TORONTO, Nov. 7, 2018 /PRNewswire/ -- The Stars Group Inc.
(NASDAQ: TSG) (TSX: TSGI) today reported its financial results for
the third quarter ended September 30,
2018 and provided certain additional highlights and updates.
Unless otherwise noted, all dollar ($) amounts are in U.S.
dollars.
"This was a landmark quarter during a transformative year for
the company as we begin to deliver on our vision to become the
world's favorite iGaming destination," stated Rafi Ashkenazi, The
Stars Group's Chief Executive Officer. "We completed our
acquisition of Sky Betting & Gaming, which was cleared by the
CMA in October, making us the leader in the UK online betting and
gaming market. We also launched BetEasy in Australia and sports betting in New Jersey."
"We are pleased with our quarterly results, which reflect both
continued organic growth from our International business and
contributions from both BetEasy and Sky Betting & Gaming,
despite unfavorable sporting results during the period," said Mr.
Ashkenazi.
"As we continue our transformation and look towards 2019, we are
excited to take advantage of the opportunities ahead of us by
leveraging our leading positions in attractive markets, strong
brands, technology and operating expertise," concluded Mr.
Ashkenazi.
Third Quarter 2018 Summary
Consolidated
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
In thousands of U.S.
Dollars
(except percentages
and per share amounts)
|
|
2018
|
|
2017
|
|
%
Change
|
|
2018
|
|
2017
|
|
%
Change
|
|
Total
Revenue
|
|
571,983
|
|
329,443
|
|
73.6%
|
|
1,376,386
|
|
952,065
|
|
44.6%
|
|
Gross
Profit
|
|
442,757
|
|
266,966
|
|
65.8%
|
|
1,083,259
|
|
774,460
|
|
39.9%
|
|
Operating
Income
|
|
70,901
|
|
118,724
|
|
(40.3%)
|
|
185,832
|
|
335,128
|
|
(44.5%)
|
|
Net Earnings
(loss)
|
|
9,730
|
|
75,874
|
|
(87.2%)
|
|
(70,733)
|
|
212,110
|
|
(133.3%)
|
|
Adjusted Net Earnings
¹
|
|
119,500
|
|
119,595
|
|
(0.1%)
|
|
389,285
|
|
346,990
|
|
12.2%
|
|
Adjusted EBITDA
¹
|
|
198,252
|
|
155,767
|
|
27.3%
|
|
541,545
|
|
453,305
|
|
19.5%
|
|
Adjusted EBITDA
Margin ¹
|
|
34.7%
|
|
47.3%
|
|
(26.7%)
|
|
39.3%
|
|
47.6%
|
|
(17.4%)
|
|
Diluted (loss)
earnings per Common Share ($/Share)
|
|
0.06
|
|
0.37
|
|
(84.9%)
|
|
(0.34)
|
|
1.05
|
|
(132.3%)
|
|
Adjusted Diluted Net
Earnings per Share ($/Share) ¹
|
|
0.45
|
|
0.58
|
|
(23.8%)
|
|
1.67
|
|
1.71
|
|
(2.2%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
|
73,227
|
|
144,870
|
|
(49.5%)
|
|
369,307
|
|
370,843
|
|
(0.4%)
|
|
Free Cash Flow
¹
|
|
(26,723)
|
|
95,306
|
|
(128.0%)
|
|
140,392
|
|
255,028
|
|
(45.0%)
|
|
_____________________________
|
|
1 Non-IFRS
measure. For important information on The Stars Group's non-IFRS
measures, see below under "Non-IFRS Measures" and the tables under
"Reconciliation of Non-IFRS Measures to Nearest IFRS
Measures".
|
- Total Revenues – Revenues for the quarter increased
73.6% year-over-year primarily as a result of the contribution of
revenue from the acquisitions of Sky Betting & Gaming ("SBG")
and BetEasy, as well as organic growth in the International
segment.
- Adjusted EBITDA and Adjusted EBITDA Margin – Adjusted
EBITDA for the quarter increased 27.3% year-over-year, primarily
driven by the impact of the acquisitions of SBG and BetEasy and by
increased gross profit from organic growth within the International
segment. Adjusted EBITDA Margin for the quarter decreased 26.7%
year-over-year, primarily driven by the higher contribution from
the Betting and Gaming verticals within each segment.
- Consolidated Debt and Cash – The total principal amount
owing on long-term debt outstanding at the end of the quarter was
$5.65 billion with a carrying value
of $5.52 billion. The Stars Group
ended the third quarter of 2018 with approximately $419 million in operational cash on its balance
sheet, which translated into Net Debt of $5.1 billion. Subsequent to the quarter end, on
October 24, 2018, The Stars Group
fully repaid the $100 million
outstanding on its revolving credit facility using cash on its
balance sheet.
- U.S. Sports Betting Update – On August 10, 2018, The Stars Group and Mount Airy
Casino Resort announced a partnership to enter Pennsylvania's online sports wagering and
gaming market, where The Stars Group will offer to customers in
Pennsylvania its online poker,
casino (including slots and tables) and sports wagering products.
On September 13, 2018, The Stars
Group launched its BetStars online sports betting brand in
New Jersey through its partnership
with Resorts Casino Hotel. The offering, which is initially
available through mobile, provides New
Jersey customers with an innovative and robust mobile-led
sportsbook alongside The Stars Group's already existing online
poker and casino offerings available through the PokerStarsNJ and
PokerStars Casino NJ brands.
- Sky Betting & Gaming Update – On July 10, 2018, The Stars Group completed the
previously announced Sky Betting & Gaming acquisition for
$4.7 billion, and on October 11, 2018, the UK Competition &
Markets Authority cleared the acquisition, allowing The Stars Group
to begin executing on its integration plans. As it relates to the
previously announced expected synergies of at least $70 million, The Stars Group currently believes
that approximately 53% will relate to headcount and other staff
costs, 23% to purchasing costs and 24% to other cost savings. In
addition, The Stars Group currently estimates that it may achieve
approximately $5 million of such
synergies before year end, followed by a further $50 million in 2019 and an additional
$15 million in 2020. The Stars Group
continues to expect approximately $85
million in implementation costs to achieve those synergies,
with the majority of such costs being incurred in 2019.
International
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
In thousands of U.S.
Dollars (except otherwise noted)
|
|
2018
|
|
2017
|
|
%
Change
|
|
2018
|
|
2017
|
|
%
Change
|
|
Stakes
|
|
233,694
|
|
163,844
|
|
42.6%
|
|
705,251
|
|
451,699
|
|
56.1%
|
|
Betting Net Win
Margin (%)
|
|
9.0%
|
|
7.1%
|
|
26.1%
|
|
8.1%
|
|
6.1%
|
|
33.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Poker
|
|
212,832
|
|
221,393
|
|
(3.9%)
|
|
675,688
|
|
642,946
|
|
5.1%
|
|
Gaming
|
|
107,602
|
|
83,474
|
|
28.9%
|
|
316,253
|
|
243,959
|
|
29.6%
|
|
Betting
|
|
21,030
|
|
11,688
|
|
79.9%
|
|
57,351
|
|
27,541
|
|
108.2%
|
|
Other
2
|
|
10,982
|
|
12,888
|
|
(14.8%)
|
|
35,155
|
|
37,619
|
|
(6.5%)
|
|
Total
Revenue
|
|
352,446
|
|
329,443
|
|
7.0%
|
|
1,084,447
|
|
952,065
|
|
13.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
287,522
|
|
266,966
|
|
7.7%
|
|
873,444
|
|
774,460
|
|
12.8%
|
|
Gross Profit Margin
(%)
|
|
81.6%
|
|
81.0%
|
|
0.7%
|
|
80.5%
|
|
81.3%
|
|
(1.0%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
111,295
|
|
95,250
|
|
16.8%
|
|
319,668
|
|
276,798
|
|
15.5%
|
|
Sales and
marketing
|
|
31,912
|
|
32,624
|
|
(2.2%)
|
|
119,136
|
|
97,914
|
|
21.7%
|
|
Research and
development
|
|
6,808
|
|
6,030
|
|
12.9%
|
|
22,985
|
|
18,513
|
|
24.2%
|
|
Operating
Income
|
|
137,507
|
|
133,062
|
|
3.3%
|
|
411,655
|
|
381,235
|
|
8.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA ¹
|
|
182,228
|
|
162,880
|
|
11.9%
|
|
533,025
|
|
478,264
|
|
11.4%
|
|
Adjusted EBITDA
Margin (%) ¹
|
|
51.7%
|
|
49.4%
|
|
4.6%
|
|
49.2%
|
|
50.2%
|
|
(2.2%)
|
|
_____________________________
|
|
1 Non-IFRS
measure. For important information on The Stars Group's non-IFRS
measures, see below under "Non-IFRS Measures" and the tables under
"Reconciliation of Non-IFRS Measures to Nearest IFRS
Measures".
|
|
2 Other
revenue includes $1.0 million that the Corporation excluded from
its consolidated results as it related to certain non-gaming
related transactions with the United Kingdom segment.
|
- Poker – Poker revenue for the quarter was $212.8 million, or a decrease of approximately
3.9% year-over-year. Excluding the impact of year-over-year changes
in foreign exchange rates, Poker revenues for the quarter would
have increased by 0.3%. The reported decrease was primarily driven
by foreign exchange fluctuations, the cessation of operations in
certain markets, notably Australia
in September 2017, and cross selling
to other verticals (particularly during the FIFA World Cup), and
offset by, among other things, the Stars Rewards loyalty
program (introduced during the quarter ended September 30, 2017) and the introduction of
shared poker liquidity in France
and Spain in the first quarter and
Portugal in the second
quarter.
