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Annual Report & Accounts 2012 - REPORT OF THE GROUP FINANCE DIRECTOR
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ANNUAL REPORT 2012 GVC H o l d i n g s This review is in four sections: 1. Income statement; 2. Cashflow; 3. Balance sheet; and 4. Key financial issues for 2013. 1. Income statement The income statement reflects Betaland as a discontinued activity and therefore the comparatives for 2011 are restated. The complex deal with EPC and Superbahis results in a combination of revenues and costs normally being associated with gaming activities being compressed into a composite revenue figure, not easily expressed into the Group's preferred KPI measure of "revenue per day". For this reason, the Group describes the underlying activities in more conventional terms such as "sports wagers" and "sports margin" and "revenue per day" although the latter for B2B is referred to here as "pro-forma revenue per day" (PFR). This is in advance of the accounting treatment required following the acquisition of Sportingbet plc and the elimination of the revenue-share arrangements. 1.1 Proforma revenues Total revenues rose 116% to €104.2 million (2011: €48.3 million). The dominant reason for the increase was the full-year's activity of the Superbahis customers, of EPC, to whom the Group provides B2B services. Betboo's revenues increased by 17% to €10.3 million from €8.8 million, whilst CasinoClub decreased by 4% to €28.1 million from €29.4 million. 1.2 Net Gaming Revenue NGR is Gross Gaming Revenue less customer bonuses, bad debts and chargebacks, and in the case of the agreement with EPC, is net of the certain allowable costs (such as payment processing, and software royalties and affiliate commissions associated with the Superbahis product), along with the revenue-share payable to Sportingbet. Total NGR increased by €15.3 million (34%) to €59.6 million (2011: €44.3 million). €15 million of this increase was attributable to B2B; €1.5 million was attributable to Betboo, whilst CasinoClub revenue fell by €1.2 million. 1.3 Variable costs These consist of payment processing fees, software royalties, and affiliate and other marketing arrangements. 1.4 Contribution Contribution is NGR less variable costs and it increased by €14.5 million to €35.1 million. This increase is attributable between: 2012 2011 Increase €million €million €million B2B 15.2 2.8 12.4 CasinoClub 16.3 15.5 0.8 Betboo 3.6 2.3 1.3 35.1 20.6 14.5 The rise in B2B contribution reflected a full year's activity, whilst for CasinoClub the increase was a result of tight cost control. Betboo's increase was attributable to higher revenues. The relative contribution ratios were: 10 REPORT OF THE GROUP FINANCE DIRECTOR