TORONTO, Aug. 12, 2019 /PRNewswire/ -- The
Stars Group Inc. (NASDAQ: TSG) (TSX: TSGI) today reported its
financial results for the second quarter ended June 30, 2019, provided updated 2019 full year
guidance ranges, announced the appointment of an additional
independent director to its Board of Directors, and provided
certain additional highlights and updates. Unless otherwise noted,
all dollar ($) amounts are in U.S. dollars.
"The second quarter underpinned the success of last year's
acquisitions, particularly with the record performance of Sky
Betting & Gaming and our increasing product and geographic
diversification, as we continue to transform and position the
business to execute on our strategy for strong, sustainable future
growth," said Rafi Ashkenazi, The Stars Group's Chief Executive
Officer.
"2019 has been and remains a year of integration, execution and
debt reduction," said Mr. Ashkenazi. "We are committed to those key
strategic priorities for the rest of the year while we also build
our foundation and momentum to become a market leader in the U.S.
We are confident that the actions we have taken over the last year,
and are pursuing now, including to reassess our fixed cost base,
put us in a strong position to deliver our mid-term growth targets
from the end of 2019," concluded Mr. Ashkenazi.
|
Second Quarter
2019 Summary
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
In thousands of U.S.
Dollars
(except percentages and
per share amounts)
|
|
2019
|
|
2018
|
|
%
Change
|
|
2019
|
|
2018
|
|
%
Change
|
|
Total
revenue
|
|
637,618
|
|
411,512
|
|
54.9
|
%
|
|
1,218,002
|
|
|
804,403
|
|
|
51.4
|
%
|
|
Gross profit (excluding
depreciation and amortization)
|
|
463,708
|
|
327,875
|
|
41.4
|
%
|
|
881,456
|
|
|
640,502
|
|
|
37.6
|
%
|
|
Operating
income
|
|
93,955
|
|
1,064
|
|
8,730.4
|
%
|
|
155,492
|
|
|
114,931
|
|
|
35.3
|
%
|
|
Net earnings
(loss)
|
|
4,629
|
|
(154,824)
|
|
103.0
|
%
|
|
32,287
|
|
|
(80,463)
|
|
|
140.1
|
%
|
|
Adjusted Net Earnings
¹
|
|
137,469
|
|
131,023
|
|
4.9
|
%
|
|
243,069
|
|
|
269,785
|
|
|
(9.9)
|
%
|
|
Adjusted EBITDA
¹
|
|
236,734
|
|
168,271
|
|
40.7
|
%
|
|
432,089
|
|
|
343,293
|
|
|
25.9
|
%
|
|
Adjusted EBITDA Margin
¹
|
|
37.1
|
%
|
40.9
|
%
|
(9.3)
|
%
|
|
35.5
|
%
|
|
42.7
|
%
|
|
(16.9)
|
%
|
|
Diluted earnings (loss)
per Common Share
($/Share)
|
|
0.02
|
|
(1.01)
|
|
101.7
|
%
|
|
0.12
|
|
|
(0.52)
|
|
|
122.6
|
%
|
|
Adjusted Diluted Net
Earnings per Share
($/Share) ¹
|
|
0.48
|
|
0.60
|
|
(19.4)
|
%
|
|
0.87
|
|
|
1.27
|
|
|
(31.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflows from
operating activities
|
|
173,208
|
|
164,011
|
|
5.6
|
%
|
|
283,593
|
|
|
296,080
|
|
|
(4.2)
|
%
|
|
Free Cash Flow
¹
|
|
84,820
|
|
84,856
|
|
—
|
%
|
|
47,307
|
|
|
167,115
|
|
|
(71.7)
|
%
|
|
As at
|
|
June 30,
2019
|
|
December 31,
2018
|
|
%
Change
|
|
Long-term debt -
principal
|
|
5,195,398
|
|
5,666,075
|
|
(8.3)
|
%
|
|
Long-term debt -
carrying value
|
|
5,088,915
|
|
5,446,958
|
|
(6.6)
|
%
|
|
Cash -
operational
|
|
339,239
|
|
392,853
|
|
(13.6)
|
%
|
_____________________________
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".
