Bookie defends intangibles
A private body that monitors company accounts has alleged that the bookie William Hill has breached basic accounting rules on intangibles.
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Rule FRS10 says that intangible assets should be broken down and disclosed separately but Company Reporting, claims the gaming giant has given only a ‘global figure’.
William Hill reported its intangibles as a global figure of £728.9m for the year ended 31 December 2002.
Company Reporting also expressed concerns over the decision not to amortise the figure.
The £728.9m figure for intangibles dwarfs William Hill’s £32m profit before tax for the year ended 31 December 2002. It includes license value, goodwill and brand value. The figure compares to tangible assets of just £99m.
Another company known to have aggregated intangibles is household goods provider Reckitt Benckiser, says Company Reporting. However in this case, the company used an amortisation policy of separating amortised intangibles from unamortised intangibles.
In the accounts William Hill says its intangibles are not amortised because it considers them to have an indefinite life due to their long-term nature. The 1985 Companies Act requires intangibles to be amortised over a finite period.
Mark Sproul, of Company Reporting, said: ‘It’s difficult to see where the value of the company lies and there is definitely a transparency issue.’
William Hill has pointed to the difficulty in separating the components of intangibles and goodwill on acquisition of a betting office or chain of offices, according to Company Reporting. Hilton, however, which now owns the Ladbrokes gaming chain, has fully disclosed the intangibles.
A spokesman for William Hill said he was unable to comment.
The Accounting Standards Board said no issues specific to the gaming industry had yet been reported but that it was normal practice to define intangibles.