equity and recognised as a reserve in equity. Any directly attributable transaction costs are allocated to the liability and the equity component in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of the convertible debentures is measured at amortised cost using the effective interest method. The equity component of the convertible debentures is not remeasured subsequent to initial recognition.

The Group's compound financial instruments further comprise of a convertible loan receivable that can be converted to equity of the loan party after 12 months following the date of the loan agreement. As a result, the instrument is composed of an asset component and an embedded derivative component. The asset component is recognised initially at the fair value of a similar asset that does not have an equity conversion option. The embedded derivative component is separated from the host contract and is recognised initially at the fair value established using a risk-neutral simulation model.

Subsequent to initial recognition, both, the asset component and the embedded derivative component of the convertible loan receivable, are measured at amortised cost using the effective interest method.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the Consolidated Balance Sheets if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Derivative financial instruments

From time to time Jackpotjoy plc uses derivative instruments for risk management purposes. Jackpotjoy plc does not use derivative instruments for speculative trading purposes. All derivatives are recorded at fair value on the Consolidated Balance Sheets. The method of recognising unrealised and realised fair value gains and losses depends on whether the derivatives are designated as hedging instruments. For derivatives not designated as hedging instruments, unrealised gains and losses are recorded in interest income/expense on the Consolidated Statements of Comprehensive Income. For derivatives designated as hedging instruments, unrealised and realised gains and losses are recognised according to the nature of the hedged item and where the hedged item is a non-financial asset, amounts recognised in the hedging reserve are reclassified and the non-financial asset is adjusted accordingly.

Hedge accounting

The Group uses derivative financial instruments, such as forward currency and interest rate swaps to hedge its foreign currency risk and interest rate risk, respectively. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured to fair value at each reporting period end. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognised in the Statements of Other Comprehensive Income and later reclassified to profit or loss when the hedge item affects profit or loss.

IAS 39 - Financial Instruments: Recognition and Measurement permits hedge accounting under certain circumstances provided that the hedging relationship is:

• formally designated and documented, including the entity's risk management objective and strategy for undertaking the hedge, identification of the hedging instrument, the hedged item, the nature of the risk being hedged, and how the entity will assess the hedging instrument's effectiveness;

• expected to be highly effective in achieving offsetting changes in fair value or cash flows attributable to the hedged risk as designated and documented, and effectiveness can be reliably measured; and

• assessed on an ongoing basis and determined to have been highly effective.

For the purpose of hedge accounting, hedges are classified as:

• fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment;

• cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a risk associated with a recognised asset or liability or a highly probable forecast transaction; and

• hedges of a net investment in a foreign operation.

Fair value hedge

The change in the fair value of a hedging instrument is recognised in the Consolidated Statements of Comprehensive Income as a finance cost. The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognised in the Consolidated Statements of Comprehensive Income as a finance cost. For fair value hedges relating to items carried at amortised cost, any adjustment to carrying value is amortised through profit or loss over the remaining term of the hedge using the effective interest rate method. EIR amortisation may begin as soon as an adjustment exists and no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged. If the hedged item is derecognised, the unamortised fair value is recognised immediately in profit or loss.

At 31 December 2017, the Group had no hedges designated as fair value hedges. Subsequent to year-end, the Group entered into an interest rate swap agreement and designated it as a fair value hedge.

Cash flow hedges

The Group uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions and firm commitments. The effective portion of the gain or loss on the hedging instrument is recognised in the Statements of Other Comprehensive Income in the cash flow hedge reserve, while any ineffective portion is recognised immediately in profit or loss. The ineffective portion relating to foreign currency contracts is recognised in finance costs. Amounts recognised in the Statements of Other Comprehensive Income are transferred to profit or loss when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is recognised or when a forecast sale occurs.

If the hedging instrument or hedged item expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if the designation of the arrangement as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognised in the Statements of Other Comprehensive Income remains separately in equity until the forecast transaction occurs or the foreign currency firm commitment is met.

Effective from 31 March 2017, the Group designated its New Currency Swap (as defined in note 12) as a cash flow hedge.

Hedge of net investments in foreign operations

Hedges of a net investment in a foreign operation are accounted for in a way similar to cash flow hedges. Gains or losses on the hedging instrument relating to the effective portion of the hedge are recognised in the Statements of Other Comprehensive Income, while any gains or losses relating to the ineffective portion are recognised in profit or loss. On disposal of the foreign operation, the cumulative value of any such gains or losses recorded in equity is transferred to profit or loss.