- Gaming – Gaming revenue for the quarter was $107.6 million, or an increase of 28.9%
year-over-year. Excluding the impact of year-over-year changes in
foreign exchange rates, Gaming revenues for the quarter would have
increased by 32.5%. The reported increase was primarily the result
of product and content improvements to PokerStars Casino,
including the introduction of over 250 new casino games since the
beginning of the year and the launch of PokerStars Casino in
certain new markets. This was partially offset by, among other
things, the impact of year-over-year changes in foreign exchange
rates.
- Betting – Betting revenue for the quarter was
$21.0 million, or an increase of
79.9% year-over-year. Excluding the impact of year-over-year
changes in foreign exchange rates, Betting revenues for the quarter
would have increased by 86.5%. The reported increase was primarily
the result of increases in Stakes and Betting Net Win Margin. These
increases were primarily driven by increased wagering activity due
to product and content improvements to BetStars, the launch
of BetStars in certain new markets, and the 2018 FIFA World
Cup.
- Adjusted EBITDA and Adjusted EBITDA Margin – Adjusted
EBITDA for the quarter increased 11.9% year-over-year, primarily
driven by increased revenue and gross profit across all segments as
noted above. Adjusted EBITDA Margin for the quarter increased 4.6%
year-over-year, primarily driven by increased revenues combined
with operational leverage from additional product and content
improvements and a decline in sales and marketing expenses in the
quarter.
- Quarterly Real-Money Active Uniques (QAUs) – QAUs were
2.0 million, which represents a decrease of 3.1% year-over-year.
This decrease was primarily the result of the cessation of
real-money online poker operations in certain markets, notably
Australia in September 2017, and The Stars Group's continued
strategy of focusing on high-value customers (primarily
recreational players), as offset by the growth and expansion of the
real-money casino and betting product offerings.
- Quarterly Net Yield (QNY) – QNY was $167, an increase of 11.3% year-over-year, and
QNY excluding the impact of year-over-year changes in foreign
exchange rates was $174, an increase
of 16.0% year-over-year. QNY is a non-IFRS measure.
- Net Deposits – Net Deposits were $335 million, an increase of 4.1% year-over-year.
The increase was primarily driven by the implementation of the
Stars Rewards loyalty program and continued focus on
high-value customers (primarily recreational players), foreign
exchange fluctuations and continued development of the casino and
betting product offerings.
- Stakes and Betting Net Win Margin – Stakes were
$233.7 million, an increase of 42.6%
year-over-year, and Betting Net Win Margin was 9.0%, an increase of
1.9 percentage points year-over-year. The increases in the quarter
were primarily due to product and content improvements to
BetStars driving incremental QAUs, the launch of
BetStars in certain new markets, and the World Cup. The
Betting Net Win Margin for the International segment is less
exposed to the English Premier League and UK horse racing, and as
such, was not impacted to the same extent by the
operator-unfavorable results The Stars Group experienced within the
United Kingdom segment as a
whole.
United
Kingdom
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
In thousands of U.S.
Dollars (except otherwise noted)
|
|
2018
|
|
2017
|
|
%
Change
|
|
2018
|
|
2017
|
|
%
Change
|
|
Stakes
|
|
1,221,854
|
|
—
|
|
—
|
|
1,221,854
|
|
—
|
|
—
|
|
Betting Net Win
Margin (%)
|
|
7.0%
|
|
—
|
|
—
|
|
7.0%
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Poker
|
|
2,884
|
|
—
|
|
—
|
|
2,884
|
|
—
|
|
—
|
|
Gaming
|
|
73,318
|
|
—
|
|
—
|
|
73,318
|
|
—
|
|
—
|
|
Betting
|
|
85,189
|
|
—
|
|
—
|
|
85,189
|
|
—
|
|
—
|
|
Other
|
|
6,989
|
|
—
|
|
—
|
|
6,989
|
|
—
|
|
—
|
|
Total
Revenue
|
|
168,380
|
|
—
|
|
—
|
|
168,380
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
121,226
|
|
—
|
|
—
|
|
121,226
|
|
—
|
|
—
|
|
Gross Profit Margin
(%)
|
|
72.0%
|
|
—
|
|
—
|
|
72.0%
|
|
—
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
General and
administrative
|
|
104,697
|
|
—
|
|
—
|
|
104,697
|
|
—
|
|
—
|
|
Sales and marketing
2
|
|
40,224
|
|
—
|
|
—
|
|
40,224
|
|
—
|
|
—
|
|
Research and
development
|
|
4,940
|
|
—
|
|
—
|
|
4,940
|
|
—
|
|
—
|
|
Operating
Loss
|
|
(28,635)
|
|
—
|
|
—
|
|
(28,635)
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA ¹
|
|
27,943
|
|
—
|
|
—
|
|
27,943
|
|
—
|
|
—
|
|
Adjusted EBITDA
Margin (%) ¹
|
|
16.6%
|
|
—
|
|
—
|
|
16.6%
|
|
—
|
|
—
|
|
____________________________
|
|
1 Non-IFRS
measure. For important information on The Stars Group's non-IFRS
measures, see below under "Non-IFRS Measures" and the tables under
"Reconciliation of Non-IFRS Measures to Nearest IFRS
Measures".
|
|
2 Sales
and marketing expense includes $1.0 million that the Corporation
excluded from its consolidated results as it related to certain
non-gaming related transactions with the United Kingdom
segment.
|
- Revenue, Adjusted EBITDA and Adjusted EBITDA Margin –
Revenue from July 10, 2018 through
the end of the quarter ended September 30,
2018, was $168.4 million.
Adjusted EBITDA and Adjusted EBITDA Margin for the same period were
$27.9 million and 16.6%,
respectively. Revenue for the period was primarily impacted by low
Betting Net Win Margin when compared to historical averages driven
by particularly operator-unfavorable sports results. This was
partially offset by strong Stakes during the period, due to strong
growth in QAUs. Adjusted EBITDA and Adjusted EBTIDA Margin were
similarly impacted by the low Betting Net Win Margin and were also
impacted by marketing investment for the start of the European
football season.
- Stakes and Betting Net Win Margin – Stakes and Betting
Net Win Margin from July 10, 2018
through the end of the quarter ended September 30, 2018 were $1.22 billion and 7.0%, respectively. The Betting
Net Win Margin can vary significantly from quarter to quarter;
however, over the long term, the Corporation believes that these
margins tend to become more predictable. The Betting Net Win Margin
is below SBG's expected long-term average of approximately 9%
primarily as a result of operator-unfavorable results in English
Premier League football and horse racing, which collectively
represent a significant portion of Stakes. The Stars Group believes
that had Betting Net Win Margin been 9% during the period, Betting
revenue would have been $110.0
million as opposed to $85.2
million.
Australia
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
In thousands of U.S.
Dollars (except otherwise noted)
|
|
2018
|
|
2017
|
|
%
Change
|
|
2018
|
|
2017
|
|
%
Change
|
|
Stakes
|
|
825,438
|
|
—
|
|
—
|
|
1,693,164
|
|
—
|
|
—
|
|
Betting Net Win
Margin (%)
|
|
6.3%
|
|
—
|
|
—
|
|
7.4%
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Betting
|
|
52,157
|
|
—
|
|
—
|
|
124,559
|
|
—
|
|
—
|
|
Total
Revenue
|
|
52,157
|
|
—
|
|
—
|
|
124,559
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
35,154
|
|
—
|
|
—
|
|
89,589
|
|
—
|
|
—
|
|
Gross Profit Margin
(%)
|
|
67.4%
|
|
—
|
|
—
|
|
71.9%
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
39,963
|
|
—
|
|
—
|
|
84,588
|
|
—
|
|
—
|
|
Sales and
marketing
|
|
21,050
|
|
—
|
|
—
|
|
37,523
|
|
—
|
|
—
|
|
Research and
development
|
|
114
|
|
—
|
|
—
|
|
1,098
|
|
—
|
|
—
|
|
Operating
Loss
|
|
(25,973)
|
|
—
|
|
—
|
|
(33,620)
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA ¹
|
|
(4,764)
|
|
—
|
|
—
|
|
7,861
|
|
—
|
|
—
|
|
Adjusted EBITDA
Margin (%) ¹
|
|
(9.1%)
|
|
—
|
|
—
|
|
6.3%
|
|
—
|
|
—
|
|
_____________________________
|
|
1 Non-IFRS
measure. For important information on The Stars Group's non-IFRS
measures, see below under "Non-IFRS Measures" and the tables under
"Reconciliation of Non-IFRS Measures to Nearest IFRS
Measures".
|
- Revenue, Adjusted EBITDA and Adjusted EBITDA Margin –
Revenue for the quarter was $52.2
million. Adjusted EBITDA and Adjusted EBITDA Margin for the
same period were $(4.8) million and
(9.1)%, respectively. Revenue for the quarter was impacted by low
Betting Net Win Margin when compared to historical averages driven
by particularly operator-unfavorable sports results.
