9. aVailaBle foR sale financial asset continued
Where an entity holds, directly or indirectly through subsidiaries, less than 20 per cent of the voting power of an investee, it
is presumed that the entity does not have significant influence and therefore an investment does not qualify as an associate
unless such influence can be clearly demonstrated. Although the group has a Director on the Board of BhL and has influence
through its shareholding over the payment of dividends the Director does not participate in policy making decisions, and
the entity is unlikely to be in a dividend paying position over the lifetime of the investment. the group does not believe there
is evidence to rebut the presumption it does not have significant influence over BhL and therefore the investment is not
considered to be an associate and has been accounted for as an available for sale asset.
the group has a call option to acquire the balance of the outstanding shares. the call option can be exercised no earlier
than 1 July 2017 and no later than 30 september 2017, and would be subject to further mgA clearance and the Aim Rules.
the minimum call option price is €70 million, and the actual price would be determined by the mix of revenues between
regulated and non-regulated markets and certain multiples attaching thereto which at our current multiple levels would lead
to the transaction being accretive for shareholders.
if the group decides not to exercise its call option BsL may require the group to acquire its shares in BhL at a price
determined by the mix of revenues between regulated and non-regulated markets and certain multiples thereof (but absent
any floor on the price). completion of this purchase would be subject to certain conditions including the group's ability to
raise the necessary financing. should the group not raise the required financing, BsL may acquire the group's shares in
BhL for nominal consideration.
the above options are required to be carried at fair value through profit or loss in accordance with iAs 39 and are grouped
in level 3 of the fair value hierarchy. the group engaged a third party valuations specialist to value the options using a monte
carlo valuation model based on the enterprise value for BhL and modeling of the anticipated exercise price.
in valuing the underlying business of BhL, a discounted cash flow model was used, applying a long-term growth rate of 2%
to the group's forecasts at acquisition and a discount rate of 18% (based on comparison to industry peers and observable
inputs). Based on this model, the fair value of the put and call options at inception was estimated to be €1.7 million liability,
reflecting management's estimate of a 15% probability that the options will be effective.
the options have been recognised in the consolidated balance sheet within non-current liabilities, as part of the initial
investment transaction. the consideration for the investment of €3.6million has been attributed to both the available for sale
asset and the option liability taken on. this increases the value of consideration transferred in respect of the available for
sale asset to €5.2 million, however, iAs 39 requires that financial assets are recognised initially at fair value plus attributable
costs, therefore an impairment of €1.6 million has been recognised at inception. the carrying value of the asset at inception
is therefore €3.8 million, and there has been no significant change in the fair value of the asset or the options as of the
Both the available for sale asset and the options are required to be re-measured at fair value at each reporting date. changes
in the fair value of the available for sale asset will be recognised in other comprehensive income, except for impairment
losses which are recognised through profit or loss and will be reported within financing costs and therefore excluded from
10. BetBoo defeRRed consideRation
Balance at 1 January 7,582 12,283
unwinding of discount charged to income statement 710 1,677
payments made (4,339) (6,378)
Balance at 31 December 3,953 7,582
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
ANNUAL REPORT 2014 46
notes to the consolidated financial statements continued
for the year ended 31 december 2014