- Revenue – Revenue for the quarter increased primarily as
a result of the contribution from Sky Betting & Gaming, which
The Stars Group acquired in July
2018. During the quarter, online sports betting was The
Stars Group's largest product vertical (36% versus 20% in 2018),
followed by online casino (31% versus 25% in 2018) and online poker
(30% versus 53% in 2018), while 79% of consolidated revenues were
derived from locally regulated or taxed markets (61% in 2018).
Additional segment specific factors impacting revenue are described
below.
- Debt and Cash – During the quarter, The Stars Group
prepaid $250 million outstanding on
its USD first lien term loan, and ended the quarter with
approximately $339.2 million in
operational cash and $5.1 billion of
debt on its balance sheet, resulting in Net Debt of $4.7 billion.
- FOX Bet – In May, The Stars Group and FOX Sports
announced plans to launch FOX Bet, the first-of-its kind national
media and sports wagering partnership in the United States. In addition to a commercial
agreement of up to 25 years and associated product launches,
including real-money and free-to-play games, FOX also acquired
4.99% of The Stars Group's then-issued and outstanding common
shares for aggregate proceeds of $236.0
million. FOX Bet currently remains on track to launch in
applicable states prior to the start of the NFL season.
- U.S. Market Access Update – In July, The Stars Group
announced agreements with Penn National Gaming and the Akwesasne
Mohawk Casino Resort in New York,
providing market access for online betting and gaming in up to ten
states and extending The Stars Group's aggregate market access to
up to 20 states, subject to license availability, state law and
regulatory approvals.
- Appointment of Independent Director – The Board
appointed John Schappert, effective
August 12, 2019, as a new independent
director and member of the Board's Compensation and Technology
Committees. Mr. Schappert, 49, has served as the Chairman and
Chief Executive Officer of Shiver Entertainment, a private company
that develops video game software for consoles (PlayStation 4, Xbox
One, Nintendo Switch), PC, and mobile phones and tablets, since
2012. Mr. Schappert also currently serves as the Chairman of
Motorsport Games, a private company that develops and publishes
video games, and Pipeworks Studios, a private company that develops
video games and software, since 2019 and 2018, respectively. Prior
to this, Mr. Schappert served as the Chief Operating Officer for
Zynga Inc. (Nasdaq: ZNGA) from 2011 to 2012 and served on its board
of directors during that time. Mr. Schappert also previously served
as the Chief Operating Officer for Electronic Arts Inc. (Nasdaq:
EA) from 2009 to 2011, and was Corporate Vice President of
Microsoft Corporation's (Nasdaq: MSFT) Interactive Entertainment
Business unit from 2007 to 2009. From 1998 until 2007, Mr.
Schappert held several positions for various divisions of EA,
including Vice President and General Manager of Electronic Arts
Tiburon from 1998 until 2002, Senior Vice President and Group
General Manager of Electronic Arts Canada from 2002 until 2006, and
Executive Vice President and Chief Operating Officer of Worldwide
Studios from 2006 until 2007. Mr. Schappert founded Tiburon
Entertainment, the developer of the Madden NFL video game
franchise, in 1994 and served as President and Chief Executive
Officer until 1998, when it was acquired by EA. From 1991 until
1994, Mr. Schappert was a software engineer and game developer for
Visual Concepts. Mr. Schappert earned an Associates of Arts degree
from Miami Dade Community College in
Miami, Florida.
- Technology Committee of the Board – On August 8, 2019, the Board established a standing
Technology Committee of independent directors, which will have
certain oversight and monitoring responsibilities with respect to
technology-related risks and the overall role of technology in
executing The Stars Group's business strategy. The Technology
Committee is currently comprised of Eugene
Roman, John Schappert and
Mary Turner, with Mr. Roman serving
as the chair.
International
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
In thousands of U.S.
