TORONTO, March 6, 2019 /CNW/ - The Stars Group Inc.
(NASDAQ: TSG) (TSX: TSGI) today reported its financial results for
the fourth quarter and year ended December
31, 2018 and provided 2019 full year financial guidance
ranges, as well as certain additional highlights and updates.
Unless otherwise noted, all dollar ($) amounts are in U.S.
dollars.
"2018 was a landmark year for the company," said Rafi Ashkenazi,
The Stars Group's Chief Executive Officer. "We completed the
acquisitions of Sky Betting & Gaming in the U.K. and BetEasy in
Australia, extended our licensed
footprint to 21 jurisdictions around the world and began laying the
foundations to grow our presence in the U.S.," stated Mr.
Ashkenazi.
"Our International business saw strong organic growth in the
year despite restrictions in certain markets and lapping the
initial roll-out of our Stars Rewards program. Our United Kingdom and Australia segments both performed in-line with
our expectations during the fourth quarter, and we believe they are
currently well-positioned to continue gaining market share in
2019," said Mr. Ashkenazi.
"As we look at 2019 and beyond, 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. We are pleased with our performance in the
first two months of the year, underpinning our confidence in our
financial guidance for 2019, and we are currently on track to
deliver the full $70 million in cost
synergies from the acquisition of Sky Betting & Gaming within
the current year alone, with potential opportunities for
incremental synergies under review," concluded Mr. Ashkenazi.
Fourth Quarter and Full Year 2018 Summary
Consolidated
|
|
Quarter Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
In thousands of U.S.
Dollars
(except percentages
and per share amounts)
|
|
2018
|
|
|
2017
|
|
|
%
Change
|
|
|
2018
|
|
|
2017
|
|
|
%
Change
|
|
Total
revenue
|
|
|
652,852
|
|
|
|
360,250
|
|
|
|
81.2%
|
|
|
|
2,029,238
|
|
|
|
1,312,315
|
|
|
|
54.6%
|
|
Gross profit
(excluding depreciation and amortization)
|
|
|
486,815
|
|
|
|
290,359
|
|
|
|
67.7%
|
|
|
|
1,570,074
|
|
|
|
1,064,818
|
|
|
|
47.4%
|
|
Operating
income
|
|
|
67,090
|
|
|
|
112,266
|
|
|
|
(40.2%)
|
|
|
|
252,922
|
|
|
|
447,394
|
|
|
|
(43.5%)
|
|
Net earnings
(loss)
|
|
|
(38,173)
|
|
|
|
47,175
|
|
|
|
(180.9%)
|
|
|
|
(108,906)
|
|
|
|
259,285
|
|
|
|
(142.0%)
|
|
Adjusted Net Earnings
¹
|
|
|
144,663
|
|
|
|
111,951
|
|
|
|
29.2%
|
|
|
|
533,948
|
|
|
|
458,940
|
|
|
|
16.3%
|
|
Adjusted EBITDA
¹
|
|
|
239,404
|
|
|
|
147,002
|
|
|
|
62.9%
|
|
|
|
780,949
|
|
|
|
600,306
|
|
|
|
30.1%
|
|
Adjusted EBITDA
Margin ¹
|
|
|
36.7%
|
|
|
|
40.8%
|
|
|
|
(10.1%)
|
|
|
|
38.5%
|
|
|
|
45.7%
|
|
|
|
(15.9%)
|
|
Diluted (loss)
earnings per Common Share ($/Share)
|
|
|
(0.14)
|
|
|
|
0.23
|
|
|
|
(162.8%)
|
|
|
|
(0.49)
|
|
|
|
1.27
|
|
|
|
(138.7%)
|
|
Adjusted Diluted Net
Earnings per Share ($/Share) ¹
|
|
|
0.52
|
|
|
|
0.54
|
|
|
|
(4.2%)
|
|
|
|
2.19
|
|
|
|
2.25
|
|
|
|
(2.9%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflows from
operating activities
|
|
|
190,537
|
|
|
|
123,757
|
|
|
|
54.0%
|
|
|
|
559,844
|
|
|
|
494,600
|
|
|
|
13.2%
|
|
Free Cash Flow
¹
|
|
|
82,558
|
|
|
|
84,854
|
|
|
|
(2.7%)
|
|
|
|
222,950
|
|
|
|
339,882
|
|
|
|
(34.4%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
|
%
Change
|
|
Long-term debt -
principal
|
|
5,566,075
|
|
|
2,453,185
|
|
|
126.9%
|
|
Long-term debt -
carrying value
|
|
5,446,958
|
|
|
2,358,569
|
|
|
130.9%
|
|
Cash -
operational
|
|
392,853
|
|
|
283,225
|
|
|
38.7%
|
|
_____________________________
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 – Revenue for the quarter and year increased
primarily as a result of the contribution of revenue from Sky
Betting & Gaming and BetEasy. Revenue for the year was also
driven by growth in the International segment, primarily through
the continued development of its real-money online casino and
sports betting offerings.
- Debt and Cash – During the quarter, The Stars Group
fully repaid the $100 million
outstanding on its revolving credit facility, ending the year with
approximately $393 million in
operational cash and $5.45 billion in
of debt on its balance sheet, resulting in Net Debt of $5.05 billion. In February
2019, The Stars Group continued to reduce its debt by
prepaying $100 million on its first
lien term loans using cash on its balance sheet.
- Kentucky – At the end
of December, the Kentucky Court of
Appeals ruled in The Stars Group's favor and reversed in its
entirety the $870 million judgment
issued against it by a trial court judge in December 2015 under a centuries old statute and
relating to alleged losses by Kentucky residents who played real-money
online poker on PokerStars' website during a period between 2006
and 2011. The Supreme Court of Kentucky is currently considering whether to
hear the Commonwealth's appeal of the reversal.
- U.S. Sports Betting – In the second half of 2018,
following the U.S. Supreme Court decision relating to sports
betting, The Stars Group entered into various market access
agreements with Mount Airy Casino and Eldorado Resorts, Inc.
(NASDAQ: ERI) which, when combined with its existing market access
deal in New Jersey with Resorts
Casino Hotel, gives The Stars Group potential access to 13 states.
The Stars Group also launched its BetStars online sports betting
brand in New Jersey and became an
authorized gaming operator of the NBA.
International
|
|
Quarter Ended
December 31,
|
|
Year Ended
December 31,
|
In thousands of U.S.