- Stakes and Betting Net Win Margin – Stakes and Betting
Net Win Margin for the quarter ended September 30, 2018 were $825.4 million and 6.3%, respectively. The
Betting Net Win Margin can vary significantly from quarter to
quarter; however, over the long term, the Corporation believes that
these margins tend to become more predictable. The Betting Net Win
Margin is below BetEasy's long-term average of 8.5% primarily as a
result of operator-unfavorable results in horse racing, which
represents a significant portion of Stakes. The Stars Group
believes that had Betting Net Win Margin been 8.5% during the
quarter, Betting revenue would have been $70.2 million as opposed to $52.2 million.
For additional information regarding The Stars Group's reporting
segments and major lines of operations, please see The Stars
Group's unaudited interim condensed consolidated financial
statements for the three and nine months ended September 30, 2018 (the "Q3 2018 Financial
Statements"), including note 6 therein, and management's discussion
and analysis thereon (the "Q3 2018 MD&A").
Historic Supplemental Information and 2019 Update
Due to its recent acquisitions of SBG and BetEasy and to provide
additional clarity with respect to the historical performance of
The Stars Group's business on a proforma basis for the three and
nine months ended September 30, 2018
and 2017, and presented based on The Stars Group's current
reporting segments and lines of operations, see the information
below under the heading "Supplementary Information". Certain of
this information contains non-IFRS measures. For important
information on The Stars Group's non-IFRS measures, see below under
"Non-IFRS Measures" and the tables under "Reconciliation of
Non-IFRS Measures to Nearest IFRS Measures".
In addition, to provide further clarity with respect to the
potential impact of such acquisitions on its full year 2019
results, The Stars Group is also providing information for certain
financial items:
- Depreciation and amortization excluding purchase price
allocation amortization of between $65 and $75
million;
- Cash interest expense of between $295 and $305
million;
- Effective tax rate (applied to Adjusted EBITDA less cash
interest expense and non-purchase price allocation related
depreciation and amortization) of between 8.0 and 10.0%; and
- Diluted Shares of between 274 and 278 million.
These unaudited expected financial items are based on certain
accounting assumptions and reflect management's view of current and
future market and business conditions, including assumptions of (i)
no material impairment or write-down of the assets to which this
depreciation and amortization relates, (ii) no material change in
the prevailing EURIBOR or LIBOR rates as at September 30, 2018 and no material adverse impact
on applicable hedging counterparties, (iii) no material change in
the mix of taxable income by jurisdiction, in the rate of corporate
tax or tax regimes in the jurisdictions in which The Stars Group
currently operates and no material change in the geographies where
The Stars Group currently offers its products, (iv) no material
increases or decreases in The Stars Group's issued and outstanding
shares, (v) no other material regulatory events, and (vi) no
material foreign currency exchange rate fluctuations, particularly
against the Euro, Great Britain
pound sterling and Australian dollar.
Supplementary information
|
|
Proforma
Three Months Ended
September 30, 2018
|
|
In millions of U.S.
Dollars
|
|
International
|
|
United
Kingdom
|
|
Australia2
|
|
Corporate3
|
|
Consolidated
|
|
Stakes
|
|
233.7
|
|
1,404.7
|
|
825.4
|
|
—
|
|
2,463.8
|
|
Betting Net Win
Margin
|
|
9.0%
|
|
7.3%
|
|
6.3%
|
|
—
|
|
7.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Poker
|
|
212.8
|
|
3.2
|
|
—
|
|
—
|
|
216.0
|
|
Gaming
|
|
107.6
|
|
83.9
|
|
—
|
|
—
|
|
191.5
|
|
Betting
|
|
21.0
|
|
102.3
|
|
52.2
|
|
—
|
|
175.5
|
|
Other
|
|
11.0
|
|
8.4
|
|
—
|
|
(1.0)
|
|
18.4
|
|
Total
|
|
352.4
|
|
197.8
|
|
52.2
|
|
(1.0)
|
|
601.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(loss)
|
|
137.5
|
|
(67.9)
|
|
(26.0)
|
|
(12.0)
|
|
31.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA1
|
|
182.2
|
|
37.5
|
|
(4.8)
|
|
(7.2)
|
|
207.7
|
|
Adjusted EBITDA
Margin1
|
|
51.7%
|
|
19.0%
|
|
(9.1%)
|
|
—
|
|
34.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
QAUs
(millions)
|
|
2.0
|
|
2.0
|
|
0.3
|
|
—
|
|
4.3
|
|
Proforma
Three Months Ended
September 30, 2017
|
|
In millions of U.S.
Dollars
|
|
International
|
|
United
Kingdom
|
|
Australia2
|
|
Corporate
|
|
Consolidated
|
|
Stakes
|
|
163.8
|
|
1,207.6
|
|
437.1
|
|
—
|
|
1,808.5
|
|
Betting Net Win
Margin
|
|
7.1%
|
|
9.0%
|
|
9.1%
|
|
—
|
|
8.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Poker
|
|
221.4
|
|
3.6
|
|
—
|
|
—
|
|
225.0
|
|
Gaming
|
|
83.5
|
|
72.8
|
|
—
|
|
—
|
|
156.3
|
|
Betting
|
|
11.7
|
|
108.4
|
|
39.7
|
|
—
|
|
159.8
|
|
Other
|
|
12.8
|
|
6.6
|
|
—
|
|
—
|
|
19.4
|
|
Total
|
|
329.4
|
|
191.4
|
|
39.7
|
|
—
|
|
560.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(loss)
|
|
133.1
|
|
(24.7)
|
|
(10.0)
|
|
(14.3)
|
|
84.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA1
|
|
162.9
|
|
54.7
|
|
(2.9)
|
|
(7.1)
|
|
207.6
|
|
Adjusted EBITDA
Margin1
|
|
49.4%
|
|
28.6%
|
|
(7.3%)
|
|
—
|
|
37.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
QAUs
(millions)
|
|
2.1
|
|
1.6
|
|
0.1
|
|
—
|
|
3.8
|
|
|
Proforma
Nine Months Ended
September 30, 2018
|
|
In millions of U.S.
Dollars
|
|
International
|
|
United
Kingdom
|
|
Australia2
|
|
Corporate3
|
|
Consolidated
|
|
Stakes
|
|
705.3
|
|
4,194.9
|
|
1,982.2
|
|
|
|
6,882.4
|
|
Betting Net Win
Margin
|
|
8.1%
|
|
8.9%
|
|
7.6%
|
|
—
|
|
8.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Poker
|
|
675.7
|
|
10.5
|
|
—
|
|
—
|
|
686.2
|
|
Gaming
|
|
316.2
|
|
244.2
|
|
—
|
|
—
|
|
560.4
|
|
Betting
|
|
57.3
|
|
372.0
|
|
150.4
|
|
—
|
|
579.7
|
|
Other
|
|
35.2
|
|
27.2
|
|
—
|
|
(1.0)
|
|
61.4
|
|
Total
|
|
1,084.4
|
|
653.9
|
|
150.4
|
|
(1.0)
|
|
1,887.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(loss)
|
|
411.7
|
|
(177.8)
|
|
(35.4)
|
|
(163.5)
|
|
35.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA1
|
|
533.0
|
|
161.4
|
|
13.5
|
|
(27.3)
|
|
680.6
|
|
Adjusted EBITDA
Margin1
|
|
49.2%
|
|
24.7%
|
|
9.0%
|
|
—
|
|
36.1%
|
|
|
Proforma
Nine Months Ended
September 30, 2017
|
|
In millions of U.S.
Dollars
|
|
International
|
|
United
Kingdom
|
|
Australia2
|
|
Corporate
|
|
Consolidated
|
|
Stakes
|
|
451.7
|
|
3,728.6
|
|
1,194.5
|
|
—
|
|
5,374.8
|
|
Betting Net Win
Margin
|
|
6.1%
|
|
8.5%
|
|
9.2%
|
|
—
|
|
8.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Poker
|
|
643.0
|
|
10.6
|
|
—
|
|
—
|
|
653.6
|
|
Gaming
|
|
244.0
|
|
206.4
|
|
—
|
|
—
|
|
450.4
|
|
Betting
|
|
27.5
|
|
315.8
|
|
109.5
|
|
—
|
|
452.8
|
|
Other
|
|
37.6
|
|
18.6
|
|
—
|
|
—
|
|
56.2
|
|
Total
|
|
952.1
|
|
551.4
|
|
109.5
|
|
—
|
|
1,613.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(loss)
|
|
381.2
|
|
(80.0)
|
|
(16.2)
|
|
(46.1)
|
|
238.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA1
|
|
478.3
|
|
161.0
|
|
3.5
|
|
(25.0)
|
|
617.8
|
|
Adjusted EBITDA
Margin1
|
|
50.2%
|
|
29.2%
|
|
3.2%
|
|
—
|
|
38.3%
|
|
FX Rates
|
|
Mar.
31,
|
|
Jun.
30,
|
|
Sept.
30,
|
|
|
Mar.
31,
|
|
Jun.
30,
|
|
|
Sept.