Effective from 14 December 2017, the Group elected to use its EUR Term Facility as a hedge of its exposure to foreign exchange risk on its investments in EUR foreign subsidiaries. Gains or losses on the retranslation of this borrowing are transferred to the Statements of Other Comprehensive Income to offset any gains or losses on translation of the net investments in the subsidiaries.

At 31 December 2017, no material ineffectiveness arising on net investment hedge was included in the Consolidated Statement of Comprehensive Income.

Income taxes

Income tax expense consists of current and deferred tax expense. Income tax expense is recognised in the Consolidated Statements of Comprehensive Income. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax assets and liabilities are recognised for deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred taxes are not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realised or the liability settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the Consolidated Statements of Comprehensive Income in the period that substantive enactment occurs.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. To the extent that the Group does not consider it probable that a deferred tax asset will be recovered, the deferred tax asset is reduced.

Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits held at call with banks and excludes restricted cash.

The effect on the Consolidated Statements of Cash Flows of restrictions either taking effect on, or being lifted from, cash balances is reported with regard to the linkage principle, under which changes in cash are classified based on the purpose for which the restricted cash is used. Under this principle, changes in cash (such as cash, which is obtained for the financing of business combinations becoming restricted) are treated as a financing cash outflow.

Tangible assets

Tangible assets are recorded at cost less accumulated depreciation. These assets are depreciated over their estimated useful lives as follows:

Depreciation is recorded under administrative costs in the Consolidated Statements of Comprehensive Income.

Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortised over their useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. Amortisation expense is reflected in the Consolidated Statements of Comprehensive Income.

Amortisation for the material categories of finite life intangible assets is recorded under administrative costs and is calculated at the following rates:

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit ("CGU") level. If any indication of impairment exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows independently of other assets, the Group estimates the recoverable amount of the CGU to which the asset belongs.

Recoverable amount is the higher of fair value less cost to sell (measured according to level 3 in the fair value hierarchy) and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Investments in subsidiaries

Investments comprise direct shareholdings of the ordinary share capital in the Group's subsidiaries, all of which are included in this consolidated financial information. For a list of all the subsidiaries which are wholly owned by the Group, including name and country of incorporation, refer to note 2 of this consolidated financial information.

Share-based compensation and long-term incentive plan

Compensation expense for equity-settled stock options awarded under the Share Option Plan (as defined in note 20) is measured at the fair value at the grant date using the Black-Scholes valuation model and is recognised using the graded vesting method over the vesting period of the options granted. Compensation expense for equity-settled stock options awarded under the LTIP (as defined in note 20) is measured at the fair value at the grant date using the Black-Scholes valuation model for the EPS Tranche (as defined in note 20) and the Monte Carlo model for the TSR Tranche (as defined in note 20).

Compensation expense recognised is adjusted to reflect the number of options that has been estimated by management for which conditions attaching to service will be fulfilled as of the grant date until the vesting date so that the ultimately recognised expense corresponds to the options that have actually vested. The compensation expense credit is attributed to contributed surplus when the expense is recognised in the Consolidated Statements of Comprehensive Income.

Earnings per share

Basic earnings per share are calculated by dividing the net income or loss for the period attributed to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share are calculated using the same method as for basic earnings per share and adjusting the weighted average of common shares outstanding during the period to reflect the dilutive impact, if any, of options and warrants assuming they were exercised for that number of common shares calculated by applying the treasury stock method. The treasury stock method assumes that all proceeds received by Jackpotjoy plc when options and warrants are exercised will be used to purchase common shares at the average market price during the reporting period. Convertible debt is considered in the calculation of diluted earnings per share to the extent that it is dilutive.

Provisions

Provisions are recognised when the Group has a present obligation, legal or constructive, as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

Research and development costs

Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:

• the technical feasibility of completing the intangible asset so that the asset will be available for use or sale.

• its intention to complete and its ability to use or sell the asset.

• how the asset will generate future economic benefits.

• the availability of resources to complete the asset.

• the ability to measure reliably the expenditure during development.

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins the same month the asset is recognised and is amortised over the period of expected future economic benefit to the Group. During the period of development, the asset is tested for impairment annually.

Leases

Jackpotjoy plc has classified its rental leases as operating leases. Operating lease payments are recognised on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed, in which case that systematic basis is used. Operating lease payments are recorded under administrative costs in the Consolidated Statements of Comprehensive Income unless they are attributable to qualifying assets, in which case they are capitalised.

Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.

4. Summary of significant accounting estimates and assumptions

The preparation of Jackpotjoy plc's consolidated financial information requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Estimates and judgements are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

The effect of a change in an accounting estimate is recognised prospectively by including it in the Consolidated Statements of Comprehensive Income in the period of the change, if the change affects that period only; or in the period of the change and future periods if the change affects both.

The estimates and judgements that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Business combinations and contingent consideration

Business combinations require management to exercise judgement in measuring the fair value of the assets acquired, equity instruments issued, and liabilities, and contingent consideration incurred or assumed. In particular, a high degree of judgement is applied in determining the fair value of the separable intangible assets acquired, their useful economic lives and which assets and liabilities are included in a business combination.

In certain acquisitions, the Group may include contingent consideration which is subject to the acquired company achieving certain performance targets. At each reporting period, Jackpotjoy plc estimates the future earnings of acquired companies, which are subject to contingent consideration in order to assess the probability that the acquired company will achieve their performance targets and thus earn their contingent consideration. Any changes in the fair value of the contingent consideration between reporting periods are included in the determination of net income. Changes in fair value arise as a result of changes in the estimated probability of the acquired business achieving its earnings targets and the consequential impact of amounts payable under these arrangements.

Goodwill and intangible assets

Goodwill and intangible assets are reviewed annually for impairment, or more frequently when there are indicators that impairment may have occurred, by comparing the carrying value to its recoverable amount. Management uses judgement in estimating the recoverable values of the Group's CGUs and uses internally developed valuation models that consider various factors and assumptions including forecasted cash earnings, growth rates and discount rates. The use of different assumptions and estimates could influence the determination of the existence of impairment and the valuation of goodwill.

Taxes

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Group companies may be subject to indirect taxation on transactions, which have been treated as exempt supplies of gambling, or on supplies which have been zero rated where legislation provides that the services are received or used and enjoyed in the country where the service provider is located. Revenue earned from customers located in any particular jurisdiction may give rise to further taxes in that jurisdiction.

If such taxes are levied, either on the basis of current law or the current practice of any tax authority, or by reason of a change in the law or practice, then this may have a material adverse effect on the amount of tax payable by the Group or on its financial position.

Where it is considered probable that a previously identified contingent liability will give rise to an actual outflow of funds, then a provision is made in respect of the relevant jurisdiction and period impacted. Where the likelihood of a liability arising is considered remote, or the possible contingency is not material to the financial position of the Group, the contingency is not recognised as a liability at the balance sheet date.

5. Segment information

Segments are reported in a manner consistent with internal reporting provided to the Chief Operating Decision Maker. The Chief Operating Decision Maker has been identified as the management team comprising of the Executive Chairman and the Chief Financial Officer.

In March 2018 the Group determined that its reportable operating segments had changed such that the Mandalay segment is aggregated with the Jackpotjoy segment with effect from 1 January 2018, as Mandalay no longer met the criteria set out in IFRS 8 - Operating Segments for a reportable operating segment. Mandalay has therefore been aggregated with the Jackpotjoy segment in common with the Group's other third-party platform hosted operations and all 2016 and 2017 segment figures have been restated accordingly.

The Jackpotjoy segment consists of the real money and social gaming operating results of the Jackpotjoy, Starspins, and Botemania brands, in addition to the operating results of various online bingo websites operated off the Dragonfish platform and the operating results of affiliate portal websites. The Vera&John segment consists of the online casino operating results of various brands, including Vera&John and InterCasino.

The following tables present selected financial results for each segment and the unallocated corporate costs:

Year ended 31 December 2016:

*Jackpotjoy gaming revenue figure includes social gaming revenue £18,137,000 for 2016

Year ended 31 December 2017:

*Jackpotjoy gaming revenue figure includes social gaming revenue of £15,394,000 for 2017

The following table presents net assets per segment and unallocated corporate costs as at 31 December 2016:

The following table presents net assets per segment and unallocated corporate costs as at 31 December 2017:

During the years ended 31 December 2016 and 2017, substantially all of the revenue earned by the Group was in Europe. Revenues were earned from customers located in the following locations: United Kingdom - 63% (2016 - 65%), Sweden - 10% (2016 - 10%), rest of Europe - 14% (2016 - 12%), rest of world - 13% (2016 - 13%). Non-current assets by geographical location as at 31 December 2017 were as follows: Europe £87.7 million (31 December 2016 - £93.6 million) and the Americas £508.2 million (31 December 2016 - £558.7 million).