Dollars (except otherwise noted)
|
|
2018
|
|
|
2017
|
|
|
%
Change
|
|
2018
|
|
|
2017
|
|
|
%
Change
|
Stakes
|
|
|
261,055
|
|
|
|
195,714
|
|
|
|
33.4%
|
|
|
966,306
|
|
|
|
647,413
|
|
|
|
49.3%
|
Betting Net Win
Margin (%)
|
|
|
8.3%
|
|
|
|
11.1%
|
|
|
|
(25.1%)
|
|
|
8.2%
|
|
|
|
7.6%
|
|
|
|
7.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Poker
|
|
|
210,940
|
|
|
|
234,350
|
|
|
|
(10.0%)
|
|
|
886,628
|
|
|
|
877,296
|
|
|
|
1.1%
|
Poker
Constant Currency Revenue
|
|
|
224,148
|
|
|
|
234,350
|
|
|
|
(4.4%)
|
|
|
880,485
|
|
|
|
877,296
|
|
|
|
0.4%
|
Gaming
|
|
|
112,111
|
|
|
|
90,822
|
|
|
|
23.4%
|
|
|
428,364
|
|
|
|
334,781
|
|
|
|
28.0%
|
Gaming
Constant Currency Revenue
|
|
|
117,500
|
|
|
|
90,822
|
|
|
|
29.4%
|
|
|
421,207
|
|
|
|
334,781
|
|
|
|
25.8%
|
Betting
|
|
|
21,766
|
|
|
|
21,690
|
|
|
|
0.4%
|
|
|
79,117
|
|
|
|
49,231
|
|
|
|
60.7%
|
Betting Constant Currency Revenue
|
|
|
22,700
|
|
|
|
21,690
|
|
|
|
4.7%
|
|
|
77,558
|
|
|
|
49,231
|
|
|
|
57.5%
|
Other
2
|
|
|
10,913
|
|
|
|
13,388
|
|
|
|
(18.5%)
|
|
|
46,068
|
|
|
|
51,007
|
|
|
|
(9.7%)
|
Other
Constant Currency Revenue
|
|
|
11,317
|
|
|
|
13,388
|
|
|
|
(15.5%)
|
|
|
46,315
|
|
|
|
51,007
|
|
|
|
(9.2%)
|
Total
revenue
|
|
|
355,730
|
|
|
|
360,250
|
|
|
|
(1.3%)
|
|
|
1,440,177
|
|
|
|
1,312,315
|
|
|
|
9.7%
|
Constant
Currency Revenue
|
|
|
375,665
|
|
|
|
360,250
|
|
|
|
4.3%
|
|
|
1,425,565
|
|
|
|
1,312,315
|
|
|
|
8.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Active
Uniques (millions)
|
|
|
2.1
|
|
|
|
2.2
|
|
|
|
(2.9%)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
Quarterly Net
Yield ($/QAU)
|
|
|
163
|
|
|
|
160
|
|
|
|
1.9%
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
(excluding depreciation and amortization)
|
|
|
286,167
|
|
|
|
290,358
|
|
|
|
(1.4%)
|
|
|
1,159,611
|
|
|
|
1,064,818
|
|
|
|
8.9%
|
Gross profit margin
(%)
|
|
|
80.4%
|
|
|
|
80.6%
|
|
|
|
(0.2%)
|
|
|
80.5%
|
|
|
|
81.1%
|
|
|
|
(0.8%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
|
141,500
|
|
|
|
92,912
|
|
|
|
52.3%
|
|
|
461,168
|
|
|
|
369,710
|
|
|
|
24.7%
|
Sales and
marketing
|
|
|
45,464
|
|
|
|
55,626
|
|
|
|
(18.3%)
|
|
|
164,600
|
|
|
|
153,540
|
|
|
|
7.2%
|
Research and
development
|
|
|
4,880
|
|
|
|
6,667
|
|
|
|
(26.8%)
|
|
|
27,865
|
|
|
|
25,180
|
|
|
|
10.7%
|
Operating
income
|
|
|
94,323
|
|
|
|
135,153
|
|
|
|
(30.2%)
|
|
|
505,978
|
|
|
|
516,388
|
|
|
|
(2.0%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA ¹
|
|
|
167,862
|
|
|
|
158,140
|
|
|
|
6.1%
|
|
|
700,887
|
|
|
|
636,404
|
|
|
|
10.1%
|
Adjusted EBITDA
Margin (%) ¹
|
|
|
47.2%
|
|
|
|
43.9%
|
|
|
|
7.5%
|
|
|
48.7%
|
|
|
|
48.5%
|
|
|
|
0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Deposits
(millions)
|
|
|
338
|
|
|
|
327
|
|
|
|
3.4%
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
____________________________
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
and $2.0 million for the quarter and year ended December 31, 2018,
respectively, that The Stars Group excluded from its consolidated
results as it related to certain non-gaming related transactions
with the United Kingdom segment.
|
- Poker – Poker revenue slightly increased for the year,
in-line with expectations, and showed overall resiliency against
continued headwinds, which primarily negatively impacted the
quarter, including foreign exchange fluctuations, reduced deposits
by customers in certain markets as a result of local restrictions
on some methods of payment processing and on certain methods of
downloading The Stars Group's poker applications, as well as
increased cross-selling of customers to The Stars Group's online
casino offerings. Poker revenue in 2018 also continued to see the
positive impact of shared poker liquidity across France, Spain
and Portugal, but was offset by
exiting certain markets, such as Australia, and lapping the launch of the Stars
Rewards loyalty program.
- Gaming and Betting – Gaming and Betting revenue for the
quarter and year both increased primarily as a result of product
and content improvements, including, with respect to Gaming
revenue, through the introduction of over 350 new casino games
during the year, the launch of its real-money online casino and
sports betting offerings in certain new markets and the continued
success of cross-selling customers from poker to casino.
- Customers – QAUs decreased primarily due to reduced
activity in certain markets as a result of local restrictions on
some methods of payment processing and on certain methods of
downloading The Stars Group's poker applications.
United
Kingdom
|
|
Quarter Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
In thousands of U.S.
Dollars (except otherwise noted)
|
|
2018
|
|
|
2017
|
|
|
%
Change
|
|
|
2018
|
|
|
2017
|
|
|
%
Change
|
|
Stakes
|
|
|
1,289,374
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,511,228
|
|
|
|
—
|
|
|
|
—
|
|
Betting Net Win
Margin (%)
|
|
|
10.1%
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8.6%
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Poker
|
|
|
3,045
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,929
|
|
|
|
—
|
|
|
|
—
|
|
Gaming
|
|
|
84,164
|
|
|
|
—
|
|
|
|
—
|
|
|
|
157,482
|
|
|
|
—
|
|
|
|
—
|
|
Betting
|
|
|
130,732
|
|
|
|
—
|
|
|
|
—
|
|
|
|
215,921
|
|
|
|
—
|
|
|
|
—
|
|
Other
|
|
|
7,810
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,799
|
|
|
|
—
|
|
|
|
—
|
|
Total
revenue
|
|
|
225,751
|
|
|
|
—
|
|
|
|
—
|
|
|
|
394,131
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Active
Uniques (millions)
|
|
|
1.9
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Quarterly Net
Yield ($/QAU)
|
|
|
116
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
(excluding depreciation and amortization)
|
|
|
153,880
|
|
|
|
—
|
|
|
|
—
|
|
|
|
275,106
|
|
|
|
—
|
|
|
|
—
|
|
Gross profit margin
(%)
|
|
|
68.2%
|
|
|
|
—
|
|
|
|
—
|
|
|
|
69.8%
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
|
135,326
|
|
|
|
—
|
|
|
|
—
|
|
|
|
240,023
|
|
|
|
—
|
|
|
|
—
|
|
Sales and marketing
2
|
|
|
35,413
|
|
|
|
—
|
|
|
|
—
|
|
|
|
75,637
|
|
|
|
—
|
|
|
|
—
|
|
Research and
development
|
|
|
5,660
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,600
|
|
|
|
—
|
|
|
|
—
|
|
Operating
loss
|
|
|
(22,519)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(51,154)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA ¹
|
|
|
72,017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
99,960
|
|
|
|
—
|
|
|
|
—
|
|
Adjusted EBITDA
Margin (%) ¹
|
|
|
31.9%
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25.4%
|
|
|
|
—
|
|
|
|
—
|
|
____________________________
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 includes $1.0
million and $2.0 million for the quarter and year ended December
31, 2018, respectively, that The Stars Group excluded from its
consolidated results as it related to certain non-gaming related
transactions with the International segment.
|
- Revenue – Revenue for the quarter was positively
impacted by a high Betting Net Win Margin as compared to the
historical long-term average of approximately 9%, which was driven
by the mix of Stakes across different sporting events and bet types
throughout the quarter as such sporting events and bet types can
have different average Betting Net Win Margins. The comparable
prior year period, which was before The Stars Group's acquisition
of Sky Betting & Gaming, saw a sustained run of
operator-favorable sporting results, leading to a high Betting Net
Win Margin of 14.0%.