30,
|
|
Average for the three
months ended
|
|
2017
|
|
2017
|
|
2017
|
|
|
2018
|
|
2018
|
|
|
2018
|
|
GBP to USD
|
|
1.2393
|
|
1.2786
|
|
1.3087
|
|
|
1.3917
|
|
1.3616
|
|
|
1.3035
|
|
AUD to USD
|
|
0.7579
|
|
0.7508
|
|
0.7890
|
|
|
0.7861
|
|
0.7572
|
|
|
0.7393
|
|
_____________________________
|
|
|
1 Non-IFRS
measure. For important information on The Stars Group's non-IFRS
measures, see below under "Non-IFRS Measures" and the tables under
"Reconciliation of Non-IFRS Measures to Nearest IFRS
Measures".
|
|
2 The
Australia segment supplementary information includes the results of
operations of William Hill Australia beginning with its acquisition
on April 24, 2018. In August 2018, The Stars Group substantially
completed its migration of customers and platforms and integration
of William Hill Australia into BetEasy.
|
|
3 Other
revenue includes $1.0 million that the Corporation excluded from
its consolidated results as it related to certain non-gaming
related transactions with the United Kingdom segment.
|
Financial Statements, Management's Discussion and Analysis
and Additional Information
The Stars Group's Q3 2018 Financial Statements, Q3 2018
MD&A, and additional information relating to The Stars Group
and its business, can be found on SEDAR at www.sedar.com, Edgar at
www.sec.gov and The Stars Group's website at www.starsgroup.com.
The financial information presented in this news releases was
derived from the Q3 2018 Financial Statements.
In addition to press releases, securities filings and public
conference calls and webcasts, The Stars Group intends to use its
investor relations page on its website as a means of disclosing
material information to its investors and others and for complying
with its disclosure obligations under applicable securities laws.
Accordingly, investors and others should monitor the website in
addition to following The Stars Group's press releases, securities
filings and public conference calls and webcasts. This list may be
updated from time to time.
Conference Call and Webcast Details
The Stars Group will host a conference call today, November 7, 2018 at 8:30
a.m. ET to discuss its financial results for the third
quarter ended 2018 and related matters, and provide additional
detail with respect to the information in this news release, its
webcast presentation, its Q3 2018 Financial Statements and Q3 2018
MD&A, as well as certain additional historical supplemental
financial information, including on a proforma basis for the SBG
and BetEasy acquisitions. To access via tele-conference, please
dial +1 855-327-6838 or +1-631-891-4304
ten minutes prior to the scheduled start of the call. The playback
will be made available two hours after the event at
+1-844-512-2921 or +1 412-317-6671. The
Conference ID number is 10005822. To access the webcast please use
the following link:
http://public.viavid.com/index.php?id=132084
Reconciliation of Non-IFRS Measures to Nearest IFRS
Measures
The tables below present reconciliations of Adjusted EBITDA,
Adjusted Net Earnings and Adjusted Diluted Net Earnings per Share
to net (loss) earnings, which is the nearest IFRS measure:
|
|
Three Months Ended
September 30, 2018
|
|
In thousands of U.S.
Dollars (except per share amounts)
|
|
International
|
|
United
Kingdom
|
|
Australia
|
|
Corporate
|
|
Consolidated
|
|
Net earnings
(loss)
|
|
137,507
|
|
(28,635)
|
|
(25,973)
|
|
(73,169)
|
|
9,730
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
recovery
|
|
—
|
|
—
|
|
—
|
|
13,189
|
|
13,189
|
|
Net financing
charges
|
|
—
|
|
—
|
|
—
|
|
(74,360)
|
|
(74,360)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
137,507
|
|
(28,635)
|
|
(25,973)
|
|
(11,998)
|
|
70,901
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
34,398
|
|
53,642
|
|
10,855
|
|
43
|
|
98,938
|
|
Add (deduct) the
impact of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
costs and deal contingent forwards
|
|
—
|
|
—
|
|
—
|
|
1,667
|
|
1,667
|
|
Stock-based
compensation
|
|
—
|
|
—
|
|
—
|
|
3,154
|
|
3,154
|
|
Loss from investments
and associates
|
|
123
|
|
—
|
|
—
|
|
—
|
|
123
|
|
Impairment of
intangibles assets and assets held for sale
|
|
3,869
|
|
—
|
|
—
|
|
—
|
|
3,869
|
|
Other costs
|
|
6,331
|
|
2,936
|
|
10,354
|
|
(21)
|
|
19,600
|
|
Total adjusting
items
|
|
10,323
|
|
2,936
|
|
10,354
|
|
4,800
|
|
28,413
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
182,228
|
|
27,943
|
|
(4,764)
|
|
(7,155)
|
|
198,252
|
|
|
Nine Months Ended
September 30, 2018
|
|
In thousands of U.S.
Dollars (except per share amounts)
|
|
International
|
|
United
Kingdom
|
|
Australia
|
|
Corporate
|
|
Consolidated
|
|
Net earnings
(loss)
|
|
412,723
|
|
(28,635)
|
|
(33,620)
|
|
(421,201)
|
|
(70,733)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
recovery
|
|
—
|
|
—
|
|
—
|
|
15,438
|
|
15,438
|
|
Net financing
charges
|
|
—
|
|
—
|
|
—
|
|
(273,071)
|
|
(273,071)
|
|
Net earnings from
associates
|
|
1,068
|
|
—
|
|
—
|
|
—
|
|
1,068
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
411,655
|
|
(28,635)
|
|
(33,620)
|
|
(163,568)
|
|
185,832
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
108,354
|
|
53,642
|
|
20,723
|
|
62
|
|
182,781
|
|
Add (deduct) the
impact of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
costs and deal contingent forwards
|
|
—
|
|
—
|
|
—
|
|
112,485
|
|
112,485
|
|
Stock-based
compensation
|
|
—
|
|
—
|
|
—
|
|
8,802
|
|
8,802
|
|
Loss from investments
and associates
|
|
370
|
|
—
|
|
—
|
|
—
|
|
370
|
|
Impairment of
intangibles assets and assets held for sale
|
|
4,943
|
|
—
|
|
—
|
|
—
|
|
4,943
|
|
Other costs
|
|
7,703
|
|
2,936
|
|
20,758
|
|
14,935
|
|
46,332
|
|
Total adjusting
items
|
|
13,016
|
|
2,936
|
|
20,758
|
|
136,222
|
|
172,932
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
533,025
|
|
27,943
|
|
7,861
|
|
(27,284)
|
|
541,545
|
|
|
Three Months Ended
September 30, 2017
|
|
In thousands of U.S.
Dollars (except per share amounts)
|
|
International
|
|
United
Kingdom
|
|
Australia
|
|
Corporate
|
|
Consolidated
|
|
Net earnings
(loss)
|
|
130,493
|
|
—
|
|
—
|
|
(54,619)
|
|
75,874
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
recovery
|
|
—
|
|
—
|
|
—
|
|
(2,186)
|
|
(2,186)
|
|
Net financing
charges
|
|
—
|
|
—
|
|
—
|
|
(38,095)
|
|
(38,095)
|
|
Net loss from
associates
|
|
(2,569)
|
|
—
|
|
—
|
|
—
|
|
(2,569)
|
|
|
|
|
—
|
|
—
|
|
|
|
|
|
Operating income
(loss)
|
|
133,062
|
|
—
|
|
—
|
|
(14,338)
|
|
118,724
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
36,626
|
|
—
|
|
—
|
|
5
|
|
36,631
|
|
Add (deduct) the
impact of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
—
|
|
—
|
|
—
|
|
3,298
|
|
3,298
|
|
Gain from
investments
|
|
(8,920)
|
|
—
|
|
—
|
|
—
|
|
(8,920)
|
|
Reversal of impairment
of intangibles assets and assets held for sale
|
|
(1,117)
|
|
—
|
|
—
|
|
—
|
|
(1,117)
|
|
Other costs
|
|
3,229
|
|
—
|
|
—
|
|
3,922
|
|
7,151
|
|
Total adjusting
items
|
|
(6,808)
|
|
—
|
|
—
|
|
7,220
|
|
412
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
162,880
|
|
—
|
|
—
|
|
(7,113)
|
|
155,767
|
|
|
Nine Months Ended
September 30, 2017
|
|
In thousands of U.S.
Dollars (except per share amounts)
|
|
International
|
|
United
Kingdom
|
|
Australia
|
|
Corporate
|
|
Consolidated
|
|
Net earnings
(loss)
|
|
378,666
|
|
—
|
|
—
|
|
(166,556)
|
|
212,110
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
recovery
|
|
—
|
|
—
|
|
—
|
|
(856)
|
|
(856)
|
|
Net financing
charges
|
|
—
|
|
—
|
|
—
|
|
(119,593)
|
|
(119,593)
|
|
Net loss from
associates
|
|
(2,569)
|
|
—
|
|
—
|
|
—
|
|
(2,569)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
381,235
|
|
—
|
|
—
|
|
(46,107)
|
|
335,128
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
108,814
|
|
—
|
|
—
|
|
152
|
|
108,966
|
|
Add (deduct) the
impact of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
|
|
|
|
|
7,914
|
|
7,914
|
|
Gain from
investments
|
|
(9,137)
|
|
—
|
|
—
|
|
(4,429)
|
|
(13,566)
|
|
Reversal of impairment
of intangibles assets and assets held for sale
|
|
(6,162)
|
|
—
|
|
—
|
|
(2,267)
|
|
(8,429)
|
|
Other costs
|
|
3,514
|
|
—
|
|
—
|
|
19,778
|
|
23,292
|
|
Total adjusting
items
|
|
(11,785)
|
|
—
|
|
—
|
|
20,996
|
|
9,211
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
478,264
|
|
—
|
|
—
|
|
(24,959)
|
|
453,305
|
|
|
Three Months Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
In thousands of U.S.
