Annual Report & Accounts 2012 - REPORT OF THE CHIEF EXECUTIVE
ANNUAL REPORT 2012 GVC H o l d i n g s
Aggregate revenues have, given a full year of operation, been extremely significant for the Group,
amounting to €21.2 million in 2012 compared to just €6.1 million in 2011.
Average PFR per day has increased from €80k in Q4-2011 to €210k per day in Q4-2012.
The B2B division delivered a contribution margin of 72% with a cost base at €7.9 million reflecting a
whole year of staff and office costs in supporting the revenue stream. At the end of the year, the
headcount associated with this division was 70.
A feature of the B2B division is that it is more working capital intensive than our other businesses with
just under €16 million of net current assets and €14 million of current liabilities.
CasinoClub revenue at €28.1 million was marginally lower than 2011 (€29.4 million). €0.3 million of this
reduction was associated with lower poker revenue, a trend experienced in many other gaming
Contribution margin improved both in terms of percentage, 58% for 2012 (2011: 53%) and absolute
terms, €16.3 million for 2012 (2011: €15.5 million).
At the end of the year, the headcount associated with this division was 56.
Revenues grew by 17% to €10.3 million, up from €8.8 million in 2011. This was despite a lower sports
hold at an aggregate of 8.5% (2011: 10.8%). The fact that wagers increased 81% from €24.4 million to
€44.1 million is most encouraging.
There were additional investments in marketing and infrastructure to support this growth and
accordingly the Clean EBITDA loss at €1.4 million (2011: loss €1.5 million), was contained well. The
underlying headcount at the end of the year was 120. The Group has embarked on an internal
restructuring which aims to make meaningful reductions in the Betboo cost base, and lead to an
improvement in its financial performance.
Early in the year, the Board concluded that the markets in which Betaland operated were worsening
and that the Group was not well placed to make any significant long-term returns from this business.
By continuing Betaland in operation, the Group might have been burdened with some substantial
closure costs. The disposal to an external third-party managed to contain these losses.
The most significant development in the Group's history is the acquisition of Sportingbet plc which was
completed on 19 March 2013 and which was approved by an overwhelming vote of GVC shareholders
on 21 February 2013.
The transaction was completed with William Hill plc, the UK's leading bookmaker. William Hill plc has
now taken over Sportingbet's Australian business (and the Sportingbet brand in Australia), certain
freehold properties and, after six months, an option to acquire Sportingbet's Spanish brand, "Miapuesta".
The Group has acquired the Sportingbet brand in all other territories, along with a number of significant
other brands. Additionally, the transaction allows the Group to enjoy substantially all of the revenue from
the Superbahis business.
However, and as outlined in the Group's prospectus, the Group has to undertake a substantial
restructuring of Sportingbet to turnaround the historic cash burn suffered by that business, and does
inherit its existing liabilities along with the assets. The Group will be discharging these debts along with
the combined deal costs. I have every confidence that my Board colleagues and I can achieve the
restructuring in the 12 months timeframe indicated in the prospectus.
REPORT OF THE CHIEF EXECUTIVE continued