1. SIGNIFICANT ACCOUNTING POLICIES continued
1.9 Employee Benefits continued
The fair value of the options granted is measured using a binomial valuation model. This valuation method takes into account
the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect
the actual number of share options that vest.
Payments made to repurchase or cancel vested awards are accounted for with the fair value of the options cancelled,
measured at the date of cancellation being taken to retained earnings; the balance is taken to the income statement. Also
on cancellation an accelerated charge would be recognised immediately.
See note 21 for further details of the three schemes.
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of
a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is
material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and, where appropriate, the risks specific to the liability.
1.11 Revenue Recognition
Net Gaming Revenue is measured at the fair value of consideration received or receivable and comprises the following
Casino: net win in respect of bets placed on casino games that have concluded in the year, stated net of promotional
Sportsbook: gains and losses in respect of bets placed on sporting events in the year, stated net of promotional bonuses.
Open positions are carried at fair market value and gains and losses arising on this valuation are
recognised in revenue, as well as gains and losses realised on positions that have closed.
Poker: net win in respect of rake for poker games that have concluded in the year, stated net of promotional
Bingo: net win in respect of bets placed on bingo games that have concluded in the year, stated net of promotional
Where promotional bonuses apply to customers playing a variety of products through the same wallet, bonuses are allocated
pro-rata to the net win.
B2B income comprises the amounts receivable for services to other online gaming operators. Income is recognised when
a right to consideration has been obtained through performance and reflects contract activity during the year. Until 19 March
2013 B2B income included amounts due for the provision of services to East Pioneer Corporation B.V. ("EPC"). The amounts
have been shown as income as they represent normal trading transactions and match costs incurred by the Group as a
result of providing services to EPC. A reconciliation of the NGR attributable to the B2B partner to the B2B income recognised
in these financial statements is shown in note 2. From the 19 March 2013 the results of EPC have been fully consolidated
into the Group following the acquisition of Sportingbet PLC.
1.12 Financial Expenses
Financial expenses comprise interest payable on borrowings calculated using the effective interest rate method.
1.13 Exceptional Items
Exceptional items are those that in the judgement of the Directors, need to be disclosed by virtue of their size or incidence
in order for the user to obtain a proper understanding of the financial information.
1.14 Financial Income
Financial income is interest income recognised in the income statement as it accrues, using the effective interest method.
Current tax is the tax currently payable based on taxable profit for the year. Deferred income taxes are calculated using the
liability method on temporary differences.
ANNUAL REPORT 2013 34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2013