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Annual Report & Accounts 2014 - REPORT OF THE CHIEF EXECUTIVE
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in 2014 gvc delivered excellent operational and organic growth across the broad spread of markets in which the group operates. the Board is pleased to report a series of significant increases over those achieved in 2013 across all key financial metrics as shown below. percentage 2014 2013 increase (€) (€) Sports wagers 25% 1.5 billion 1.2 billion proforma revenue 23% 225 million 182 million NGr 32% 225 million 170 million contribution 20% 123 million 103 million clean EBItDa 28% 49.2 million 38.3 million operating profit 204% 42.9 million 14.1 million profit before tax 217% 41.3 million 13.0 million Basic EpS 195% 66.4 cents 22.5 cents Dividends declared 14% 55.5 cents 48.5 cents Totals may not sum due to rounding and percentages have been calculated on the underlying rather than the summarised figures. the group has achieved a record level of clean eBitda for 2014 at €49.2 million which is 28% higher than the prior year, giving rise to clean net operating cash flows of €42.6 million. while the focus of 2013 was the integration of the transformational sportingbet acquisition, 2014 was about identifying where gvc's products and services could be improved, positioning the group for the 2014 world cup and using this as an event to secure organic growth. the world cup was a resounding success for the group. not only was the four week event itself prosperous for the group, particularly in the host country, Brazil, but the event led to a 'step-change' in the retention and acquisition of customers beyond the world cup final in many of the territories in which the group operates. gvc invested approximately €7 million into marketing around the world cup and reaped an immediate benefit in profitability which, following its policy on dividend distribution, allowed the group in september 2014 to declare a special dividend of 1.5 €cents, and thus returned €1.5 million of the world cup net profits (approximately €2 million) back to shareholders, in line with its stated dividend policy. in line with its strategy for 2014, gvc invested in its products. these investments which totaled €3.3 million (2013: €4k) have been capitalised as required under ias 38 'intangible assets'. given that mobile is fast becoming the natural choice for players in many markets, continued investment in mobile is seen to be key to future success. in addition, gvc has broadened its games offering through third party integration. as stated previously, the ability to offer market leading in-play products is a significant milestone in unlocking additional organic growth opportunities. in addition, efforts in widening our payments capability and content to assist the expansion of our in-play market were key achievements as in-play represented 70% of sports gross gaming revenue (“ggr”) in Q4 2014. in order to continue the growth momentum achieved in 2014, the strategic product investments gvc plan for 2015 will be around 50% higher than 2014. we believe that increased investment will not only help maintain gvc's position in its current markets but also be accretive to revenue, as already evidenced by the growth in wagering and gaming revenues. average daily KpIs expressed Year on year prior quarter history in €000s Q1-2015* Q1-2014 change Q2-2014 Q3-2014 Q4-2014 Sports wagers 4,601 3,765 +22% 3,907 3,995 4,366 Sports Margin % 8.9% 10.0% 9.8% 10.5% 9.0% Sports GGr** % - In play 73% 67% 59% 61% 70% - Mobile 35% 21% 24% 28% 34% Sports NGr 306 279 +10% 296 330 302 Gaming NGr 355 280 +27% 306 325 345 total NGr 661 559 +18% 602 655 647 * to 18 March 2015. ** wagers less payouts before bonuses. ANNUAL REPORT 2014 6 rEport oF thE chIEF ExEcUtIvE