6-K 1 ck0001639920-6k_20180503.htm 6-K ck0001639920-6k_20180503.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of May, 2018

Commission File Number: 001-38438

Spotify Technology S.A.

(Translation of registrant’s name into English)

42-44, avenue de la Gare

L- 1610 Luxembourg

Grand Duchy of Luxembourg

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F      Form 40-F  

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes      No  

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes      No  

 

 

 

 

 


 

 

 

 

 

 

 

 

 

Spotify Technology S.A.

Interim condensed consolidated financial statements

For the three months ended March 31, 2018

 


Table of contents

 

 

 

Page

PART I – FINANCIAL INFORMATION

 

 

Item 1. Financial Statements

 

1

Interim condensed consolidated statement of operations

 

1

Interim condensed consolidated statement of comprehensive loss

 

2

Interim condensed consolidated statement of financial position

 

3

Interim condensed consolidated statement of changes in equity/(deficit)

 

4

Interim condensed consolidated statement of cash flows

 

5

Notes to the interim condensed consolidated financial statements

 

6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

23

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

35

PART II – OTHER INFORMATION

 

 

Item 1. Legal Proceedings

 

37

Item 1A. Risk Factors

 

37

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

37

Item 3. Defaults Upon Senior Securities

 

37

Item 5. Other Information

 

37

Signatures

 

38

 

 

 


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Interim condensed consolidated statement of operations

(Unaudited)

(in € millions, except share and per share data)

 

 

 

 

 

Three months ended March 31,

 

 

 

Note

 

2018

 

 

2017

 

Revenue

 

4

 

 

1,139

 

 

 

902

 

Cost of revenue

 

 

 

 

856

 

 

 

797

 

Gross profit

 

 

 

 

283

 

 

 

105

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

 

 

115

 

 

 

80

 

Sales and marketing

 

 

 

 

138

 

 

 

110

 

General and administrative

 

 

 

 

71

 

 

 

54

 

 

 

 

 

 

324

 

 

 

244

 

Operating loss

 

 

 

 

(41

)

 

 

(139

)

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

5

 

 

15

 

 

 

27

 

Finance costs

 

5

 

 

(154

)

 

 

(62

)

Share in earnings of associate

 

 

 

 

 

 

 

2

 

Finance income/(costs) - net

 

 

 

 

(139

)

 

 

(33

)

 

 

 

 

 

 

 

 

 

 

 

Loss before tax

 

 

 

 

(180

)

 

 

(172

)

 

 

 

 

 

 

 

 

 

 

 

Income tax (benefit) expense

 

6

 

 

(11

)

 

 

1

 

Net loss attributable to owners of the parent

 

 

 

 

(169

)

 

 

(173

)

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to owners of the parent

 

 

 

 

 

 

 

 

 

 

   Basic and diluted

 

7

 

 

(1.01

)

 

 

(1.15

)

 

 

 

 

 

 

 

 

 

 

 

Weighted-average ordinary shares outstanding

 

 

 

 

 

 

 

 

 

 

   Basic and diluted

 

7

 

 

167,778,952

 

 

 

150,149,327

 

 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

 


-1-


Interim condensed consolidated statement of comprehensive loss

(Unaudited)

(in € millions)

 

 

 

 

 

Three months ended March 31,

 

 

 

Note

 

2018

 

 

2017

 

Net loss attributable to owners of the parent

 

 

 

 

(169

)

 

 

(173

)

Other comprehensive (loss)/income:

 

 

 

 

 

 

 

 

 

 

Items that may be subsequently reclassified to condensed

   consolidated statement of operations (net of tax):

 

 

 

 

 

 

 

 

 

 

   (Losses)/gains on short term investments

 

19

 

 

(1

)

 

 

1

 

   Gains on cash flow hedging instruments

 

19

 

 

1

 

 

 

 

   Exchange differences on translation of foreign operations

 

 

 

 

(15

)

 

 

(1

)