Dollars (except per share amounts)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Net (loss)
earnings
|
|
9,730
|
|
75,874
|
|
(70,733)
|
|
212,110
|
|
Income tax (recovery)
expense
|
|
(13,189)
|
|
2,186
|
|
(15,438)
|
|
856
|
|
Net loss
(earnings) before tax
|
|
(3,459)
|
|
78,060
|
|
(86,171)
|
|
212,966
|
|
Add (deduct) the
impact of the following:
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Interest
accretion
|
|
8,984
|
|
10,767
|
|
30,064
|
|
35,708
|
|
Loss on debt
extinguishment
|
|
18,521
|
|
—
|
|
143,497
|
|
—
|
|
Re-measurement of
contingent consideration
|
|
5,056
|
|
—
|
|
8,753
|
|
—
|
|
Re-measurement of
derivatives
|
|
(11,300)
|
|
—
|
|
(11,300)
|
|
—
|
|
Ineffectiveness of
cash flow hedges
|
|
(11,949)
|
|
—
|
|
(11,949)
|
|
—
|
|
Acquisition-related
costs and deal contingent forwards
|
|
1,667
|
|
—
|
|
112,485
|
|
—
|
|
Amortization of
acquisition intangibles
|
|
92,107
|
|
31,077
|
|
154,965
|
|
93,227
|
|
Stock based
compensation
|
|
3,154
|
|
3,298
|
|
8,802
|
|
7,914
|
|
(Gain) loss from
investments and associates
|
|
123
|
|
(6,353)
|
|
(698)
|
|
(10,998)
|
|
Impairment (reversal
of impairment) of intangibles assets and assets held for
sale
|
|
3,869
|
|
(1,117)
|
|
4,943
|
|
(8,429)
|
|
Other costs
(income)
|
|
19,600
|
|
7,151
|
|
46,332
|
|
23,292
|
|
Income tax impact of
the above
|
|
(6,873)
|
|
(3,288)
|
|
(10,438)
|
|
(6,690)
|
|
Adjusted net
earnings
|
|
119,500
|
|
119,595
|
|
389,285
|
|
346,990
|
|
Adjusted net
earnings attributable to
|
|
|
|
|
|
|
|
|
|
Shareholders of The
Stars Group Inc.
|
|
119,961
|
|
119,595
|
|
389,430
|
|
346,990
|
|
Non-controlling
interest
|
|
(461)
|
|
—
|
|
(145)
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Weighted average
diluted number of shares
|
|
269,526,633
|
|
204,800,009
|
|
232,640,294
|
|
202,796,952
|
|
Adjusted Diluted
Net Earnings per Share attributable to
Shareholders of The Stars Group Inc
|
|
0.45
|
|
0.58
|
|
1.67
|
|
1.71
|
The table below presents certain items comprising "Other costs"
in the reconciliation tables above:
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
In thousands of U.S.
Dollars
|
|
$000's
|
|
$000's
|
|
$000's
|
|
$000's
|
|
Integration
costs
|
|
17,088
|
|
—
|
|
28,555
|
|
—
|
|
Financial (income)
expenses
|
|
(4,948)
|
|
2,839
|
|
(2,899)
|
|
3,062
|
|
Termination of
employment agreements
|
|
4,486
|
|
1,358
|
|
6,544
|
|
4,166
|
|
AMF and other
investigation professional fees
|
|
(888)
|
|
(1,265)
|
|
3,771
|
|
3,888
|
|
Lobbying (US and
Non-US) and other legal expenses
|
|
4,260
|
|
2,916
|
|
9,918
|
|
12,233
|
|
Non-recurring
professional fees
|
|
1,423
|
|
664
|
|
1,976
|
|
2,168
|
|
Retention
bonuses
|
|
25
|
|
41
|
|
259
|
|
1,271
|
|
Loss on disposal of
assets
|
|
—
|
|
338
|
|
41
|
|
599
|
|
Austria gaming
duty
|
|
(3,679)
|
|
—
|
|
(3,679)
|
|
(5,000)
|
|
Termination of
affiliate agreements
|
|
—
|
|
—
|
|
—
|
|
407
|
|
Other
|
|
1,833
|
|
260
|
|
1,846
|
|
498
|
|
Other
costs
|
|
19,600
|
|
7,151
|
|
46,332
|
|
23,292
|
The tables below present reconciliations of proforma Adjusted
EBITDA to operating income (loss), which is the nearest IFRS
measure:
|
|
Proforma
Three Months Ended
September 30, 2018
|
|
In millions of U.S.
Dollars
|
|
International
|
|
United
Kingdom
|
|
Australia1
|
|
Corporate
|
|
Consolidated
|
|
Operating income
(loss)
|
|
137.5
|
|
(67.9)
|
|
(26.0)
|
|
(12.0)
|
|
31.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
34.4
|
|
102.5
|
|
10.9
|
|
—
|
|
147.8
|
|
Add (deduct) the
impact of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition related
costs
|
|
—
|
|
2.9
|
|
10.3
|
|
1.7
|
|
14.9
|
|
Impairment of
intangible assets
|
|
3.9
|
|
—
|
|
—
|
|
—
|
|
3.9
|
|
Other
Adjustments
|
|
6.4
|
|
—
|
|
—
|
|
3.1
|
|
9.5
|
|
Total adjusting
items
|
|
10.3
|
|
2.9
|
|
10.3
|
|
4.8
|
|
28.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
182.2
|
|
37.5
|
|
(4.8)
|
|
(7.2)
|
|
207.7
|
|
|
Proforma
Three Months Ended
September 30, 2017
|
|
In millions of U.S.
Dollars
|
|
International
|
|
United
Kingdom
|
|
Australia1
|
|
Corporate
|
|
Consolidated
|
|
Operating income
(loss)
|
|
133.1
|
|
(24.7)
|
|
(10.0)
|
|
(14.3)
|
|
84.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
36.6
|
|
79.4
|
|
6.0
|
|
—
|
|
122.0
|
|
Add (deduct) the
impact of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
intangible assets
|
|
(1.1)
|
|
—
|
|
—
|
|
—
|
|
(1.1)
|
|
Other
Adjustments
|
|
(5.7)
|
|
—
|
|
1.1
|
|
7.2
|
|
2.6
|
|
Total adjusting
items
|
|
(6.8)
|
|
—
|
|
1.1
|
|
7.2
|
|
1.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
162.9
|
|
54.7
|
|
(2.9)
|
|
(7.1)
|
|
207.6
|
|
|
Proforma
Nine Months Ended
September 30, 2018
|
|
In millions of U.S.
Dollars
|
|
International
|
|
United
Kingdom
|
|
Australia1
|
|
Corporate
|
|
Consolidated
|
|
Operating income
(loss)
|
|
411.7
|
|
(177.8)
|
|
(35.4)
|
|
(163.5)
|
|
35.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
108.4
|
|
269.9
|
|
25.6
|
|
—
|
|
403.9
|
|
Add (deduct) the
impact of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition related
costs
|
|
—
|
|
2.9
|
|
10.3
|
|
112.5
|
|
125.7
|
|
Impairment of
intangible assets
|
|
4.8
|
|
—
|
|
—
|
|
—
|
|
4.8
|
|
Transaction related
costs
|
|
—
|
|
66.4
|
|
—
|
|
—
|
|
66.4
|
|
Other
Adjustments
|
|
8.1
|
|
—
|
|
13.0
|
|
23.7
|
|
44.8
|
|
Total adjusting
items
|
|
12.9
|
|
69.3
|
|
23.3
|
|
136.2
|
|
241.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
533.0
|
|
161.4
|
|
13.5
|
|
(27.3)
|
|
680.6
|
|
|
Proforma
Nine Months Ended
September 30, 2017
|
|
In millions of U.S.
Dollars
|
|
International
|
|
United
Kingdom
|
|
Australia1
|
|
Corporate
|
|
Consolidated
|
|
Operating income
(loss)
|
|
381.2
|
|
(80.0)
|
|
(16.2)
|
|
(46.1)
|
|
238.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
108.8
|
|
232.9
|
|
17.1
|
|
0.2
|
|
359.0
|
|
Add (deduct) the
impact of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
intangible assets
|
|
(6.1)
|
|
8.1
|
|
—
|
|
(2.3)
|
|
(0.3)
|
|
Other
Adjustments
|
|
(5.6)
|
|
—
|
|
2.6
|
|
23.2
|
|
20.2
|
|
Total adjusting
items
|
|
(11.7)
|
|
8.1
|
|
2.6
|
|
20.9
|
|
19.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
478.3
|
|
161.0
|
|
3.5
|
|
(25.0)
|
|
617.8
|
|
|
_____________________________
|
|
1 The
Australia segment supplementary information includes the results of
operations of William Hill Australia beginning with its acquisition
on April 24, 2018. In August 2018, The Stars Group substantially
completed its migration of customers and platforms and integration
of William Hill Australia into BetEasy.
|
The table below presents a reconciliation of Free Cash Flow to
net cash flows from operating activities, which is the nearest IFRS
measure:
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
In thousands of U.S.
