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Annual Report & Accounts 2015 - NOTES
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15. BetBoo deferred consideration 2015 2014 €000's €000's Balance at 1 January 3,953 7,582 Unwinding of discount charged to income statement 54 710 Payments made (2,401) (4,339) Balance at 31 december 1,606 3,953 split (prior year restated): current liabilities 1,606 2,347 non-current liabilities - 1,606 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. the costs of the revised earn-out were 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: • 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 €21,381,227, which we now expect to reach in august 2016. the intangible assets acquired in the transaction and the impact of the revised earn-out are as follows: €000's acquisition price of Betboo initial consideration 2,840 deferred consideration 18,541 total consideration 21,381 acquisition costs 289 original cost on acquisition 21,670 the deferred consideration has been discounted to reflect its fair value at the date of acquisition. the effect of this discount will be unwound over the period of the deferral with a charge to the income statement contained within interest expense. the expected impact of this over the earn-out period is shown below: Prior periods 2014 2015 2016 total €000's €000's €000's €000's €000's Balance at 1 January - 7,582 3,953 1,606 - deferred consideration 9,942 - - - 9,942 Unwinding of discount charged to income statement 7,824 710 54 11 8,599 Payments made (10,184) (4,339) (2,401) - (16,924) Payments anticipated - - - (1,617) (1,617) Balance at 31 december 7,582 3,953 1,606 - - GVC HOLDINGS PLC ANNUAL REPORT 2015 73 notes to the consolidated financial statements