26. ACCOUNTING ESTIMATES AND JUDGEMENTS continued
26.2 Customer liabilities
Customer liabilities represent cash held by the Group on behalf of customers. These are stated net of an allowance for
uncollected dormant balances. Management apply judgement calculating the allowance by reference to player terms and
Management apply judgement in evaluating the recoverability of receivables. To the extent that the Board believes receivables
not to be recovered they have been provided for in the financial statements.
26.4 Impairment of Goodwill and Trademarks
Determining whether goodwill and trademarks with an indefinite useful life are impaired requires an estimation of the value
in use of the cash-generating units. The value-in-use calculation requires the entity to estimate the future cash flows expected
to arise from the cash-generating unit and select a suitable discount rate in order to calculate present value. Note 10.2
provides information on the assumptions used in these financial statements.
The valuation work to assess the impairment of goodwill and intangible assets was conducted internally by management.
26.5 Share Options
Accounting for share option charges requires a degree of judgement over such matters as dividend yield, and expected
volatility. Further details on the assumptions made by management are disclosed in note 21.
26.6 Open Bets
The Directors review the scale and magnitude of open bets frequently, and in particular at the balance sheet date.
Assessments are made on whether to make provisions for the outcome of such open bets. Management have assessed
that the value of open bets at year end is not material.
26.7 East Pioneer Corporation B.V.
On 21 November 2011 the Group entered into a B2B arrangement with East Pioneer Corporation B.V. ("EPC") to provide a
suite of back office services to the company following EPC's acquisition of Superbahis, a business operated by Sportingbet
The terms of the contracts between SBT, EPC and the group are complex. Until 19 March 2013, neither the Group nor EPC
provided the platform or licensing, held the customers on their servers, retained the brand nor set and controlled the sports
book odds of the website. In return for the back office services provided, the Group was entitled to receive income from
EPC equating to a share of the profits of the business. The Group does not, however, have any interest in the net assets or
equity of EPC which is an independently held entity. Prior to 19 March 2013, management asserted that the group did not
control any of the operating or financial policies of EPC. The Group did recognise there are material transactions between
itself and EPC and the provision of back office services necessitates an interchange of management personnel and the
provision of essential technical information between EPC and the Group. Accordingly, such amounts due under the B2B
transaction with EPC were therefore included within revenue up to 19 March 2013.
Following the acquisition of Sportingbet PLC on 19 March 2013, the group now has the power to govern the financial and
operating policies of the Superbahis operations, delivers virtually all of the services required to operate the business and in
turn enjoys substantially all of the risks and rewards arising from the performance of that business. On this basis, from this
date, the Group considers it is appropriate to consolidate the results of the Superbahis business of EPC within these financial
The Directors considered that the guarantee relating to the acquisition by EPC as referred to in note 25 had a fair value of
€nil due to the uncertainty regarding the regulatory environment in which EPC operates and also due to the fact that much
of the cash used to fund such payments resides within payment processor accounts operated by the Group.
In considering the impact of the acquisition of Sportingbet and its contracts with EPC with whom the group had pre-existing
contracts relating to the Superbahis business, the group re-evaluated its contract with EPC in accordance with IFRS 3. In
so doing it considered the services provided, the risks associated with the provision of those services and the expected
financial reward for their provision and concluded the existing contract remained on terms no more or less favourable to
market conditions than on its outset.
ANNUAL REPORT 2013 60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
for the year ended 31 December 2013