Dollars
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Net cash inflows from
operating activities
|
|
73,227
|
|
144,870
|
|
369,307
|
|
370,843
|
|
Customer deposit
liability movement
|
|
1,552
|
|
(2,884)
|
|
(12,349)
|
|
22,398
|
|
|
74,779
|
|
141,986
|
|
356,958
|
|
393,241
|
|
Capital
Expenditure:
|
|
|
|
|
|
|
|
|
|
Additions to deferred
development costs
|
|
(16,496)
|
|
(6,275)
|
|
(32,686)
|
|
(16,701)
|
|
Additions to property
and equipment
|
|
(9,530)
|
|
(3,253)
|
|
(18,791)
|
|
(5,507)
|
|
Additions to
intangible assets
|
|
(4,426)
|
|
(565)
|
|
(16,268)
|
|
(1,484)
|
|
Interest
paid
|
|
(62,113)
|
|
(30,556)
|
|
(128,391)
|
|
(95,620)
|
|
Debt principal
repayments
|
|
(8,937)
|
|
(6,031)
|
|
(20,430)
|
|
(18,901)
|
|
Free Cash
Flow
|
|
(26,723)
|
|
95,306
|
|
140,392
|
|
255,028
|
The table below presents a reconciliation of Net Debt:
|
In thousands of U.S.
Dollars
|
As at September 30,
2018
|
|
Current portion of
long-term debt
|
35,750
|
|
Long-term
debt
|
5,483,900
|
|
Less: Cash and cash
equivalents - operational
|
418,896
|
|
Net
Debt
|
5,100,754
|
For additional information on The Stars Group's non-IFRS
measures, see below and the Q3 2018 MD&A, including under the
headings "Management's Discussion and Analysis", "Limitations of
Key Metrics, Other Data and Non-IFRS Measures" and "Key Metrics and
Non-IFRS Measures".
About The Stars Group
The Stars Group is a global leader in the online and mobile
gaming and interactive entertainment industries, entertaining
millions of customers across its online real- and play-money poker,
gaming and betting product offerings, which are delivered through
both mobile and desktop applications and the web. The Stars Group
offers these products directly or indirectly under several
ultimately owned or licensed gaming and related consumer businesses
and brands, including, among others, PokerStars, PokerStars Casino,
BetStars, Full Tilt, BetEasy, Sky Bet, Sky
Vegas, Sky Casino, Sky Bingo,
Sky Poker, and Oddschecker, as well as live poker tour and events
brands, including the PokerStars Players No Limit Hold'em
Championship, European Poker Tour, PokerStars Caribbean Adventure,
Latin American Poker Tour, Asia Pacific Poker Tour, PokerStars
Festival and PokerStars MEGASTACK. The Stars Group is one of the
world's most licensed online gaming operators with its subsidiaries
collectively holding licenses or approvals in 19 jurisdictions
throughout the world, including in Europe, Australia, and the Americas. The Stars Group's
vision is to become the world's favorite iGaming destination and
its mission is to provide its customers with winning moments.
Cautionary Note Regarding Forward Looking Statements
This news release contains forward-looking statements and
information within the meaning of the Private Securities Litigation
Reform Act of 1995 and applicable securities laws, including,
without limitation, certain financial and operational expectations
and projections, such as certain future operational and growth
plans and strategies, and certain financial items relating to the
full year 2019 results. Forward-looking statements and information
can, but may not always, be identified by the use of words such as
"seek", "anticipate", "plan", "continue", "estimate", "expect",
"may", "will", "project", "predict", "potential", "targeting",
"intend", "could", "might", "would", "should", "believe",
"objective", "ongoing", "imply", "assumes", "goal", "likely" and
similar references to future periods or the negatives of these
words or variations or synonyms of these words or comparable
terminology and similar expressions. These statements and
information, other than statements of historical fact, are based on
management's current expectations and are subject to a number of
risks, uncertainties, and assumptions, including market and
economic conditions, business prospects or opportunities, future
plans and strategies, projections, technological developments,
anticipated events and trends and regulatory changes that affect
The Stars Group, its subsidiaries, and its and their respective
customers and industries. Although The Stars Group and management
believe the expectations reflected in such forward-looking
statements and information are reasonable and are based on
reasonable assumptions and estimates as of the date hereof, there
can be no assurance that these assumptions or estimates are
accurate or that any of these expectations will prove accurate.
Forward-looking statements are inherently subject to significant
business, regulatory, economic and competitive risks, uncertainties
and contingencies that could cause actual events to differ
materially from those expressed or implied in such statements.
Specific risks and uncertainties include, but are not limited to:
the heavily regulated industry in which The Stars Group carries on
its business; risks associated with interactive entertainment and
online and mobile gaming generally; current and future laws or
regulations and new interpretations of existing laws or
regulations, or potential prohibitions, with respect to interactive
entertainment or online gaming or activities related to or
necessary for the operation and offering of online gaming;
potential changes to the gaming regulatory framework; legal and
regulatory requirements; ability to obtain, maintain and comply
with all applicable and required licenses, permits and
certifications to offer, operate and market its product offerings,
including difficulties or delays in the same; significant barriers
to entry; competition and the competitive environment within
addressable markets and industries; impact of inability to complete
future or announced acquisitions or to integrate businesses
successfully, including, without limitation, Sky Betting &
Gaming and BetEasy; The Stars Group's substantial indebtedness
requires that it use a significant portion of its cash flow to make
debt service payments; The Stars Group's secured credit facilities
contain covenants and other restrictions that may limit its
flexibility in operating its business; risks associated with
advancements in technology, including artificial intelligence;
ability to develop and enhance existing product offerings and new
commercially viable product offerings; ability to mitigate foreign
exchange and currency risks; ability to mitigate tax risks and
adverse tax consequences, including, without limitation, changes in
tax laws or administrative policies relating to tax and the
imposition of new or additional taxes, such as value-added and
point of consumption taxes, and gaming duties; The Stars Group's
exposure to greater than anticipated tax liability; risks of
foreign operations generally; protection of proprietary technology
and intellectual property rights; ability to recruit and retain
management and other qualified personnel, including key technical,
sales and marketing personnel; defects in product offerings; losses
due to fraudulent activities; management of growth; contract
awards; potential financial opportunities in addressable markets
and with respect to individual contracts; ability of technology
infrastructure to meet applicable demand and reliance on online and
mobile telecommunications operators; systems, networks,
telecommunications or service disruptions or failures or
cyber-attacks and failure to protect customer data, including
personal and financial information; regulations and laws that may
be adopted with respect to the Internet and electronic commerce or
that may otherwise impact The Stars Group in the jurisdictions
where it is currently doing business or intends to do business,
particularly those related to online gaming or that could impact
the ability to provide online product offerings, including, without
limitation, as it relates to payment processing; ability to obtain
additional financing or to complete any refinancing on reasonable
terms or at all; customer and operator preferences and changes in
the economy; dependency on customers' acceptance of its product
offerings; consolidation within the gaming industry; litigation
costs and outcomes; expansion within existing and into new markets;
relationships with vendors and distributors; natural events;
contractual relationships of Sky Betting & Gaming or The Stars
Group with Sky plc and/or its subsidiaries; counterparty risks;
failure of systems and controls of The Stars Group to restrict
access to its products; reliance on scheduling and live
broadcasting of major sporting events; macroeconomic conditions and
trends in the gaming and betting industry; bookmaking risks; an
ability to realize projected financial increases attributable to
acquisitions and The Stars Group's business strategies; and an
ability to realize all or any of The Stars Group's estimated
synergies and cost savings in connection with acquisitions,
including, without limitation, the acquisition of Sky Betting &
Gaming and the Australian acquisitions. These factors are not
intended to represent a complete list of the factors that could
affect The Stars Group; however, these factors as well as other
applicable risks and uncertainties include, but are not limited to,
those identified in The Stars Group's annual information form for
the year ended December 31, 2017,
including under the heading "Risk Factors and Uncertainties", in
the June 21, 2018 prospectus
supplement to the short form base shelf prospectus dated
January 16, 2018 under the heading
"Risk Factors", and in the Q3 2018 MD&A, including under the
headings "Risk Factors and Uncertainties", "Limitations of Key
Metrics, Other Data and Non-IFRS Measures" and "Key Metrics and
Non-IFRS Measures", each available on SEDAR at www.sedar.com, EDGAR
at www.sec.gov and The Stars Group's website at www.starsgroup.com,
and in other filings that The Stars Group has made and may make in
the future with applicable securities authorities in the future,
should be considered carefully. Investors are cautioned not to put
undue reliance on forward-looking statements or information. Any
forward-looking statement or information in this news release are
expressly qualified by this cautionary statement. Any
forward-looking statement or information speaks only as of the date
hereof, and The Stars Group undertakes no obligation to correct or
update any forward-looking statement, whether as a result of new
information, future events or otherwise, except as required by
applicable law.