Items not to be subsequently reclassified to condensed

   consolidated statement of operations (net of tax):

 

 

 

 

 

 

 

 

 

 

   Gain in the fair value of long term investment

 

19

 

 

45

 

 

 

 

Other comprehensive income for the

   period (net of tax)

 

 

 

 

30

 

 

 

 

Total comprehensive loss for the period attributable to

   owners of the parent

 

 

 

 

(139

)

 

 

(173

)

 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

 

-2-


Interim condensed consolidated statement of financial position

(in € millions)

 

 

 

Note

 

 

March 31, 2018

 

 

December 31, 2017

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment

 

 

8

 

 

 

68

 

 

 

73

 

Intangible assets including goodwill

 

 

9

 

 

 

161

 

 

 

162

 

Investment in associate

 

 

 

 

 

 

1

 

 

 

1

 

Long term investment

 

 

19

 

 

 

968

 

 

 

910

 

Restricted cash and other non-current assets

 

 

10

 

 

 

56

 

 

 

54

 

Deferred tax assets

 

 

6

 

 

 

10

 

 

 

9

 

 

 

 

 

 

 

 

1,264

 

 

 

1,209

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

 

14

 

 

 

322

 

 

 

360

 

Income tax receivable

 

 

6

 

 

 

1

 

 

 

 

Short term investments

 

 

19

 

 

 

843

 

 

 

1,032

 

Cash and cash equivalents

 

 

 

 

 

 

733

 

 

 

477

 

Other current assets

 

 

 

 

 

 

39

 

 

 

29

 

 

 

 

 

 

 

 

1,938

 

 

 

1,898

 

Total assets

 

 

 

 

 

 

3,202

 

 

 

3,107

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity and liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

 

 

 

 

 

 

 

 

 

 

Other paid in capital

 

 

 

 

 

 

2,531

 

 

 

2,488

 

Other reserves

 

 

 

 

 

 

226

 

 

 

177

 

Accumulated deficit

 

 

 

 

 

 

(2,596

)

 

 

(2,427

)

Equity attributable to owners of parent

 

 

 

 

 

 

161

 

 

 

238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Convertible notes

 

 

13

 

 

 

1,022

 

 

 

944

 

Accrued expenses and other liabilities

 

 

17

 

 

 

61

 

 

 

56

 

Provisions

 

 

18

 

 

 

7

 

 

 

6

 

Deferred tax liabilities

 

 

6

 

 

 

3

 

 

 

3

 

 

 

 

 

 

 

 

1,093

 

 

 

1,009

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

15

 

 

 

360

 

 

 

341

 

Income tax payable

 

 

6

 

 

 

4

 

 

 

9

 

Deferred revenue

 

 

16

 

 

 

223

 

 

 

216

 

Accrued expenses and other liabilities

 

 

17

 

 

 

889

 

 

 

881

 

Provisions

 

 

18

 

 

 

53

 

 

 

59

 

Derivative liabilities

 

 

19

 

 

 

419

 

 

 

354

 

 

 

 

 

 

 

 

1,948

 

 

 

1,860

 

Total liabilities

 

 

 

 

 

 

3,041

 

 

 

2,869

 

Total equity and liabilities

 

 

 

 

 

 

3,202

 

 

 

3,107

 

 

 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

-3-


Interim condensed consolidated statement of changes in equity/(deficit)

(Unaudited)

(in € millions)

 

 

 

Note

 

Share

capital

 

 

Other

paid in

capital

 

 

Other

reserves

 

 

Accumulated

deficit

 

 

(Deficit)/Equity

attributable to

owners of parent

 

Balance at January 1, 2017

 

 

 

 

 

 

 

830

 

 

 

122

 

 

 

(1,192

)

 

 

(240

)

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

(173

)

 

 

(173

)

Issuance of shares upon exercise of stock

  options and restricted stock units

 

12

 

 

 

 

 

17

 

 

 

 

 

 

 

 

 

17

 

Share-based payments

 