- Customers – Growth in QAUs and Stakes remained strong
for the quarter primarily driven by Sky Bet as momentum from the
2018 FIFA World Cup and start of the English Premier League season
continued into the period. QAUs also benefited from the continued
roll-out of personalized promotions and new and exclusive content
across the Sky Gaming brands.
Australia
|
|
Quarter Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
In thousands of U.S.
Dollars (except otherwise noted)
|
|
2018
|
|
|
2017
|
|
|
%
Change
|
|
|
2018
|
|
|
2017
|
|
|
%
Change
|
|
Stakes
|
|
|
877,338
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,570,502
|
|
|
|
—
|
|
|
|
—
|
|
Betting Net Win
Margin (%)
|
|
|
8.2%
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7.6%
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Betting
|
|
|
71,542
|
|
|
|
—
|
|
|
|
—
|
|
|
|
196,101
|
|
|
|
—
|
|
|
|
—
|
|
Other
|
|
|
829
|
|
|
|
|
|
|
|
|
|
|
|
829
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
|
|
72,371
|
|
|
|
—
|
|
|
|
—
|
|
|
|
196,930
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Active
Uniques (millions)
|
|
|
0.30
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Quarterly Net
Yield ($/QAU)
|
|
|
243
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
(excluding depreciation and amortization)
|
|
|
47,768
|
|
|
|
—
|
|
|
|
—
|
|
|
|
137,357
|
|
|
|
—
|
|
|
|
—
|
|
Gross profit margin
(%)
|
|
|
66.0%
|
|
|
|
—
|
|
|
|
—
|
|
|
|
69.7%
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
|
32,934
|
|
|
|
—
|
|
|
|
—
|
|
|
|
117,522
|
|
|
|
—
|
|
|
|
—
|
|
Sales and
marketing
|
|
|
15,862
|
|
|
|
—
|
|
|
|
—
|
|
|
|
53,385
|
|
|
|
—
|
|
|
|
—
|
|
Research and
development
|
|
|
432
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,530
|
|
|
|
—
|
|
|
|
—
|
|
Operating
loss
|
|
|
(1,460)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(35,080)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA ¹
|
|
|
13,211
|
|
|
|
—
|
|
|
|
—
|
|
|
|
21,072
|
|
|
|
—
|
|
|
|
—
|
|
Adjusted EBITDA
Margin (%) ¹
|
|
|
18.3%
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10.7%
|
|
|
|
—
|
|
|
|
—
|
|
_____________________________
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 – Revenue for the quarter was marginally
impacted by a lower Betting Net Win Margin as compared to the
historical long-term average of approximately 8.5% which was due to
a combination of operator-unfavorable sports results as well as
promotional spend relating to the migration of William Hill
Australia customers to the BetEasy platform.
- Customers – The Stars Group's migration of William Hill
Australia customers to the newly rebranded BetEasy platform
(formerly CrownBet) continued with approximately 85% of customers
successfully migrated by the end of the quarter.
For additional information regarding The Stars Group's reporting
segments and major lines of operations, please see The Stars
Group's consolidated financial statements for the year ended
December 31, 2018 (the "2018 Annual
Financial Statements"), including note 7 therein, and management's
discussion and analysis thereon (the "2018 Annual MD&A").
2019 Full Year Guidance
The Stars Group currently expects the following 2019 full year
consolidated financial guidance ranges:
- Revenue of between $2,640 million
and $2,765 million;
- Adjusted EBITDA of between $960
million and $1,010 million;
and
- Adjusted Diluted Net Earnings per Share of between $1.87 and $2.11.
The above Adjusted EBITDA guidance range includes currently
expected foreign currency headwinds of approximately $33 million previously announced expected
headwinds from applicable duty increases or regulatory developments
of approximately $85 million and an
incremental benefit from expected cost synergies related to the
acquisition of Sky Betting & Gaming of approximately
$60 million. Excluding the impact of
these items and certain changes to applicable accounting standards,
would imply an expected Adjusted EBITDA growth of between 10% and
15% as compared to Adjusted EBITDA for the year ended December 31, 2018. For additional assumptions,
see below.
The Stars Group currently intends to provide certain expected
growth target ranges for the next three to five years, including
Revenue and Adjusted Diluted Net Earnings per Share, as well as its
expectations for Adjusted EBITDA Margin over the same time periods,
and certain related information immediately prior to its Investor
Day on March 27, 2019.
In addition, to provide further clarity with respect to certain
key assumptions and the impact of its 2018 acquisitions on its full
year 2019 expected results, The Stars Group is also providing
information for certain financial items:
- Depreciation and amortization (excluding purchase price
allocation amortization) of between $75
million and $85 million;
- Cash interest expense of between $290
million and $300 million;
- Effective tax rate (applied to Adjusted EBITDA less cash
interest expense and non-purchase price allocation related
depreciation and amortization) of between 8% and 10%;
- Diluted Shares of 277 million; and
- Capital expenditures, which include estimated spend on
intangible assets, property, plant and equipment and certain
development costs, of between $110
million and $150 million.
These unaudited expected results and other information reflect
management's view of current and future market and business
conditions, including certain accounting assumptions and
assumptions of (i) expected Betting Net Win Margin of approximately
9%, (ii) no material changes in the current challenging operating
conditions in certain markets from prior regulatory changes,
including constraints on payment processing, and no material
changes to current expectations with respect to certain
macroeconomic or political events, including Brexit, (iii) no other
material regulatory events or material changes in applicable taxes
or duty rates, (iv) no material investments associated with the
entry into new markets, (v) no material foreign currency exchange
rate fluctuations, particularly against the Euro, Great Britain pound sterling and Australian
dollar, (vi) no material impairment or write-down of the assets to
which depreciation and amortization relates, (vii) no material
change in the prevailing EURIBOR or LIBOR rates as at December 31, 2018 and no material adverse impact
on applicable hedging counterparties, (viii) no material change in
the mix of taxable income by jurisdiction, rate of corporate tax or
tax regimes in the jurisdictions in which The Stars Group currently
operates; (ix) no material change in the geographies where The
Stars Group currently offers its products, and * no material change
in The Stars Group's Diluted Shares. Such guidance is based on a
Euro to U.S. dollar exchange rate of 1.135 to 1.00, a Great Britain pound sterling to U.S. dollar
exchange rate of 1.31 to 1.00 and an Australian dollar to U.S.
dollar exchange rate of 0.712 to 1.00.