Non-IFRS Measures
This news release references non-IFRS financial measures,
including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net
Earnings, Adjusted Diluted Net Earnings per Share, Free Cash Flow,
Net Debt and the numerator of QNY. The Stars Group believes these
non-IFRS financial measures will provide investors with useful
supplemental information about the financial performance of its
business, enable comparison of financial results between periods
where certain items may vary independent of business performance,
and allow for greater transparency with respect to key metrics used
by management in operating its business. Although management
believes these financial measures are important in evaluating The
Stars Group, they are not intended to be considered in isolation or
as a substitute for, or superior to, financial information prepared
and presented in accordance with IFRS. They are not recognized
measures under IFRS and do not have standardized meanings
prescribed by IFRS. These measures may be different from non-IFRS
financial measures used by other companies, limiting its usefulness
for comparison purposes. Moreover, presentation of certain of these
measures is provided for year-over-year comparison purposes, and
investors should be cautioned that the effect of the adjustments
thereto provided herein have an actual effect on The Stars Group's
operating results. In addition to QNY, which is defined below under
"Key Metrics and Other Data", The Stars Group provides the
following non-IFRS measures in this news release:
Adjusted EBITDA means net earnings before financial
expenses, income taxes expense (recovery), depreciation and
amortization, stock-based compensation, restructuring, net earnings
(loss) on associate and certain other items as set out in the
reconciliation tables under "Reconciliation of Non-IFRS Measures to
Nearest IFRS Measures" above.
Adjusted EBITDA Margin means Adjusted EBITDA as a
proportion of total revenue.
Adjusted Net Earnings means net earnings before interest
accretion, amortization of intangible assets resulting from
purchase price allocations following acquisitions, stock-based
compensation, restructuring, net earnings (loss) on associate, and
certain other items. In addition, beginning with the Q3 2018
MD&A, adjustments are made for (i) the re-measurement of
contingent consideration, which was previously included in, and
adjusted for through, interest accretion, but starting with the Q3
2018 Financial Statements it is now a separate line item, (ii) the
re-measurement of embedded derivatives and ineffectiveness on cash
flow hedges, each of which are new line items in the Q3 2018
Financial Statements, and (iii) certain non-recurring tax
adjustments and settlements. Each adjustment to net earnings is
then adjusted for the tax impact, where applicable, in the
respective jurisdiction to which the adjustment relates, as set out
in the reconciliation tables under "Reconciliation of Non-IFRS
Measures to Nearest IFRS Measures" above.
Adjusted Diluted Net Earnings per Share means Adjusted
Net Earnings attributable to the Shareholders of The Stars Group
Inc. divided by Diluted Shares. Diluted Shares means the weighted
average number of Common Shares on a fully diluted basis, including
options, other equity-based awards, warrants and the preferred
shares of The Stars Group. The effects of anti-dilutive
potential Common Shares are ignored in calculating Diluted Shares.
Diluted Shares used in the calculation of diluted earnings per
share may differ from diluted shares used in the calculation of
Adjusted Diluted Net Earnings per Share where the dilutive effects
of the potential Common Shares differ. See note 9 in the Q3 2018
Financial Statements. For the three and nine months ended
September 30, 2018, Diluted Shares
used for the calculation of Adjusted Diluted Net Earnings per Share
equalled 269,526,633 and 232,640,294, respectively, compared with
204,800,009 and 202,796,952 for the same periods in 2017,
respectively.
Free Cash Flow means net cash flows from operating
activities after adding back customer deposit liability movements,
and after capital expenditures and debt servicing cash flows
(excluding voluntary prepayments), as set out in the reconciliation
tables under "Reconciliation of Non-IFRS Measures to Nearest IFRS
Measures" above. The Corporation believes that removing movements
in customer deposit liabilities provides a more meaningful
understanding of its free cash flows as customer deposits are not
available funds for the Corporation to use for financial or
operational purposes.
Net Debt means total long-term debt less operational
cash.
To show the foreign exchange impact due to translation and
purchasing power the Corporation calculates revenue on a constant
currency basis, by translating the International segment's revenue
for the three and nine months ended September 30, 2018 using the prior year's monthly
exchange rates for its local source currencies other than the U.S.
dollar, which The Stars Group believes is a useful metric that
facilitates comparison to its historical performance.
For additional information on The Stars Group's non-IFRS
measures, see above and the Q3 2018 MD&A, including under the
headings "Management's Discussion and Analysis", "Limitations of
Key Metrics, Other Data and Non-IFRS Measures" and "Key Metrics and
Non-IFRS Measures".
Key Metrics and Other Data
The Stars Group provides the following key metrics in this news
release:
QAUs for the International and Australia reporting segments means active
unique customers (online, mobile and desktop client) who (i) made a
deposit or transferred funds into their real-money account with The
Stars Group at any time, and (ii) generated real-money online rake
or placed a real-money online bet or wager on during the applicable
quarterly period. The Stars Group defines "active unique customer"
as a customer who played or used one of its real-money offerings at
least once during the period, and excludes duplicate counting, even
if that customer is active across multiple lines of operation
(Poker, Gaming and/or Betting, as applicable) within the applicable
reporting segment. The definition of QAUs excludes customer
activity from certain low-stakes, non-raked real-money poker games,
but includes real-money activity by customers using funds (cash and
cash equivalents) deposited by The Stars Group into such customers'
previously funded accounts as promotions to increase their lifetime
value.
QAUs for the United
Kingdom reporting segment (which currently includes the Sky
Betting & Gaming business operations only) means active unique
customers (online and mobile) who have settled a Stake or made a
wager on any betting or gaming product within the relevant period.
The Stars Group defines unique for the United Kingdom reporting segment as a customer
who played at least once on one of its real-money offerings during
the period, and excludes duplicate counting, even if that customer
is active across more than one line of operation. For the purpose
of the three months ended September 30,
2018, QAUs for the United
Kingdom reporting segment also include the applicable
pre-acquisition period.
QNY means combined revenue for The Stars Group's lines of
operation (i.e., Poker, Gaming and/or Betting, as applicable),
excluding Other revenues, as reported during the applicable
quarterly period (or as adjusted to the extent any accounting
reallocations are made in later periods) divided by the total QAUs
during the same period. The United
Kingdom reporting segment's definition of QNY includes
revenue noted in the definition above for the full financial
quarter, including the pre-acquisition period. QNY is a
non-IFRS measure. The Stars Group does not provide a reconciliation
for the numerator of QNY as the revenue components thereof are set
forth in this news release.
Net Deposits means the aggregate of gross deposits or
transfer of funds made by customers into their real-money online
accounts less withdrawals or transfer of funds by such customers
from such accounts, in each case during the applicable quarterly
period. Gross deposits exclude (i) any deposits, transfers or other
payments made by such customers into The Stars Group's play-money
and social gaming offerings, and (ii) any real-money funds (cash
and cash equivalents) deposited by The Stars Group into such
customers' previously funded accounts as promotions to increase
their lifetime value.
Stakes means betting amounts wagered on The Stars Group's
applicable online betting product offerings, and is also an
industry term that represents the aggregate amount of funds wagered
by customers within the Betting line of operation for the period
specified.
Betting Net Win Margin is calculated as Betting revenue
as a proportion of Stakes.
The Stars Group is in the process of the integration and
migration of customers and platforms with respect to the Australian
acquisitions (which management believes is substantially complete
as of the date hereof), the integration of Sky Betting &
Gaming, and the implementation of its new operating and reporting
segments, and once complete, The Stars Group may revise or remove
currently presented key metrics or non-IFRS measures or report
certain additional or other key metrics or non-IFRS measures in the
future.
For additional information on The Stars Group's key metrics and
other data, see the Q3 2018 MD&A, including under the headings
"Limitations of Key Metrics, Other Data and Non-IFRS Measures",
"Key Metrics and Non-IFRS Measures" and "Segment Results of
Operations".
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
EARNINGS
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
In thousands of U.S.
Dollars (except per share amounts)
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Revenues
|
|
571,983
|
|
|
329,443
|
|
|
1,376,386
|
|
|
952,065
|
|
Cost of
revenue
|
|
(129,226)
|
|
|
(62,477)
|
|
|
(293,127)
|
|
|
(177,605)
|
|
Gross
profit
|
|
442,757
|
|
|
266,966
|
|
|
1,083,259
|
|
|
774,460
|
|
General and
administrative
|
|
(267,463)
|
|
|
(109,096)
|
|
|
(671,556)
|
|
|
(322,344)
|
|
Sales and
marketing
|
|
(92,531)
|
|
|
(33,116)
|
|
|
(196,848)
|
|
|
(98,475)
|
|
Research and
development
|
|
(11,862)
|
|
|
(6,030)
|
|
|
(29,023)
|
|
|
(18,513)
|
|
Operating
income
|
|
70,901
|
|
|
118,724
|
|
|
185,832
|
|
|
335,128
|
|
Net financing
charges
|
|
(74,360)
|
|
|
(38,095)
|
|
|
(273,071)
|
|
|
(119,593)
|
|
Net earnings from
associates
|
|
—
|
|
|
(2,569)
|
|
|
1,068
|
|
|
(2,569)
|
|
(Loss) earnings
before income taxes
|
|
(3,459)
|
|
|
78,060
|
|
|
(86,171)
|
|
|
212,966
|
|
Income tax
recovery
|
|
13,189
|
|
|
(2,186)
|
|
|
15,438
|
|
|
(856)
|
|
Net (loss)
earnings
|
|
9,730
|
|
|
75,874
|
|
|
(70,733)
|
|
|
212,110
|
|
Net (loss)
earnings attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of The
Stars Group Inc.
|
|
15,127
|
|
|
76,082
|
|
|
(63,067)
|
|
|
211,987
|
|
Non-controlling
interest
|
|
(5,397)
|
|
|
(208)
|
|
|
(7,666)
|
|
|
123
|
|
Net (loss)
earnings
|
|
9,730
|
|
|
75,874
|
|
|
(70,733)
|
|
|
212,110
|
|
(Loss) earnings
per Common Share (U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.06
|
|
$
|
0.52
|
|
$
|
(0.34)
|
|
$
|
1.45
|
|
Diluted
|
$
|
0.06
|
|
$
|
0.37
|
|
$
|
(0.34)
|
|
$
|
1.05
|
|
Weighted Average
Common Shares Outstanding (thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
257,322
|
|
|
147,351
|
|
|
186,517
|
|
|
146,537
|
|
Diluted
|
|
269,527
|
|
|
204,800
|
|
|
186,517
|
|
|
202,797
|
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
|
|
As at
September 30,
|
|
As at December
31,
|
|
In thousands of U.S.