12

 

 

 

 

 

 

 

 

14

 

 

 

 

 

 

14

 

Balance at March 31, 2017

 

 

 

 

 

 

 

847

 

 

 

136

 

 

 

(1,365

)

 

 

(382

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2018

 

 

 

 

 

 

 

2,488

 

 

 

177

 

 

 

(2,427

)

 

 

238

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

(169

)

 

 

(169

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

30

 

Issuance of new shares

 

11

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

Issuance of shares upon exercise of stock

  options and restricted stock units

 

12

 

 

 

 

 

39

 

 

 

 

 

 

 

 

 

39

 

Share-based payments

 

12

 

 

 

 

 

 

 

 

18

 

 

 

 

 

 

18

 

Income tax impact associated with share-based

   payments

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Balance at March 31, 2018

 

 

 

 

 

 

 

2,531

 

 

 

226

 

 

 

(2,596

)

 

 

161

 

 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

-4-


Interim condensed consolidated statement of cash flows

(Unaudited)

(in € millions)

 

 

 

 

Three months ended March 31,

 

 

 

Note

 

2018

 

 

2017

 

Operating activities

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

(169

)

 

 

(173

)

Adjustments to reconcile net loss to net cash flows

 

 

 

 

 

 

 

 

 

 

Depreciation of property and equipment

 

8

 

 

9

 

 

 

12

 

Amortization of intangible assets

 

9

 

 

2

 

 

 

2

 

Share-based payments expense

 

12

 

 

18

 

 

 

14

 

Impairment loss on trade receivables

 

 

 

 

3

 

 

 

 

Gain on disposal of equipment

 

 

 

 

(1

)

 

 

 

Finance income

 

5

 

 

(15

)

 

 

(27

)

Finance costs

 

5

 

 

154

 

 

 

62

 

Income tax (benefit) expense

 

 

 

 

(11

)

 

 

1

 

Share in earnings of associate

 

 

 

 

 

 

 

(2

)

Net foreign exchange gains

 

 

 

 

(1

)

 

 

 

Changes in working capital:

 

 

 

 

 

 

 

 

 

 

Decrease/(increase) in trade receivables and other assets

 

 

 

 

15

 

 

 

(40

)

Increase in trade and other liabilities

 

 

 

 

70

 

 

 

186

 

Increase in deferred revenue

 

16

 

 

9

 

 

 

9

 

(Decrease)/increase in provisions

 

18

 

 

(3

)

 

 

44

 

Interest received

 

 

 

 

10

 

 

 

5

 

Income tax paid

 

 

 

 

(6

)

 

 

 

Net cash flows from operating activities

 

 

 

 

84

 

 

 

93

 

 

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

 

Business combinations, net of cash acquired

 

 

 

 

 

 

 

(23

)

Purchases of property and equipment

 

8

 

 

(6

)

 

 

(1

)

Proceeds from sales of equipment

 

 

 

 

1

 

 

 

 

Purchases of intangibles

 

9

 

 

(2

)

 

 

(2

)

Purchases of short term investments

 

19

 

 

(271

)

 

 

(357

)

Sales and maturities of short term investments

 

19

 

 

430

 

 

 

286

 

Transaction fees for long term investment

 

 

 

 

(9

)

 

 

 

Change in restricted cash

 

19

 

 

(4

)

 

 

(28

)

Net cash flows from (used in) investing activities

 

 

 

 

139

 

 

 

(125

)

 

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

 

Finance lease payments

 

 

 

 

 

 

 

(1

)

Proceeds from the issuance of ordinary shares

 

 

 

 

4

 

 

 

 

Proceeds from exercise of share options

 

12

 

 

39

 

 

 

17

 

Net cash flows from financing activities

 

 

 

 

43

 

 

 

16

 

 

 

 

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

 

 

 

266

 

 

 

(16

)

Cash and cash equivalents at beginning of the period

 

 

 

 

477

 

 

 

755

 

Net foreign exchange losses on cash and cash equivalents

 

 

 

 

(10

)

 

 

(4

)

Cash and cash equivalents at March 31

 

 

 

 

733

 

 

 

735

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

 

 

 

Non-cash investing activities

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment in trade and

   other payables

 

8

 

 

4

 

 

 

4

 

 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

-5-


Notes to the interim condensed consolidated financial statements

(Unaudited)

1.

