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47

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Allocation of Expenses (continued)

Ancillary operations

Costs allocated to ancillary operations include actual direct expenses, and an allocation of indirect site expenses based on the

percentage of gross ancillary revenue to total revenue on an individual casino site basis.

Central office costs are allocated to ancillary operations based on a percentage of gross ancillary revenue to total revenue. These

central office costs are then allocated to each casino site based on the percentage of each casino site’s ancillary net income to all

casinos’ ancillary net income before the allocation of indirect site expenses.

Customer Loyalty Program

As part of its customer loyalty initiative, SIGA offers a Players Club program to patrons. Under the program, club members

accumulate reward points based on amounts wagered on slot machines. Members can redeem their points for cash or vouchers

for free or discounted goods or services. SIGA records the points earned as a reduction of gaming revenue. Accounts payable

and accrued liabilities are accrued for the estimated cost of the earned points balance at the end of the period under the Players

Club program. If the patron chooses to redeem their points for a voucher for free or discounted goods or services, the revenue is

determined by the fair value of the undelivered goods and services related to a customer loyalty program and remains in accounts

payable and accrued liabilities until the promotional consideration is provided.

Employee Benefits

A defined contribution pension plan is a post-employment benefit plan under which an entity pays fixed contributions into

a separate entity and will have no legal or constructive obligation to pay further amounts. SIGA’s matching contributions

to the defined contribution pension plan for employees are recorded as salaries and benefits expense in the statement of

comprehensive income when services are rendered by employees.

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service

is provided.

Foreign Currency

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to SIGA’s functional

currency at the exchange rate at that date. Revenues and expenses are translated at rates of exchange prevailing on the

transaction dates. Translation gains and losses on foreign currency denominated monetary items are taken into income in

the current year.

Financial Instruments

Classification and measurement

All financial instruments are initially measured at fair value, plus transaction costs, except in the case of financial assets and

liabilities classified as fair value through profit or loss (“FVTPL”). The classification of financial instruments at initial recognition

depends on the purpose and management’s intention for which the financial instruments were acquired or issued, their

characteristics and SIGA’s designation of such instruments. Measurement in subsequent periods depends on whether the

financial instruments have been classified as FVTPL, loans and receivables, and other liabilities. An explanation of the nature

of these classifications follows. SIGA’s classifications of its financial instruments are disclosed in Note 20.

Financial assets are classified as at FVTPL when the financial asset is either held-for-trading or it is designated as at FVTPL.

A financial asset is classified as held-for-trading if:

• It has been acquired principally for the purpose of selling it in the near term; or

• On initial recognition it is part of a portfolio of identified financial instruments that SIGA manages together and has a recent

actual pattern of short-term profit-taking; or

• It is a derivative that is not designated and effective as a hedging instrument.

NOTES TO THE FINANCIAL STATEMENTS

Year Ended March 31, 2016