Annual Information Form, Consolidated Financial Statements,
Management's Discussion and Analysis and Additional Information;
Internal Control Over Financial Reporting
The Stars Group's annual information form for the year ended
December 31, 2018 (the "2018 AIF"),
2018 Annual Financial Statements, 2018 Annual 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 2018 Annual Financial Statements.
Management has identified internal control deficiencies that
constitute material weaknesses in The Stars Group's internal
control over financial reporting as of December 31, 2018. These deficiencies relate to
the foreign exchange translation of intercompany loans to reporting
currency and the timely assessment of inputs and assumptions used
in the valuation of embedded derivatives. The Stars Group has
identified and implemented, and continues to implement, steps to
remediate these deficiencies. There were no restatements required
in the 2018 Annual Financial Statements or otherwise as a result of
the foregoing. The impact of translation of intercompany loans was
correctly recorded in the 2018 Annual Financial Statements and
there was no correction required in relation to the valuation of
embedded derivatives. For additional information, see "Disclosure
Controls and Procedures and Internal Control Over Financial
Reporting" in the 2018 Annual MD&A.
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, March 6, 2019 at 8:30 a.m.
ET to discuss its financial results for the fourth quarter
and year ended December 31, 2018 and
related matters, and provide additional detail with respect to the
information in this news release, its webcast presentation, and
related annual reports and filings. To access via tele-conference,
please dial +1-877-451-6152 or +1-201-389-0879 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 13687915. To access the
webcast please use the following link:
http://public.viavid.com/index.php?id=133404.
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. For
additional information, see "Reconciliations" in the 2018 Annual
MD&A.
|
|
Quarter Ended
December 31, 2018
|
|
In thousands of U.S.
Dollars (except per share amounts)
|
|
International
|
|
|
United
Kingdom
|
|
|
Australia
|
|
|
Corporate
|
|
|
Consolidated
|
|
Net earnings
(loss)
|
|
|
94,323
|
|
|
|
(22,519)
|
|
|
|
(1,460)
|
|
|
|
(108,517)
|
|
|
|
(38,173)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
recovery
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(14,450)
|
|
|
|
(14,450)
|
|
Net financing
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(90,813)
|
|
|
|
(90,813)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
|
94,323
|
|
|
|
(22,519)
|
|
|
|
(1,460)
|
|
|
|
(3,254)
|
|
|
|
67,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
35,950
|
|
|
|
55,237
|
|
|
|
8,753
|
|
|
|
85
|
|
|
|
100,025
|
|
Add (deduct) the
impact of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,084
|
|
|
|
3,084
|
|
Stock-based
compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,004
|
|
|
|
4,004
|
|
Loss from
investments
|
|
|
1,297
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,297
|
|
Impairment of
intangibles assets
|
|
|
678
|
|
|
|
602
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,280
|
|
Other costs
(income)
|
|
|
35,614
|
|
|
|
38,697
|
|
|
|
5,918
|
|
|
|
(17,605)
|
|
|
|
62,624
|
|
Total adjusting
items
|
|
|
37,589
|
|
|
|
39,299
|
|
|
|
5,918
|
|
|
|
(10,517)
|
|
|
|
72,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
167,862
|
|
|
|
72,017
|
|
|
|
13,211
|
|
|
|
(13,686)
|
|
|
|
239,404
|
|
|
|
Year Ended
December 31, 2018
|
|
In thousands of U.S.
Dollars (except per share amounts)
|
|
International
|
|
|
United
Kingdom
|
|
|
Australia
|
|
|
Corporate
|
|
|
Consolidated
|
|
Net earnings
(loss)
|
|
|
507,046
|
|
|
|
(51,154)
|
|
|
|
(35,080)
|
|
|
|
(529,718)
|
|
|
|
(108,906)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
recovery
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
988
|
|
|
|
988
|
|
Net financing
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(363,884)
|
|
|
|
(363,884)
|
|
Net earnings from
associates
|
|
|
1,068
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
|
505,978
|
|
|
|
(51,154)
|
|
|
|
(35,080)
|
|
|
|
(166,822)
|
|
|
|
252,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
144,304
|
|
|
|
108,879
|
|
|
|
29,476
|
|
|
|
147
|
|
|
|
282,806
|
|
Add (deduct) the
impact of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
costs and deal contingent forwards
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
115,569
|
|
|
|
115,569
|
|
Stock-based
compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,806
|
|
|
|
12,806
|
|
Loss from investments
and associates
|
|
|
1,667
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,667
|
|
Impairment of
intangibles assets and assets held for sale
|
|
|
5,621
|
|
|
|
602
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,223
|
|
Other costs
(income)
|
|
|
43,317
|
|
|
|
41,633
|
|
|
|
26,676
|
|
|
|
(2,670)
|
|
|
|
108,956
|
|
Total adjusting
items
|
|
|
50,605
|
|
|
|
42,235
|
|
|
|
26,676
|
|
|
|
125,705
|
|
|
|
245,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
700,887
|
|
|
|
99,960
|
|
|
|
21,072
|
|
|
|
(40,970)
|
|
|
|
780,949
|
|
|
|
Quarter Ended
December 31, 2017
|
|
In thousands of U.S.
Dollars (except per share amounts)
|
|
International
|
|
|
United
Kingdom
|
|
|
Australia
|
|
|
Corporate
|
|
|
Consolidated
|
|
Net earnings
(loss)
|
|
|
135,153
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(87,978)
|
|
|
|
47,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
recovery
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(26,352)
|
|
|
|
(26,352)
|
|
Net financing
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(38,739)
|
|
|
|
(38,739)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
|
135,153
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(22,887)
|
|
|
|
112,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
38,213
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
|
38,221
|
|
Add (deduct) the
impact of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,708
|
|
|
|
2,708
|
|
Gain from
investments
|
|
|
(20,032)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(20,032)
|
|
Impairment of
intangibles assets and assets held for sale
|
|
|
1,630
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,630
|
|
Other costs
|
|
|
3,176
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,033
|
|
|
|
12,209
|
|
Total adjusting
items
|
|
|
(15,226)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11,741
|
|
|
|
(3,485)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
158,140
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(11,138)
|
|
|
|
147,002
|
|
|
|
Year Ended
December 31, 2017
|
|
In thousands of U.S.
Dollars (except per share amounts)
|
|
International
|
|
|
United
Kingdom
|
|
|
Australia
|
|
|
Corporate
|
|
|
Consolidated
|
|
Net earnings
(loss)
|
|
|
513,819
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(254,534)
|
|
|
|
259,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
recovery
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(27,208)
|
|
|
|
(27,208)
|
|
Net financing
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(158,332)
|
|
|
|
(158,332)
|
|
Net loss from
associates
|
|
|
(2,569)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,569)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
|
516,388
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(68,994)
|
|
|
|
447,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
147,027
|
|
|
|
—
|
|
|
|
—
|
|
|
|
159
|
|
|
|
147,186
|
|
Add (deduct) the
impact of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,622
|
|
|
|
10,622
|
|
Gain from
investments
|
|
|
(29,169)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,429)
|
|
|
|
(33,598)
|
|
Impairment of
intangibles assets and assets held for sale
|
|
|
(4,532)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,267)
|
|
|
|
(6,799)
|
|
Other costs
|
|
|
6,690
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28,811
|
|
|
|
35,501
|
|
Total adjusting
items
|
|
|
(27,011)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
32,737
|
|
|
|
5,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
636,404
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(36,098)
|
|
|
|
600,306
|
|
|
|
Quarter Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
In thousands of U.S.