Dollars
|
|
2018
|
|
2017
|
|
ASSETS
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash equivalents -
operational
|
|
418,896
|
|
283,225
|
|
Cash and cash equivalents -
customer deposits
|
|
327,765
|
|
227,098
|
|
Total cash and cash
equivalents
|
|
746,661
|
|
510,323
|
|
Restricted cash
advances and collateral
|
|
10,696
|
|
7,862
|
|
Prepaid expenses and
other current assets
|
|
50,816
|
|
29,695
|
|
Current investments -
customer deposits
|
|
104,125
|
|
122,668
|
|
Accounts
receivable
|
|
154,102
|
|
100,409
|
|
Income tax
receivable
|
|
29,643
|
|
16,540
|
|
Derivatives
|
|
—
|
|
2,037
|
|
Total current
assets
|
|
1,096,043
|
|
789,534
|
|
Non-current
assets
|
|
|
|
|
|
Restricted cash
advances and collateral
|
|
10,700
|
|
45,834
|
|
Prepaid expenses and
other non-current assets
|
|
27,496
|
|
26,551
|
|
Non-current accounts
receivable
|
|
12,430
|
|
11,818
|
|
Property and
equipment
|
|
76,745
|
|
44,837
|
|
Income tax
receivable
|
|
11,805
|
|
14,061
|
|
Deferred income
taxes
|
|
6,597
|
|
5,141
|
|
Derivatives
|
|
32,904
|
|
—
|
|
Goodwill and
intangible assets
|
|
10,205,886
|
|
4,477,350
|
|
Total non-current
assets
|
|
10,384,563
|
|
4,625,592
|
|
Total
assets
|
|
11,480,606
|
|
5,415,126
|
|
LIABILITIES
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts payable and
other liabilities
|
|
434,087
|
|
194,187
|
|
Customer
deposits
|
|
429,574
|
|
349,766
|
|
Current
provisions
|
|
31,853
|
|
17,590
|
|
Derivatives
|
|
14,136
|
|
—
|
|
Income tax
payable
|
|
91,864
|
|
35,941
|
|
Due to related
parties
|
|
2,028
|
|
—
|
|
Current portion of
long-term debt
|
|
35,750
|
|
4,990
|
|
Total current
liabilities
|
|
1,039,292
|
|
602,474
|
|
Non-current
liabilities
|
|
|
|
|
|
Long-term
debt
|
|
5,483,900
|
|
2,353,579
|
|
Long-term
provisions
|
|
4,268
|
|
3,093
|
|
Derivatives
|
|
21,093
|
|
111,762
|
|
Other long-term
liabilities
|
|
91,521
|
|
—
|
|
Due to related
parties
|
|
34,267
|
|
—
|
|
Income tax
payable
|
|
12,825
|
|
24,277
|
|
Deferred income
taxes
|
|
594,297
|
|
16,510
|
|
Total non-current
liabilities
|
|
6,242,171
|
|
2,509,221
|
|
Total
liabilities
|
|
7,281,463
|
|
3,111,695
|
|
EQUITY
|
|
|
|
|
|
Share
capital
|
|
4,095,038
|
|
1,884,219
|
|
Reserves
|
|
(442,234)
|
|
(142,340)
|
|
Retained
earnings
|
|
542,146
|
|
561,519
|
|
Equity
attributable to the Shareholders of The Stars Group
Inc.
|
|
4,194,950
|
|
2,303,398
|
|
Non-controlling
interest
|
|
4,193
|
|
33
|
|
Total
equity
|
|
4,199,143
|
|
2,303,431
|
|
Total liabilities
and equity
|
|
11,480,606
|
|
5,415,126
|
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
|
|
|
Nine Months Ended
September 30,
|
|
In thousands of U.S.
Dollars
|
|
2018
|
|
2017
|
|
Operating
activities
|
|
|
|
|
|
Net (loss)
earnings
|
|
(70,733)
|
|
212,110
|
|
Add
(deduct):
|
|
|
|
|
|
Income tax (recovery)
expense recognized in net earnings
|
|
(15,438)
|
|
856
|
|
Net financing
charges
|
|
273,071
|
|
118,824
|
|
Depreciation and
amortization
|
|
182,781
|
|
108,966
|
|
Unrealized loss
(gain) on foreign exchange
|
|
58,954
|
|
(9,891)
|
|
Unrealized loss
(gain) on investments
|
|
584
|
|
(9,332)
|
|
Impairment (reversal
of impairment) of intangible assets and assets held for
sale
|
|
4,901
|
|
(8,430)
|
|
Net (earnings) loss
from associates
|
|
(1,068)
|
|
2,569
|
|
Realized loss (gain)
on current investments and promissory note
|
|
420
|
|
(9,155)
|
|
Income taxes
paid
|
|
(27,182)
|
|
(8,941)
|
|
Changes in non-cash
operating elements of working capital
|
|
(49,805)
|
|
(10,284)
|
|
Customer deposit
liability movement
|
|
12,349
|
|
(22,398)
|
|
Other
|
|
473
|
|
5,949
|
|
Net cash inflows
from operating activities
|
|
369,307
|
|
370,843
|
|
Investing
activities
|
|
|
|
|
|
Acquisition of
subsidiaries, net of cash acquired
|
|
(1,865,262)
|
|
(6,516)
|
|
Additions to
intangible assets
|
|
(16,268)
|
|
(1,484)
|
|
Additions to property
and equipment
|
|
(18,791)
|
|
(5,507)
|
|
Additions to deferred
development costs
|
|
(32,686)
|
|
(16,701)
|
|
Net sale of
investments utilizing customer deposits
|
|
18,543
|
|
4,466
|
|
Cash movement from
(to) restricted cash
|
|
35,000
|
|
—
|
|
Settlement of
promissory note
|
|
—
|
|
8,084
|
|
Net investment in
associates
|
|
1,068
|
|
(2,000)
|
|
Proceeds on disposal
of interest in associate classified as held for sale
|
|
—
|
|
16,127
|
|
Other
|
|
(1,074)
|
|
(6,577)
|
|
Net cash outflows
from investing activities
|
|
(1,879,470)
|
|
(10,108)
|
|
Financing
activities
|
|
|
|
|
|
Issuance of Common
Shares
|
|
717,250
|
|
—
|
|
Transaction costs on
issuance of Common Shares
|
|
(32,312)
|
|
—
|
|
Issuance of Common
Shares in relation to stock options
|
|
30,572
|
|
9,921
|
|
Redemption of SBG
preferred shares and payment of shareholder loan on
acquisition
|
|
(674,286)
|
|
—
|
|
Issuance of long-term
debt
|
|
5,957,976
|
|
—
|
|
Repayment of
long-term debt
|
|
(2,865,456)
|
|
(133,901)
|
|
Repayment of
long-term debt assumed on business combination
|
|
(1,079,729)
|
|
—
|
|
Interest
paid
|
|
(36,559)
|
|
(4,719)
|
|
Transaction costs on
long-term debt
|
|
31,730
|
|
—
|
|
Net proceeds on
related party debt
|
|
(128,391)
|
|
(95,620)
|
|
Payment of deferred
consideration
|
|
—
|
|
(197,510)
|
|
Settlement of
derivatives
|
|
(125,822)
|
|
13,904
|
|
Acquisition of
further interest in subsidiaries
|
|
(48,240)
|
|
—
|
|
Settlement of
margin
|
|
—
|
|
(7,602)
|
|
Capital contribution
from non-controlling interest
|
|
12,060
|
|
—
|
|
Net cash inflows
(outflows) from financing activities
|
|
1,758,793
|
|
(415,527)
|
|
Increase (decrease)
in cash and cash equivalents
|
|
248,630
|
|
(54,792)
|
|
Unrealized foreign
exchange difference on cash and cash equivalents
|
|
(12,292)
|
|
14,298
|
|
Cash and cash
equivalents – beginning of period
|
|
510,323
|
|
267,684
|
|
Cash and cash
equivalents - end of period
|
|
746,661
|
|
227,190
|
For investor relations and media inquiries, please contact:
Vaughan Lewis, Group Director of
Investor Relations and Corporate Communications, Tel: +1
437-371-5730, ir@starsgroup.com, press@starsgroup.com