Corporate information

Spotify Technology S.A. (the “Company”) is a public limited company incorporated and domiciled in Luxembourg. The Company’s registered office is 42-44 avenue de la Gare, L1610, Luxembourg.

The principal activity of the Company and its subsidiaries (the “Group,” “we,” “us,” or “our”) is music streaming. The Group’s premium service (“Premium Service”) provides users with unlimited online and offline high-quality streaming access to its catalog. The Premium Service offers a commercial-free music experience. The Group’s ad-supported service (“Ad-Supported Service,” and together with the Premium Service, the “Service”) has no subscription fees and provides users with limited on-demand online access to the catalog. The Group depends on securing content licenses from a number of major and minor content owners and other rights holders in order to provide its service.

2.

Basis of preparation and summary of significant accounting policies

The interim condensed consolidated financial statements of Spotify Technology S.A. for the three months ended March 31, 2018 and 2017 have been prepared in accordance with IAS 34 Interim Financial Reporting.  The interim financial information is unaudited. The interim financial information reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein.  The interim condensed consolidated financial statements should be read in conjunction with the Group’s consolidated financial statements for the year ended December 31, 2017, as they do not include all the information and disclosures required in the annual consolidated financial statements. Interim results are not necessarily indicative of the results for a full year. The interim condensed consolidated financial statements are presented in millions of Euros.

On January 1, 2018, the Group adopted International Financial Reporting Standard (“IFRS”) 9, Financial Instruments which replaces IAS 39, Financial Instruments: Recognition and Measurement. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. Under the provisions of the standard, the Group made the election to present in other comprehensive income, changes in the fair value of its long term investment in Tencent Music Entertainment Group (“TME”), a private company that provides digital music services to users including streaming, online live broadcasts, and karaoke services, without recycling of fair value changes to profit and loss upon derecognition. The Group concluded that the accounting treatment of its remaining financial assets, financial liabilities and derivative instruments under IAS 39 was in accordance with the requirements of IFRS 9 and, therefore, there was no material impact on the Group’s condensed consolidated financial statements upon adoption of the standard.

In June 2016, the International Accounting Standards Board (“IASB”) issued three amendments to IFRS 2, Share-based Payment, in relation to the classification and measurement of share-based payment transactions. The amendments are intended to eliminate diversity in practice in three main areas: (i) the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction, (ii) the classification of a share-based payment transaction with net settlement features for withholding tax obligations, and (iii) the accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash-settled to equity-settled. The amendments are effective for accounting periods beginning on or after January 1, 2018. The Group has adopted the amendments to IFRS 2 as of January 1, 2018 and concluded the adoption had no material impact on the interim condensed consolidated financial statements.

On February 28, 2018, the Board of Directors of the Company approved a 40-to-one share split of the Company’s ordinary shares which became effective on March 14, 2018. All share and per share information included in the accompanying interim condensed consolidated financial statements has been adjusted to reflect this share split.

-6-


As described in Note 22, on April 3, 2018, the Group completed a direct listing of its ordinary shares on the New York Stock Exchange (“NYSE”).

Other than as mentioned above, the accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of our consolidated financial statements for the year ended December 31, 2017. None of the new or amended standards and interpretations as of January 1, 2018 has had a material impact on our financial result or position.

3.

Critical accounting estimates and judgments

In preparing these interim condensed consolidated financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation and uncertainty, were the same as those applied to the consolidated financial statements for the year ended December 31, 2017.

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events.

4.