Dollars (except per share amounts)
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Net (loss)
earnings
|
|
|
(38,173)
|
|
|
|
47,175
|
|
|
|
(108,906)
|
|
|
|
259,285
|
|
Income tax (recovery)
expense
|
|
|
14,450
|
|
|
|
26,352
|
|
|
|
(988)
|
|
|
|
27,208
|
|
Net loss
(earnings) before tax
|
|
|
(23,723)
|
|
|
|
73,527
|
|
|
|
(109,894)
|
|
|
|
286,493
|
|
Add (deduct) the
impact of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
accretion
|
|
|
12,367
|
|
|
|
12,057
|
|
|
|
42,431
|
|
|
|
47,764
|
|
Loss on debt
extinguishment
|
|
|
3,453
|
|
|
|
—
|
|
|
|
146,950
|
|
|
|
—
|
|
Re-measurement of
contingent consideration
|
|
|
(9,095)
|
|
|
|
—
|
|
|
|
(342)
|
|
|
|
—
|
|
Re-measurement of
embedded derivative
|
|
|
17,400
|
|
|
|
—
|
|
|
|
6,100
|
|
|
|
—
|
|
Ineffectiveness on
cash flow hedges
|
|
|
(2,960)
|
|
|
|
—
|
|
|
|
(14,909)
|
|
|
|
—
|
|
Acquisition-related
costs and deal contingent forwards
|
|
|
3,084
|
|
|
|
—
|
|
|
|
115,569
|
|
|
|
—
|
|
Amortization of
acquisition intangibles
|
|
|
86,686
|
|
|
|
31,075
|
|
|
|
241,651
|
|
|
|
124,301
|
|
Stock-based
compensation
|
|
|
4,004
|
|
|
|
2,708
|
|
|
|
12,806
|
|
|
|
10,622
|
|
Loss (gain) from
investments and associates
|
|
|
1,297
|
|
|
|
(20,032)
|
|
|
|
599
|
|
|
|
(31,029)
|
|
Impairment (reversal
of impairment) of intangibles assets and assets held for
sale
|
|
|
1,280
|
|
|
|
1,630
|
|
|
|
6,223
|
|
|
|
(6,799)
|
|
Other costs
|
|
|
62,624
|
|
|
|
12,209
|
|
|
|
108,956
|
|
|
|
35,502
|
|
Adjust for income tax
expense
|
|
|
(11,754)
|
|
|
|
(1,223)
|
|
|
|
(22,192)
|
|
|
|
(7,914)
|
|
Adjusted Net
Earnings
|
|
|
144,663
|
|
|
|
111,951
|
|
|
|
533,948
|
|
|
|
458,940
|
|
Adjusted Net
Earnings attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of The
Stars Group Inc.
|
|
|
141,738
|
|
|
|
111,951
|
|
|
|
531,168
|
|
|
|
458,940
|
|
Non-controlling
interest
|
|
|
2,925
|
|
|
|
—
|
|
|
|
2,780
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted number of Common Shares
|
|
|
273,294,532
|
|
|
|
206,807,485
|
|
|
|
242,768,766
|
|
|
|
203,707,589
|
|
Adjusted Diluted
Net Earnings per Share
|
|
|
0.52
|
|
|
|
0.54
|
|
|
|
2.19
|
|
|
|
2.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table below presents certain items comprising "Other costs"
in the reconciliation tables above:
|
|
Quarter Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
In thousands of U.S.
Dollars
|
|
$000's
|
|
|
$000's
|
|
|
$000's
|
|
|
$000's
|
|
Integration
costs
|
|
|
17,042
|
|
|
|
—
|
|
|
|
45,597
|
|
|
|
—
|
|
Financial
expenses
|
|
|
10,547
|
|
|
|
719
|
|
|
|
7,648
|
|
|
|
3,781
|
|
Restructuring
expenses
|
|
|
2,283
|
|
|
|
1,676
|
|
|
|
8,827
|
|
|
|
5,842
|
|
AMF and other
investigation professional fees
|
|
|
2,902
|
|
|
|
2,544
|
|
|
|
6,673
|
|
|
|
6,432
|
|
Lobbying (US and
Non-US) and other legal expenses
|
|
|
6,276
|
|
|
|
4,862
|
|
|
|
16,194
|
|
|
|
17,095
|
|
Professional fees in
connection with non-core activities
|
|
|
2,602
|
|
|
|
912
|
|
|
|
4,578
|
|
|
|
3,080
|
|
Retention
bonuses
|
|
|
—
|
|
|
|
117
|
|
|
|
259
|
|
|
|
1,388
|
|
Loss on disposal of
assets
|
|
|
—
|
|
|
|
—
|
|
|
|
41
|
|
|
|
599
|
|
Refund of Austria
gaming duty
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,679)
|
|
|
|
(5,000)
|
|
Termination of
affiliate agreements
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
407
|
|
Acquisition of option
rights for market access
|
|
|
20,661
|
|
|
|
—
|
|
|
|
20,661
|
|
|
|
—
|
|
Other
|
|
|
311
|
|
|
|
1,379
|
|
|
|
2,157
|
|
|
|
1,877
|
|
Other
costs
|
|
|
62,624
|
|
|
|
12,209
|
|
|
|
108,956
|
|
|
|
35,501
|
|
The table below presents a reconciliation of Free Cash Flow to
net cash flows from operating activities, which is the nearest IFRS
measure:
|
Quarter Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
In thousands of U.S.
Dollars
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Net cash inflows from
operating activities
|
|
190,537
|
|
|
|
123,757
|
|
|
|
559,844
|
|
|
|
494,600
|
|
Customer deposit
liability movement
|
|
4,712
|
|
|
|
8,526
|
|
|
|
(7,637)
|
|
|
|
30,924
|
|
|
|
195,249
|
|
|
|
132,283
|
|
|
|
552,207
|
|
|
|
525,524
|
|
Capital
Expenditure:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to deferred
development costs
|
|
(18,888)
|
|
|
|
(6,511)
|
|
|
|
(51,574)
|
|
|
|
(23,212)
|
|
Additions to property
and equipment
|
|
(15,161)
|
|
|
|
(5,490)
|
|
|
|
(33,952)
|
|
|
|
(10,997)
|
|
Additions to
intangible assets
|
|
(11,934)
|
|
|
|
(409)
|
|
|
|
(28,202)
|
|
|
|
(1,893)
|
|
Interest
paid
|
|
(57,771)
|
|
|
|
(29,007)
|
|
|
|
(186,162)
|
|
|
|
(124,627)
|
|
Debt servicing cash
flows (excluding voluntary prepayments)
|
|
(8,937)
|
|
|
|
(6,012)
|
|
|
|
(29,367)
|
|
|
|
(24,913)
|
|
Free Cash
Flow
|
|
82,558
|
|
|
|
84,854
|
|
|
|
222,950
|
|
|
|
339,882
|
|
The table below presents a reconciliation of Net Debt:
|
|
|
|
In thousands of U.S.