6. Costs and expenses

7. Interest income/expense

*Includes accelerated accretion of costs of £14.1 million as a result of debt refinancing that took place in December 2017

8. Earnings per share

1 In the case of a net loss, the effect of share options potentially exercisable on diluted loss per share will be anti-dilutive; therefore, basic and diluted net loss per share will be the same.

2 An assumed conversion of convertible debentures had an anti-dilutive effect on loss per share for the years ended 31 December 2017 and 31 December 2016.

3 Basic loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted average number of shares outstanding during the year.

4 Diluted loss per share is calculated by dividing the net loss attributable to ordinary shareholders by the weighted average number of shares outstanding during the period and adjusted for the number of potentially dilutive share options and contingently issuable instruments.

9. Cash and restricted cash

\* This balance consists of cash on deposit with payment service providers, as well as segregated funds held in accordance with the terms of the Jackpotjoy earn-out payment, where the Group was required to segregate 90% of its excess cash flow, less mandatory repayments of the Group's long-term debt and earn-out payments, in a non-operational bank account. Since the Group made a payment of £94.2 million for the final earn-out on the non-Spanish assets and the first earn-out instalment on the Spanish assets of the Jackpotjoy segment on 21 June 2017, no cash was required to be segregated for this purpose at 31 December 2017 (£34.7 million as at 31 December 2016). Segregated cash does not qualify as restricted cash and, as such, it is included in cash.

10. Trade and other receivables

11. Other long-term receivables and other long-term assets

On 29 November 2017, the Group entered into a secured convertible loan and services agreement with Gaming Realms plc ("Gaming Realms") (the "Gaming Realms Transaction").

Key terms of the Gaming Realms Transaction include: (a) five-year secured convertible loan to Gaming Realms in the principal amount of £3.5 million with an interest rate of 3 month UK LIBOR plus 5.5% per annum; (b) conversion option (the "Conversion Component") that allows the Group to convert some or all of the loan (in tranches of £0.5 million) into ordinary shares of Gaming Realms after 12 months; (c) a ten-year services agreement ("Services Agreement") for the supply by Gaming Realms of some of its content to websites of the Group's choosing free-of-charge. The value of the free-of-charge services provided under this Services Agreement will be capped at £3.5 million over the first five years of the agreement.

In connection with this transaction, the Group recognised a long-term receivable of £1.4 million for the loan component of the convertible loan and a long-term asset of £2.1 for the Conversion Component of the convertible loan.

12. Cross Currency Swap

On 23 November 2015, the Group entered into a cross currency swap agreement (the "Currency Swap") in order to minimise the Group's exposure to exchange rate fluctuations between GBP and the US dollar ("USD") as cash generated from the Group's operations is largely in GBP, while a portion of the principal and interest payments on the credit facilities held by the Group at the time were denominated in USD. Under the Currency Swap, 90% of the Group's USD term loan interest and principal payments were swapped into GBP. The Group paid a fixed 7.81% interest in place of floating USD interest payments of LIBOR plus 6.5% (LIBOR floor of 1%). The interest and principal payments were made at a GBP/USD foreign exchange rate of 1.5135 on a USD notional amount of $294.0 million.

On 28 March 2017, the Group terminated the Currency Swap and realised total proceeds of approximately USD 42.6 million (£34.4 million) and subsequently entered into a new cross currency swap agreement (the "New Currency Swap"). Under the New Currency Swap, 50% of the Group's term loan interest and principal payments were swapped into GBP. The Group paid a fixed 7.4% interest in place of floating USD interest payments of LIBOR plus 6.5% (LIBOR floor of 1%). The interest and principal payments were made at a GBP/USD foreign exchange rate of 1.2584 on a USD notional amount of $136.8 million.

On 4 December 2017, the Group made a payment of £8.3 million to settle the New Currency Swap in full. As a result, the fair value of the Group's currency swap agreements as at 31 December 2017 is £nil (31 December 2016 - asset of £38.2 million).

Excluding the termination settlements referred to above, the net cash flows arising on the cross currency swaps during the period were an outflow of £0.3 million. All other changes in the values of the cross currency swaps related to changes in the assessment of fair value.