Segment information

 

The Group has two reportable segments: Premium and Ad-Supported. The Premium Service is a paid service in which customers can listen on-demand and offline. Revenue is generated through subscription fees. The Ad-Supported Service is free to the user. Revenue is generated through the sale of advertising. Royalty costs are primarily recorded in each segment based on specific rates for each segment agreed with rights holders. The remaining royalties which are not specifically associated to either of the segments are allocated based on user activity or the revenue recognized in each segment. No operating segments have been aggregated to form the reportable segments.

 

Key financial performance measures of the segments including revenue, cost of revenue and gross profit are as follows:

 

 

 

Three months ended March 31,

 

 

 

2018

 

 

2017

 

 

 

(in € millions)

 

Premium

 

 

 

 

 

 

 

 

Revenue

 

 

1,037

 

 

 

828

 

Cost of revenue

 

 

767

 

 

 

710

 

Gross profit

 

 

270

 

 

 

118

 

 

 

 

 

 

 

 

 

 

Ad-Supported

 

 

 

 

 

 

 

 

Revenue

 

 

102

 

 

 

74

 

Cost of revenue

 

 

89

 

 

 

87

 

Gross profit/(loss)

 

 

13

 

 

 

(13

)

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

Revenue

 

 

1,139

 

 

 

902

 

Cost of revenue

 

 

856

 

 

 

797

 

Gross profit

 

 

283

 

 

 

105

 

 

-7-


Reconciliation of gross profit

 

General expenditures, finance income, finance costs, taxes, and share in earnings of associate are not allocated to individual segments as these are managed on an overall group basis. The reconciliation between reportable segment gross profit to our loss before tax is as follows:

 

 

 

Three months ended March 31,

 

 

 

2018

 

 

2017

 

 

 

(in € millions)

 

Segment gross profit

 

 

283

 

 

 

105

 

Research and development

 

 

(115

)

 

 

(80

)

Sales and marketing

 

 

(138

)

 

 

(110

)

General and administrative

 

 

(71

)

 

 

(54

)

Finance income

 

 

15

 

 

 

27

 

Finance costs

 

 

(154

)

 

 

(62

)

Share in earnings of associate

 

 

 

 

 

2

 

Loss before tax

 

 

(180

)

 

 

(172

)

 

Revenue by country

 

 

 

Three months ended March 31,

 

 

 

2018

 

 

2017

 

 

 

(in € millions)

 

United States

 

 

416

 

 

 

351

 

United Kingdom

 

 

128

 

 

 

99

 

Luxembourg

 

 

1

 

 

 

 

Other countries

 

 

594

 

 

 

452

 

 

 

 

1,139

 

 

 

902

 

 

Premium revenue is attributed to a country based on where the membership originates. Advertising revenue is attributed to a country based on where the campaign is viewed. There are no countries that make up greater than 10% of total revenue included in “Other countries.”

5.

Finance income and costs

 

 

 

Three months ended March 31,

 

 

 

2018

 

 

2017

 

 

 

(in € millions)

 

Finance income

 

 

 

 

 

 

 

 

Fair value movements on derivative liabilities (Note 19)

 

 

2

 

 

 

23

 

Interest income

 

 

5

 

 

 

4

 

Other financial income

 

 

8

 

 

 

 

Total

 

 

15

 

 

 

27

 

 

 

 

 

 

 

 

 

 

Finance costs

 

 

 

 

 

 

 

 

Fair value movements on derivative liabilities (Note 19)

 

 

(59

)

 

 

(13

)

Fair value movements on Convertible Notes (Note 19)

 

 

(78

)

 

 

(40

)

Interest, bank fees, and other costs

 

 

 

 

 

(1

)

Foreign exchange losses

 

 

(17

)

 

 

(8

)

Total

 

 

(154

)

 

 

(62

)

 

-8-


6.