Dollars
|
As at December 31,
2018
|
|
Current portion of
long-term debt
|
|
35,750
|
|
Long-term
debt
|
|
5,411,208
|
|
Less: Cash and cash
equivalents - operational
|
|
392,853
|
|
Net
Debt
|
|
5,054,105
|
|
The Stars Group has not provided a reconciliation of the
non-IFRS measures to the nearest IFRS measures included in its full
year 2019 financial guidance provided in this news release because
certain reconciling or adjusting items and costs for 2019 cannot be
projected or predicted with reasonable certainty without
unreasonable effort due to a number of factors, including
variability from potential foreign exchange fluctuations impacting
financial expenses, the nature and timing of other non-recurring or
one-time costs (such as impairment of intangibles assets and
certain professional fees), which could vary materially based on
actual events or transactions or unknown or unpredictable
variables, as well as the typical variability arising from the
preparation and completion of annual financial statements,
including, without limitation, certain income tax provision
accounting, annual impairment testing and other accounting matters.
Other adjusting items and costs (such as stock-based compensation,
acquisition and integration-related costs, operational
efficiency-related costs and other strategy-related expenses) may
otherwise reveal commercially or competitively sensitive
information.
The table below presents a reconciliation of The Stars Group's
2019 financial guidance ranges for Adjusted EBITDA and Adjusted
Diluted Net Earnings per Share to their corresponding 2018
historical balances. Reconciliations of such 2018 historical
balances to their nearest non-IFRS measures are presented
above.
In thousands of U.S.
Dollars (except per share amounts)
|
|
2018
Actual
|
|
|
2019
Guidance
Low1
|
|
|
2019
Guidance
High1
|
|
Operating Income
(loss)
|
|
|
253
|
|
|
|
450
|
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
283
|
|
|
|
450
|
|
|
|
430
|
|
Add (deduct) the
impact of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusting
items2
|
|
|
136
|
|
|
|
10
|
|
|
|
20
|
|
Other
costs3
|
|
|
109
|
|
|
|
50
|
|
|
|
60
|
|
Total
Adjustments
|
|
|
245
|
|
|
|
60
|
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
781
|
|
|
|
960
|
|
|
|
1,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization4
|
|
|
41
|
|
|
|
85
|
|
|
|
75
|
|
Interest5
|
|
|
184
|
|
|
|
300
|
|
|
|
290
|
|
Taxes6
|
|
|
22
|
|
|
|
52
|
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Earnings
|
|
|
534
|
|
|
|
523
|
|
|
|
587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Earnings
attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of The
Stars Group Inc.
|
|
|
531
|
|
|
|
518
|
|
|
|
584
|
|
Non-controlling
Interest
|
|
|
3
|
|
|
|
5
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
Shares
|
|
|
243
|
|
|
|
277
|
|
|
|
277
|
|
Adjusted Diluted
Net Earnings per Share
|
|
|
2.19
|
|
|
|
1.87
|
|
|
|
2.11
|
|
|
1 For
relevant assumptions, see above under "2019 Financial Guidance".
Note that certain reconciling or adjusting items and costs for 2019
cannot be projected or predicted with reasonable certainty without
unreasonable effort due to a number of factors, including
variability from potential foreign exchange fluctuations impacting
financial expenses, the nature and timing of other non-recurring or
one-time costs (such as impairment of intangibles assets and
certain professional fees), which could vary materially based on
actual events or transactions or unknown or unpredictable
variables, as well as the typical variability arising from the
preparation and completion of annual financial statements,
including, without limitation, certain income tax provision
accounting, annual impairment testing and other accounting matters.
Other adjusting items and costs (such as stock-based compensation,
acquisition and integration-related costs, operational
efficiency-related costs and other strategy-related expenses) may
otherwise reveal commercially or competitively sensitive
information
|
2 With respect to the relevant
adjusting items for 2018 (excluding "Other costs"), see the
Adjusted EBITDA reconciliation above. With respect to 2019, The
Stars Group currently expects to incur and adjust for substantially
similar items as it did in 2018 except for "acquisition-related
costs and deal contingent forwards", which related to the
acquisitions of Sky Betting & Gaming and BetEasy and comprised
the majority of such adjusting items in that year
|
3 With respect to 2018, see the table
above which presents certain items comprising "Other costs". With
respect to 2019, The Stars Group currently expects to incur and
adjust for substantially similar costs as it did in 2018
|
4 "Depreciation and amortization"
means total depreciation and amortization, excluding amortization
of acquisition intangibles, which is not adjusted for in this
measure
|
5 "Interest" means total net
financing charges, including interest on long term debt and other
interest (income) expense but excluding interest accretion,
ineffectiveness on cash flow hedges, re-measurement of deferred
contingent consideration, and re-measurement of embedded
derivatives, each of which is not adjusted for in this
measure
|
6 "Taxes" means total income tax
expense, excluding the impact of tax on "Adjusting items" and
"Other costs" included in the calculation of Adjusted EBITDA for
each period
|
For additional information on The Stars Group's non-IFRS
measures, see below and the 2018 Annual MD&A, including under
the headings "Management's Discussion and Analysis", "Non-IFRS
Measures, Key Metrics and Other Data", "Segment Results of
Operations" and "Reconciliations".
About The Stars Group
The Stars Group is a provider of technology-based product
offerings in the global gaming and interactive entertainment
industries. Its brands have millions of registered customers
globally and collectively are leaders in online and mobile betting,
poker, casino and other gaming-related offerings. The Stars Group
owns or licenses gaming and related consumer businesses and brands,
including 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 21 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:
customer and operator preferences and changes in the economy;
reputation and brand growth; competition and the competitive
environment within addressable markets and industries;
macroeconomic conditions and trends in the gaming and betting
industry; ability to predict fluctuations in financial results from
quarter to quarter; 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 substantial
indebtedness requires that it use a significant portion of its cash
flow to make debt service payments; impact of inability to complete
future or announced acquisitions or to integrate businesses
successfully, including, without limitation, Sky Betting &
Gaming and BetEasy; 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 applicable law; ability to mitigate foreign
exchange and currency risks; legal and regulatory requirements;
potential changes to the gaming regulatory framework; the heavily
regulated industry in which The Stars Group carries on its
business; 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; social responsibility concerns
and public opinion; protection of proprietary technology and
intellectual property rights; intellectual property infringement or
invalidity claims; and systems, networks, telecommunications or
service disruptions or failures or cyber-attacks and failure to
protect customer data, including personal and financial
information. 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 2018 AIF, including under the heading "Risk Factors and
Uncertainties", and in the 2018 Annual MD&A, including under
the headings "Caution Regarding Forward-Looking Statements", "Risk
Factors and Uncertainties" and "Non-IFRS Measures, Key Metrics and
Other Data", 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. The
Stars Group believes these non-IFRS financial measures will provide
investors with useful supplemental information about the financial
and operational 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, identifying and evaluating trends, and
making decisions. The Stars Group believes that such non-IFRS
financial measures provide useful information about its underlying,
core operating results and trends, enhance the overall
understanding of its past performance and future prospects and
allow for greater transparency with respect to metrics and measures
used by management in its financial and operational
decision-making.