Jackpotjoy plc elected to use hedge accounting (as described in note 3) for the purposes of recognising realised and unrealised gains and losses associated with the New Currency Swap. As a result, upon settlement of the hedged item, being the future foreign currency term loan cash payments as explained in note 17, the entire loss on the New Currency Swap in the amount of £12.5 million was reclassified to profit and loss, in accordance with IAS 39.

13. Intangible assets and goodwill

As at 31 December 2016

As at 31 December 2017

*On 6 December 2017, the Group entered into an agreement to sell certain affiliate contracts for £1.5 million.

Goodwill impairment testing

For the purpose of the annual impairment test, goodwill has been allocated to each operating segment of the business, which also represent the Group CGUs.

The recoverable amount of the Vera&John CGU has been determined based on a fair value less selling costs calculation using cash flow projections from financial forecasts approved by senior management covering a five-year period. The pre-tax discount rate applied to cash flow projections is 22% (2016 - 22%) and cash flows beyond the five-year period are extrapolated using a 2.5% (2016 - 2.5%) growth rate.

The recoverable amount of the Jackpotjoy CGU has been determined based on a fair value less selling costs calculation using cash flow projections from financial forecasts approved by senior management covering a five-year period. The pre-tax discount rate applied to cash flow projections is 14% (2016 - 18%) and cash flows beyond the five-year period are extrapolated using a 2.5% (2016 - 2.5%) growth rate.

The fair value less selling costs calculations are based on level 3 in the fair value hierarchy.

As at 31 December 2017, there was no indication of impairment of goodwill, nor do the Directors expect any reasonably possible change in a key assumption that may give rise to an impairment.

14. Accounts payable and accrued liabilities

15. Other short-term payables

16. Financial risk management

Credit risk

Credit risk is the risk of loss associated with the counterparty's inability to fulfill its payment obligations. As at 31 December 2017, the Group is largely exposed to credit risk through its relationship with its service providers, the Gamesys group, the 888 group, as well as its cash balances. Credit risk also arises from payment services providers ("PSPs"). Prior to accepting new PSPs, credit checks are performed using a reputable external source. Management monitors PSP balances on a weekly basis and promptly takes corrective action if pre-agreed limits are exceeded. As at 31 December 2017, none of the Group's receivables are considered past due or impaired. Quantitative analysis of the Group's exposure to credit risk arising from its receivables is included in note 10 and analysis of the Group's exposure to its credit risk arising from cash is presented below.

A significant amount of cash is held with the following institutions:

The Group monitors the credit ratings of counterparties regularly and at the reporting date does not expect any losses from non-performance by the counterparties. The Group's policy is to transfer significant concentrations of cash held at lower-rated financial institutions to higher rated financial institutions as swiftly as possible.

*2016 ratings have been restated to match ratings of respective banks at 31 December 2017.

Interest rate risk

Interest rate risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Jackpotjoy plc is exposed to cash flow interest rate risk on its credit facilities, described in note 17, which bear interest at variable rates. A one percentage point increase (decrease) in interest rates would have decreased (increased) net earnings before income taxes by approximately £3.5 million for the year ended 31 December 2017 (31 December 2016 - £3.7 million), with all other variables held constant. Management monitors movements in the interest rates by reviewing the LIBOR on a frequent basis.

Subsequent to 31 December 2017, Jackpotjoy plc entered into an Interest Rate Swap (as defined in note 29) to mitigate its exposure to interest rate volatility.

Foreign exchange risk

Foreign exchange risk arises when individual group entities enter into transactions denominated in a currency other than their functional currency. Jackpotjoy plc's policy is, where possible, to allow the Group's entities to settle liabilities denominated in their functional currency with the cash generated from their own operations in that currency. Where Jackpotjoy plc's entities have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of that currency to settle them), cash already denominated in that currency will, where possible, be transferred from elsewhere within Jackpotjoy plc.

Apart from these particular cash flows, the Group aims to fund expenses and investments in the respective currency and to manage foreign exchange risk at a local level by matching the currency in which revenue is generated and expenses are incurred, as well as by matching the currency of its debt structure with the currency cash is generated in.

The following table summarises the Group's discounted net financial assets/liabilities by currency and the effects on total comprehensive income, and therefore total equity as a result of a 10% change in the value of the foreign currencies against pounds sterling where the Group has significant exposure. The analysis assumes that all other variables remain constant.

At 31 December 2016

At 31 December 2017