12. ACQUISITION OF BETBOO
Balance at 1 January 12,283 12,940
Unwinding of discount charged to income statement 1,677 2,206
Payments made (6,378) (2,863)
Balance at 31 December 7,582 12,283
On 2 July 2009, the Group acquired the trade and assets of betboo.com, a leading South American internet gaming operator,
offering, bingo, casino, poker and a sports betting product.
The terms of the acquisition were an initial payment of US$4 million (€2,840k) with the sellers able to earn up to a further
US$26 million depending on performance.
On 23 February 2011, the Group announced a change in the terms of the earn out. Under the new arrangements:
• From 1 July 2011 there will be 36 monthly payments of $156,944.
• From 31 January 2012, there will be four annual payments equal to 25% of the Betboo NGR earned in the previous
Management originally estimated the deferred consideration payable to be €8,963k, and the discount to be €4,076k, resulting
in the discounted value being €4,887k. The revised earn out results in total deferred consideration increasing to €18,530k
and the discount to €8,588k resulting in the new discounted value being €9,942k.
The fair values of the revised earn out has been estimated using cash flow projections for the 4 years to 31 December 2014,
and discounted using the estimated weighted average cost of capital of 21%.
On 1 October 2013 the Betboo business migrated to the Sportingbet trading platform, the payments terms of the earn-out
changed from this date to the following.
• Four consecutive monthly payments, with the first being in October 2013, of one quarter of 25 per cent of the Net
Gaming Revenue for the period commencing 1 January 2013 and ending on 30 September 2013.
• From 1 October 2013 there will be 9 monthly payments of €227,625 with the final payment in June 2014.
• An earn-out dependent on certain revenue shares with a floor of €200,000 per month for the 40 months ending
31 January 2017. There are also further earn-out payments that stretch to the earlier of:
(a) the date on which the total earn-outs reach €21,381,227
(b) 40 months after 31 January 2017
• The total earn-out cap remains at $30 million.
• The exchange rate between the US Dollar and Euro has been fixed at 1 Euro = US$ 1.4031 making the cap
The fair values of the intangible assets acquired in the transaction and the impact of the revised earn-out are as follows:
Acquisition price of Betboo
Initial consideration 2,840
Deferred consideration 18,541
Acquisition costs 289
Fair value 21,670
ANNUAL REPORT 2013 48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2013