Although management believes these non-IFRS 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
any may not be comparable to similar meanings prescribed by other
companies, limiting its usefulness for comparison purposes.
Moreover, presentation of certain of these measures is provided for
period-over-period 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 "Reconciliations" below.
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, as previously disclosed, The
Stars Group makes adjustments for (i) the re-measurement of
contingent consideration, which was previously included in, and
adjusted for through, interest accretion, but starting with The
Stars Group's interim condensed consolidated financial statements
and related notes for the three and nine months ended September 30, 2018 (the "Q3 2018 Financial
Statements"), it is a separate line item, (ii) the re-measurement
of embedded derivatives and ineffectiveness on cash flow hedges,
each of which were 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. Adjusted Net Earnings and any other
non-IFRS measures used by The Stars Group that relies on or
otherwise incorporates Adjusted Net Earnings that was reported for
previous periods have not been restated under the updated
definition on the basis that The Stars Group believes that the
impact of the change to those periods would not be material.
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 such as warrants and
any convertible preferred shares of The Stars Group then
outstanding. 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. For the quarter and year ended December 31, 2018, Diluted Shares used for the
calculation of Adjusted Diluted Net Earnings per Share equalled
273,294,532 and 242,768,766, respectively, compared with
206,807,485 and 203,707,589 for the same periods in 2017,
respectively.
Constant Currency Revenue means IFRS reported revenue for the
relevant period calculated using the prior year's monthly average
exchange rates for its local currencies other than the U.S. dollar.
Currently, The Stars Group provides Constant Currency Revenue for
the International segment and its applicable lines of operations.
It does not currently provide Constant Currency Revenue for the
United Kingdom and Australia segments because The Stars Group
does not have comparative periods for these segments.
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).
Net Debt means total long-term debt less operational cash.
For additional information on certain of The Stars Group's
non-IFRS measures and the reasons why it believes such measures are
useful, see above and the 2018 Annual MD&A, including under the
headings "Management's Discussion and Analysis", "Non-IFRS
Measures, Key Metrics and Other Data", "Segment Results of
Operations" and "Reconciliations".
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 SBG 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 active
unique customer 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.
QNY means combined revenue for its lines of operation (i.e.,
Poker, Gaming and/or Betting, as applicable) for each reporting
segment, excluding Other revenue, 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.
Net Deposits for the International segment 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 means Betting revenue as a proportion of
Stakes.
The Stars Group is also in the process of integrating its recent
acquisitions, as applicable, and implementing its recently changed
operating and reporting segments, and once complete, The Stars
Group may revise or remove currently presented key metrics or
report certain additional or other measures in the future.
For additional information on The Stars Group's key metrics and
other data, see the 2018 Annual MD&A, including under the
headings "Non-IFRS Measures, Key Metrics and Other Data" and
"Segment Results of Operations".
CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS
|
|
|
|
Year Ended
December 31,
|
|
In thousands of U.S.
Dollars (except per share amounts)
|
|
|
|
2018
|
|
|
2017
|
|
Revenue
|
|
|
|
|
2,029,238
|
|
|
|
1,312,315
|
|
Cost of revenue
(excluding depreciation and amortization)
|
|
|
|
|
(459,164)
|
|
|
|
(247,497)
|
|
Gross profit
(excluding depreciation and amortization)
|
|
|
|
|
1,570,074
|
|
|
|
1,064,818
|
|
General and
administrative
|
|
|
|
|
(984,194)
|
|
|
|
(437,886)
|
|
Sales and
marketing
|
|
|
|
|
(292,963)
|
|
|
|
(154,358)
|
|
Research and
development
|
|
|
|
|
(39,995)
|
|
|
|
(25,180)
|
|
Operating
income
|
|
|
|
|
252,922
|
|
|
|
447,394
|
|
Net earnings from
associates
|
|
|
|
|
1,068
|
|
|
|
(2,569)
|
|
Net financing
charges
|
|
|
|
|
(363,884)
|
|
|
|
(158,332)
|
|
(Loss) earnings
before income taxes
|
|
|
|
|
(109,894)
|
|
|
|
286,493
|
|
Income tax
recovery
|
|
|
|
|
988
|
|
|
|
(27,208)
|
|
Net (loss)
earnings
|
|
|
|
|
(108,906)
|
|
|
|
259,285
|
|
Net (loss)
earnings attributable to
|
|
|
|
|
|
|
|
|
|
|
Shareholders of The
Stars Group Inc.
|
|
|
|
|
(102,452)
|
|
|
|
259,231
|
|
Non-controlling
interest
|
|
|
|
|
(6,454)
|
|
|
|
54
|
|
Net (loss)
earnings
|
|
|
|
|
(108,906)
|
|
|
|
259,285
|
|
(Loss) earnings
per Common Share (U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
(0.49)
|
|
|
$
|
1.77
|
|
Diluted
|
|
|
|
$
|
(0.49)
|
|
|
$
|
1.27
|
|
Weighted Average
Common Shares Outstanding (thousands)
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
208,270
|
|
|
|
146,819
|
|
Diluted
|
|
|
|
|
208,270
|
|
|
|
203,708
|
|
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
|
|
|
As at
December 31,
|
|
|
As at December
31,
|
|
In thousands of U.S.