Dollars (except otherwise noted)
|
|
2019
|
2018
|
%
Change
|
|
2019
|
2018
|
|
%
Change
|
|
Stakes
|
|
249,276
|
248,572
|
0.3
|
%
|
|
524,535
|
471,557
|
|
11.2
|
%
|
|
Betting Net Win
Margin (%)
|
|
7.3
%
|
7.9
%
|
(7.6)
|
%
|
|
7.3
%
|
7.7
%
|
|
(5.2)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Poker
|
|
191,496
|
216,986
|
(11.7)
|
%
|
|
405,645
|
462,856
|
|
(12.4)
|
%
|
|
Poker Constant
Currency Revenue
|
|
201,830
|
216,986
|
(7.0)
|
%
|
|
436,686
|
462,856
|
|
(5.7)
|
%
|
|
Gaming
|
|
104,300
|
101,941
|
2.3
|
%
|
|
203,208
|
208,651
|
|
(2.6)
|
%
|
|
Gaming Constant
Currency Revenue
|
|
111,058
|
101,941
|
8.9
|
%
|
|
219,170
|
208,651
|
|
5.0
|
%
|
|
Betting
|
|
18,284
|
19,635
|
(6.9)
|
%
|
|
38,333
|
36,321
|
|
5.5
|
%
|
|
Betting Constant
Currency Revenue
|
|
18,425
|
19,635
|
(6.2)
|
%
|
|
40,330
|
36,321
|
|
11.0
|
%
|
|
Other
|
|
7,792
|
11,673
|
(33.2)
|
%
|
|
15,299
|
24,173
|
|
(36.7)
|
%
|
|
Other Constant
Currency Revenue
|
|
10,126
|
11,673
|
(13.3)
|
%
|
|
18,299
|
24,173
|
|
(24.3)
|
%
|
|
Total
revenue
|
|
321,872
|
350,235
|
(8.1)
|
%
|
|
662,485
|
732,001
|
|
(9.5)
|
%
|
|
Constant
Currency Revenue
|
|
341,439
|
350,235
|
(2.5)
|
%
|
|
714,485
|
732,001
|
|
(2.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QAUs
(millions)
|
|
1.9
|
2.0
|
(4.9)
|
%
|
|
|
|
|
|
|
|
QNY
($/QAU)
|
|
163
|
167
|
(2.4)
|
%
|
|
|
|
|
|
|
|
Constant Currency
Revenue QNY
|
|
172
|
167
|
2.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
(excluding depreciation and amortization)
|
|
248,911
|
281,076
|
(11.4)
|
%
|
|
509,353
|
585,922
|
|
(13.1)
|
%
|
|
Gross profit margin
(%)
|
|
77.3
%
|
80.3
%
|
(3.7)
|
%
|
|
76.9
%
|
80.0
%
|
|
(3.9)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
107,259
|
106,447
|
0.8
|
%
|
|
206,234
|
211,667
|
|
(2.6)
|
%
|
|
Sales and marketing
¹
|
|
36,863
|
42,255
|
(12.8)
|
%
|
|
77,145
|
87,224
|
|
(11.6)
|
%
|
|
Research and
development
|
|
9,287
|
8,358
|
11.1
|
%
|
|
15,889
|
16,177
|
|
(1.8)
|
%
|
|
Operating
income
|
|
95,502
|
124,016
|
(23.0)
|
%
|
|
210,085
|
270,854
|
|
(22.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
2
|
|
143,223
|
164,467
|
(12.9)
|
%
|
|
302,563
|
350,874
|
|
(13.8)
|
%
|
|
Adjusted EBITDA
Margin (%) 2
|
|
44.5
%
|
46.9
%
|
(5.1)
|
%
|
|
45.7
%
|
47.9
%
|
|
(4.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Deposits
(millions)
|
|
307
|
322
|
(4.7)
|
%
|
|
|
|
|
|
|
_____________________________
1 Sales and marketing includes $1.2 million and $2.7
million for the three and six months ended June 30, 2019, respectively, that the Corporation
excluded from its consolidated results as it related to certain
non-gaming related transactions with the United Kingdom segment.
2 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".
- Poker – Poker revenue for the quarter decreased
year-over-year primarily as a result of adverse foreign exchange
fluctuations and continued disruptions and regulatory headwinds in
certain markets, including reduced deposits by customers as a
result of local restrictions on some methods of payment processing
and on certain methods of downloading The Stars Group's poker
applications, which was partially offset by continued organic
growth in most other markets.
