23. Acquisitions

Acquisitions made in the year
(a) Sportingbet Italia S.R.L.
On 30 May 2006 the Group acquired a 50% interest in Sportingbet Italia S.R.L. (‘Sportingbet Italia’). In calculating the goodwill arising on acquisition, the fair value of net assets of Sportingbet Italia has been assessed and adjustments from book value have been made where necessary. These adjustments are summarised below:

	Book value on acquisition £m	Fair value adjustment £m	Fiar value to the Group £m
Tangible fixed assets	0.6	-	0.6
Cash	0.3	-	0.3
Debtors	0.2	-	0.2
Creditors	(0.6)	-	(0.6)
Net assets	0.5	-	0.5
Consideration			5.6
Net assets acquired			(0.5)
Goodwill arising on acquisition			5.1

The fair value of consideration as at 30 May 2006 and as at 31 July 2006 comprised:

	£m
Cash	2.3
Contingent consideration – cash	3.3
Consideration (including £0.3m expenses)	5.6

Acquisitions made in previous years
(a) Paradise Poker
On 3 November 2004 the Group acquired the business and certain assets of Paradise Poker. The fair value of consideration as at 31 July 2005 comprised:

	£m
Cash	114.9
Shares	81.9
Contingent consideration – cash	22.7
– shares	36.2
Consideration (including £5.1m expenses)	255.7

Contingent consideration payments due to the vendor are based on profit performance and may fall due on or before 2 November 2008. Contingent cash consideration has been discounted back to current values in accordance with FRS 7. The investment, including contingent cash consideration, was denominated in US dollars and is therefore subject to exchange rate fluctuations. The fair value of consideration to be satisfied by the issue of shares is subject to movement in the Company’s share price. The actual number of shares to be issued is fixed.

The investment, including contingent cash consideration, is denominated in US dollars and is therefore subject to exchange rate fluctuations. The fair value of consideration as at 31 July 2006 comprised:

	£m
Cash	108.3
Shares	77.3
Deferred consideration – cash	16.2
– shares	24.0
Contingent consideration – cash	11.6
Consideration (including £4.8m expenses)	237.4

(b) World Gaming
On 1 October 2004, the Group restructured its relationship with World Gaming Plc from an investment in an associate to a joint venture arrangement. The fair value of consideration, including the original investment in associate, as at 31 July 2005 comprised:

	£m
Cash	6.4
Deferred consideration – cash	2.3
Consideration (including expenses of £0.7m)	8.7

The investment, including deferred cash consideration, is denominated in US dollars and is therefore subject to exchange rate fluctuations. The fair value of consideration as at 31 July 2006 comprised:

	£m
Cash	8.2
Consideration (including expenses of £0.7m)	8.2

The whole of the purchase price has been treated as goodwill as both the book and fair values of the assets acquired were negligible.

(c) ISC Entertainment Inc
On 31 July 2005 the Group acquired the business and certain assets of ISC Entertainment Inc (‘ISC’), previously a white label partner of the Group and the owner of certain US-facing sports betting and gaming marketing operations including mysportsbook.com.

The fair value of consideration as at 31 July 2005 comprised:

	£m
Cash to be paid	9.7
Shares to be issued	10.2
Contingent consideration – cash	2.9
Consideration (including expenses of £0.3m)	22.8

The investment, including contingent cash consideration, is denominated in US dollars and is therefore subject to exchange rate fluctuations.

The fair value of consideration as at 31 July 2006 comprised:

	£m
Cash	9.2
Shares	9.6
Contingent consideration – cash	2.8
Consideration (including £5.1m expenses)	21.6

Contingent consideration payments due to the vendor are based on profit performance within the three years ending 31 July 2008, and may fall due before that date.

23. Acquisitions

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