Dollars
|
|
|
|
2018
|
|
|
2017
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents -
operational
|
|
|
|
|
392,853
|
|
|
|
283,225
|
|
Cash and cash equivalents -
customer deposits
|
|
|
|
|
328,223
|
|
|
|
227,098
|
|
Total cash and cash
equivalents
|
|
|
|
|
721,076
|
|
|
|
510,323
|
|
Restricted cash
advances and collateral
|
|
|
|
|
10,819
|
|
|
|
7,862
|
|
Prepaid expenses and
other current assets
|
|
|
|
|
43,945
|
|
|
|
29,695
|
|
Current investments -
customer deposits
|
|
|
|
|
103,153
|
|
|
|
122,668
|
|
Accounts
receivable
|
|
|
|
|
136,347
|
|
|
|
100,409
|
|
Income tax
receivable
|
|
|
|
|
26,085
|
|
|
|
16,540
|
|
Derivatives
|
|
|
|
|
—
|
|
|
|
2,037
|
|
Total current
assets
|
|
|
|
|
1,041,425
|
|
|
|
789,534
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
|
|
Restricted cash
advances and collateral
|
|
|
|
|
10,630
|
|
|
|
45,834
|
|
Prepaid expenses and
other non-current assets
|
|
|
|
|
32,760
|
|
|
|
26,551
|
|
Non-current accounts
receivable
|
|
|
|
|
14,906
|
|
|
|
11,818
|
|
Property and
equipment
|
|
|
|
|
85,169
|
|
|
|
44,837
|
|
Income tax
receivable
|
|
|
|
|
15,611
|
|
|
|
14,061
|
|
Deferred income
taxes
|
|
|
|
|
1,775
|
|
|
|
5,141
|
|
Derivatives
|
|
|
|
|
54,583
|
|
|
|
—
|
|
Intangible
assets
|
|
|
|
|
4,742,699
|
|
|
|
1,672,140
|
|
Goodwill
|
|
|
|
|
5,265,980
|
|
|
|
2,805,210
|
|
Total non-current
assets
|
|
|
|
|
10,224,113
|
|
|
|
4,625,592
|
|
Total
assets
|
|
|
|
|
11,265,538
|
|
|
|
5,415,126
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and
other liabilities
|
|
|
|
|
424,007
|
|
|
|
194,187
|
|
Customer
deposits
|
|
|
|
|
423,739
|
|
|
|
349,766
|
|
Current
provisions
|
|
|
|
|
39,189
|
|
|
|
17,590
|
|
Derivatives
|
|
|
|
|
16,493
|
|
|
|
—
|
|
Income tax
payable
|
|
|
|
|
72,796
|
|
|
|
35,941
|
|
Current portion of
long-term debt
|
|
|
|
|
35,750
|
|
|
|
4,990
|
|
Total current
liabilities
|
|
|
|
|
1,011,974
|
|
|
|
602,474
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
|
|
5,411,208
|
|
|
|
2,353,579
|
|
Long-term
provisions
|
|
|
|
|
4,002
|
|
|
|
3,093
|
|
Derivatives
|
|
|
|
|
6,068
|
|
|
|
111,762
|
|
Other long-term
liabilities
|
|
|
|
|
79,716
|
|
|
|
—
|
|
Income tax
payable
|
|
|
|
|
18,473
|
|
|
|
24,277
|
|
Deferred income
taxes
|
|
|
|
|
580,697
|
|
|
|
16,510
|
|
Total non-current
liabilities
|
|
|
|
|
6,100,164
|
|
|
|
2,509,221
|
|
Total
liabilities
|
|
|
|
|
7,112,138
|
|
|
|
3,111,695
|
|
EQUITY
|
|
|
|
|
-
|
|
|
|
-
|
|
Share
capital
|
|
|
|
|
4,116,287
|
|
|
|
1,884,219
|
|
Reserves
|
|
|
|
|
(469,629)
|
|
|
|
(142,340)
|
|
Retained
earnings
|
|
|
|
|
502,761
|
|
|
|
561,519
|
|
Equity
attributable to the Shareholders of The Stars Group
Inc.
|
|
|
|
|
4,149,419
|
|
|
|
2,303,398
|
|
Non-controlling
interest
|
|
|
|
|
3,981
|
|
|
|
33
|
|
Total
equity
|
|
|
|
|
4,153,400
|
|
|
|
2,303,431
|
|
Total liabilities
and equity
|
|
|
|
|
11,265,538
|
|
|
|
5,415,126
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Year Ended
December 31,
|
|
In thousands of U.S.
Dollars
|
|
2018
|
|
|
2017
|
|
Operating
activities
|
|
|
|
|
|
|
|
|
Net (loss)
earnings
|
|
|
(108,906)
|
|
|
|
259,285
|
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
Income tax (recovery)
expense recognized in net earnings
|
|
|
(988)
|
|
|
|
27,208
|
|
Net financing
charges
|
|
|
363,884
|
|
|
|
156,842
|
|
Depreciation and
amortization
|
|
|
282,806
|
|
|
|
147,186
|
|
Stock-based
compensation
|
|
|
12,806
|
|
|
|
10,622
|
|
Acquisition of market
access rights in connection with Eldorado
|
|
|
20,661
|
|
|
|
—
|
|
Unrealized loss (gain)
on foreign exchange
|
|
|
25,336
|
|
|
|
(10,324)
|
|
Unrealized (gain) on
investments
|
|
|
(673)
|
|
|
|
(170)
|
|
Impairment (reversal
of impairment) of intangible assets and assets held for
sale
|
|
|
6,156
|
|
|
|
(6,799)
|
|
Net (earnings) loss
from associates
|
|
|
(1,068)
|
|
|
|
2,569
|
|
Realized loss (gain)
on current investments and promissory note
|
|
|
2,727
|
|
|
|
(50,038)
|
|
Income taxes
paid
|
|
|
(41,117)
|
|
|
|
(9,357)
|
|
Changes in non-cash
operating elements of working capital
|
|
|
(9,403)
|
|
|
|
(3,801)
|
|
Customer deposit
liability movement
|
|
|
7,637
|
|
|
|
(30,924)
|
|
Other
|
|
|
(14)
|
|
|
|
2,301
|
|
Net cash inflows
from operating activities
|
|
|
559,844
|
|
|
|
494,600
|
|
Investing
activities
|
|
|
|
|
|
|
|
|
Acquisition of
subsidiaries, net of cash acquired
|
|
|
(1,865,262)
|
|
|
|
(6,516)
|
|
Additions to
intangible assets
|
|
|
(28,202)
|
|
|
|
(1,893)
|
|
Additions to property
and equipment
|
|
|
(33,952)
|
|
|
|
(10,997)
|
|
Additions to deferred
development costs
|
|
|
(51,574)
|
|
|
|
(23,212)
|
|
Net sale of
investments utilizing customer deposits
|
|
|
19,515
|
|
|
|
117,106
|
|
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
|
|
Sale of
investments
|
|
|
—
|
|
|
|
88,760
|
|
Settlement of minimum
revenue guarantee
|
|
|
(7,006)
|
|
|
|
(9,311)
|
|
Other
|
|
|
(3,760)
|
|
|
|
(1,298)
|
|
Net cash
(outflows) inflows from investing activities
|
|
|
(1,934,173)
|
|
|
|
174,850
|
|
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
|
|
|
31,066
|
|
|
|
16,665
|
|
Redemption of SBG
preferred shares
|
|
|
(663,407)
|
|
|
|
—
|
|
Repayment of
shareholder loan on acquisition
|
|
|
(10,879)
|
|
|
|
—
|
|
Issuance of long-term
debt
|
|
|
5,957,976
|
|
|
|
—
|
|
Transaction costs on
long-term debt
|
|
|
(36,559)
|
|
|
|
(4,719)
|
|
Repayment of
long-term debt
|
|
|
(2,974,393)
|
|
|
|
(139,913)
|
|
Repayment of
long-term debt assumed on business combination
|
|
|
(1,079,729)
|
|
|
|
—
|
|
Interest
paid
|
|
|
(186,162)
|
|
|
|
(124,627)
|
|
Net proceeds on loan
from non-controlling interest
|
|
|
31,730
|
|
|
|
—
|
|
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
|
|
|
1,592,579
|
|
|
|
(443,802)
|
|
Increase in cash and
cash equivalents
|
|
|
218,250
|
|
|
|
225,648
|
|
Unrealized foreign
exchange difference on cash and cash equivalents
|
|
|
(7,497)
|
|
|
|
16,991
|
|
Cash and cash
equivalents – beginning of period
|
|
|
510,323
|
|
|
|
267,684
|
|
Cash and cash
equivalents - end of period
|
|
|
721,076
|
|
|
|
510,323
|
|
|
|
|
|
|
|
|
|
|
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SOURCE The Stars Group Inc.