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Annual Report & Accounts 2013 - REPORT OF THE CHIEF EXECUTIVE
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I am pleased to report a series of significant increases over 2012: 2013 2012 Percentage (€) (€) Increase Sports wagers 1.2 billion 0.5 billion 125% Proforma Revenue* 181 million 107 million 69% NGR 168 million 60 million 179% Contribution 103 million 36 million 181% Clean EBITDA 38.3 million 15.6 million 148% Normalised EPS 58.6 cents 32.1 cents 83% Dividends declared 48.5 cents 22.0 cents 120% Totals may not sum due to rounding and percentages have been calculated on the underlying rather than the summarised figures. * as described in the Chairman's report of 25 March 2013, being the underlying levels for the business as if the revenues of the B2B partner, East Pioneer Corporation BV were fully consolidated in the results of GVC. GVC has achieved a record level of Clean EBITDA for 2013 at €38.3 million which is ahead of recently upgraded market expectations. The financial turnaround of Sportingbet was completed during the year with significant restructuring, and the acquired business returned to profitability, making a contribution to Clean EBITDA of €4.7 million. This financial turnaround has allowed GVC not only to pay a quarterly dividend of 11.5 €cents in line with what it had already paid earlier in 2014, but also to announce a special dividend of a further 4.5 €cents. This means that the total dividend declared for the year is 48.5 €cents, an increase of 120% on 2012 (22.0 €cents). In Sportingbet, GVC has acquired and developed further a market leading sports platform, and it is this, together with a more "fit for purpose" corporate infrastructure, which has allowed the Board to be ready for further acquisitions and investments. GVC is already benefiting from the successful integration of Sportingbet and this can be seen in the record levels of trading in Q1-2014, with revenues exceeding €50 million per quarter for the first time. However, whatever the size of the transactions the GVC Board looks at, none will be considered if they might undermine the maintenance of the dividend for our shareholders. The principal aims of GVC in 2013 were to: • Complete the acquisition and integration of Sportingbet at minimal cost and dilution to shareholders; • Deliver significant synergies on the Sportingbet integration; • Enhance the dividend for shareholders; and • Improve the overall product offering, particularly in the mobile channel. Shareholders and customers alike have benefited from all of the above. Of particular note, in my statement for last year, I was hopeful that GVC would restore the dividend by November 2013. In fact, in July 2013 GVC announced a 50% increase in its quarterly dividend to 10.5 €cents up from 7.0 €cents declared in January 2013, and the Board then declared a further 10.5 €cents in September 2013. In January 2014, the dividend was increased again by 1 €cent (a rise of 9.5%) to 11.5 €cents. After eight months of negotiations, the deal to acquire the non-Australian business of Sportingbet was completed on 19 March 2013. GVC passed on Sportingbet's Spanish business to William Hill, as previously agreed, on 16 September 2013. The Group had its shares suspended at 233.5 pence on 16 October 2012 and on 20 March 2013, the date on which the new GVC shares were admitted to trading, the shares closed at 247 pence. The business of Sportingbet was profoundly indebted, loss-making and cash-burning. In the nine and a half months since acquisition, GVC has converted these substantial losses into a profit of just under €5 million but with the majority of this being generated in the back-end of the year, with €3.8 million being earned in Q4-2013. ANNUAL REPORT 2013 6 REPORT OF THE CHIEF EXECUTIVE