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Annual Report & Accounts 2015 - NOTES
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10. deriVatiVe financial instrUments: options continued a summary of the movement in the option values during the year and the balances at 31 december 2015 is shown below: Winunited option Betit option total €000s €000s €000s Balance at 1 January 2015 - (1,745) (1,745) movement in fair value 3,808 1,009 4,817 Balance at 31 december 2015 3,808 (736) 3,072 split: current asset 3,808 - non-current liability - (736) 10.1 Winunited option at 31 december 2015 the option was valued by a third party valuation specialist using a monte Carlo valuation model and two methodologies: a discounted cash flow and a multiples based calculation. a long-term growth rate of 2% was assumed, and a discount rate of 15% based on industry peers and observable inputs. Based on this model, the value of the call option at 31 december 2015 was €3.8 million. this increase in the fair value of the option has been recognised in the income statement in accordance with ias 39. 10.2 Betit option on 14 may 2014, the Group acquired a 15% stake in Betit holdings limited ('Bhl'). 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 maltese Gaming authority clearance and the stock exchange 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. 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 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 modelling 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% (2014: 2%) to the Group's forecasts and a discount rate of 18% (2014: 18%) (based on comparison to industry peers and observable inputs). Based on this model, the fair value of the put and call options was a net liability of €0.7 million (2014: €1.7 million), leading to a movement in the fair value of €1.0 million. 11. receiVaBles and prepayments 2015 2014 €000's €000's Balances with payment processors 21,708 22,222 trade receivables 91 111 other receivables 1,280 1,500 loans and receivables 23,079 23,833 Prepayments 11,539 3,772 34,618 27,605 Payment processor balances described as receivables are funds held by third party collection agencies subject to collection after one month, or balances used to make refunds to players. Prepayments include payments as at 31 december 2015 for goods or services which will be consumed after 1 January 2016. it includes the prepayment of certain costs and fees in respect of the Cerberus loan which was drawn down in February 2016. 70 GVC HOLDINGS PLC ANNUAL REPORT 2015 notes to the consolidated financial statements continued for the year ended 31 december 2015