Income tax

The effective tax rates for the three months ended March 31, 2018 and 2017 were 6.0% and (0.5)%, respectively. Drivers of our effective tax rate include permanent differences, withholding taxes, discrete benefit due to fair value gains, and unrecognized tax losses in certain jurisdictions. We operate in a global environment with significant operations in various jurisdictions outside Luxembourg. Accordingly, the consolidated income tax rate is a composite rate reflecting our earnings and the applicable tax rates in the various jurisdictions where we operate.

For the three months ended March 31, 2018, the income tax benefit of €11 million was due primarily to the recognition of deferred taxes as a result of the unrealized increase in the fair value of our long term investment.

Gross tax provisions were €1 million and €6 million as of March 31, 2018 and December 31, 2017, respectively. The gross tax provisions, if recognized, will result in a reduction of approximately €1 million to the provision for income taxes, therefore favorably impacting our effective tax rate. We include interest and penalties related to tax provisions within income tax (benefit) expense on the condensed consolidated statements of operations and income tax payable in the condensed consolidated statement of financial position. Interest and penalties included in income tax expense were not material in any of the periods presented. Transactions recorded through other comprehensive income have been shown net of their tax impact, as applicable, based on currently enacted tax laws.

Net deferred tax assets of €7 million and €6 million have been recorded in the condensed consolidated statement of financial position as of March 31, 2018 and December 31, 2017, respectively. In evaluating the probability of realizing the net deferred tax assets, we considered all available positive and negative evidence of future tax profit, including its past operating results and the forecast of market growth and earnings. As of March 31, 2018 and December 31, 2017, deferred tax assets of €596 million and €581 million have not been realized.

7.

Loss per share

Basic loss per share is computed using the weighted-average number of outstanding ordinary shares during the period. For the three months ended March 31, 2018, weighted-average ordinary shares outstanding excludes the issued shares upon the January 31, 2018 exchange of the Convertible Notes due to the option to unwind the exchange. Diluted loss per share is computed using the weighted-average number of outstanding ordinary shares and excludes all potential ordinary shares outstanding during the period, as their inclusion would be anti-dilutive. For the three months ended March 31, 2018 and March 31, 2017, the Group’s potential ordinary shares consist of incremental shares issuable upon the assumed exercise of stock options and warrants, and the incremental shares issuable upon the assumed vesting of unvested restricted stock units and restricted stock awards. For the three months ended March 31, 2018, the Group's potential ordinary shares also consist of the issued shares upon the January 31, 2018 exchange of Convertible Notes. The computation of loss per share for the respective periods is as follows:

 

 

Three months ended March 31,

 

 

 

2018

 

 

2017

 

 

 

(in millions, except share and per share data)

 

Basic and diluted

 

 

 

 

 

 

 

 

Net loss attributable to owners of the parent

 

 

(169

)

 

 

(173

)

Shares used in computation:

 

 

 

 

 

 

 

 

   Weighted-average ordinary shares outstanding

 

 

167,778,952

 

 

 

150,149,327

 

Basic and diluted loss per share attributable to

   owners of the parent

 

 

(1.01

)

 

 

(1.15

)

-9-


Potential dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:

 

 

Three months ended March 31,

 

 

 

2018

 

 

2017

 

Share options

 

 

14,891,965

 

 

 

12,726,840

 

Restricted stock units

 

 

191,986

 

 

 

488,640

 

Restricted stock awards

 

 

61,880

 

 

 

 

Shares issued upon exchange of Convertible Notes

 

 

9,431,960

 

 

 

 

Warrants

 

 

6,720,000

 

 

 

5,120,000

 

 

8.

Property and equipment

 

 

 

Property and equipment

 

 

Leasehold

improvements

 

 

Total

 

 

 

(in € millions)

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

At January 1, 2018

 

 

105

 

 

 

73

 

 

 

178

 

Additions

 

 

2

 

 

 

3

 

 

 

5

 

Disposals

 

 

(1

)

 

 

 

 

 

(1

)

Exchange differences

 

 

 

 

 

(1

)

 

 

(1

)

At March 31, 2018

 

 

106

 

 

 

75

 

 

 

181