- Gaming – Gaming revenue for the quarter increased
year-over-year primarily as a result of organic growth in most
markets, but was adversely impacted by foreign exchange
fluctuations. Organic growth from recently launched products,
including "Spin of the Day" and the continued roll-out of new
casino games, more than offset the impact of exited markets,
notably Switzerland (gaming and
betting) and Slovakia (gaming,
betting and poker) during the first quarter, and regulatory
disruptions in certain markets, including local restrictions on
some methods of payment processing.
- Betting – Betting revenues for the quarter decreased
year-over-year primarily as a result of a lower Betting Net Win
Margin and adverse foreign exchange fluctuations. Stakes, however,
were stable year-over-year with underlying growth offset by the
positive impact of the FIFA World Cup in the prior year period and
adverse foreign exchange fluctuations.
- Customers – QAUs decreased primarily due to reduced
activity in certain markets and the closure of certain markets,
each as noted above.
- International Senior Management Appointments – In
July, The Stars Group appointed Gino Appiotti as President of the
International segment, having previously served as its Managing
Director of Poker. Mr. Appiotti has served The Stars Group in
various senior capacities since 2011 and will report to Mr.
Ashkenazi. In addition, Severin
Rasset was appointed Managing Director & Commercial
Officer of Poker, previously serving as Director of Poker
Innovation and Operations, and Asaf
Noifeld was appointed Managing Director of Casino,
previously serving as Director of Casino Product, Innovation and
Operations, and succeeding Bo Wanghammar, who will assume a new,
broader strategic advisor role to the International segment.
United
Kingdom
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
In thousands of U.S.
Dollars (except otherwise noted)
|
|
2019
|
|
2018
|
|
%
Change
|
|
2019
|
|
2018
|
|
%
Change
|
|
Stakes
|
|
1,507,379
|
|
—
|
|
|
—
|
%
|
|
3,012,351
|
|
—
|
|
|
—
|
%
|
|
Betting Net Win
Margin (%)
|
|
9.7
%
|
|
—
|
%
|
|
—
|
%
|
|
7.3
%
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Poker
|
|
2,714
|
|
—
|
|
|
—
|
%
|
|
6,004
|
|
—
|
|
|
—
|
%
|
|
Gaming
|
|
92,591
|
|
—
|
|
|
—
|
%
|
|
182,894
|
|
—
|
|
|
—
|
%
|
|
Betting
|
|
146,443
|
|
—
|
|
|
—
|
%
|
|
220,940
|
|
—
|
|
|
—
|
%
|
|
Other
¹
|
|
11,128
|
|
—
|
|
|
—
|
%
|
|
22,135
|
|
—
|
|
|
—
|
%
|
|
Total
revenue
|
|
252,876
|
|
—
|
|
|
—
|
%
|
|
431,973
|
|
—
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QAUs
(millions)
|
|
2.2
|
|
—
|
|
|
—
|
%
|
|
|
|
|
|
|
|
QNY
($/QAU)
|
|
112
|
|
—
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
(excluding depreciation and
amortization)
|
|
177,621
|
|
—
|
|
|
—
|
%
|
|
299,146
|
|
—
|
|
|
—
|
%
|
|
Gross profit margin
(%)
|
|
70.2 %
|
|
—
|
%
|
|
—
|
%
|
|
69.3 %
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
108,488
|
|
—
|
|
|
—
|
%
|
|
217,075
|
|
—
|
|
|
—
|
%
|
|
Sales and
marketing
|
|
30,717
|
|
—
|
|
|
—
|
%
|
|
65,311
|
|
—
|
|
|
—
|
%
|
|
Research and
development
|
|
3,535
|
|
—
|
|
|
—
|
%
|
|
7,871
|
|
—
|
|
|
—
|
%
|
|
Operating
income
|
|
34,881
|
|
—
|
|
|
—
|
%
|
|
8,889
|
|
—
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
2
|
|
101,053
|
|
—
|
|
|
—
|
%
|
|
143,272
|
|
—
|
|
|
—
|
%
|
|
Adjusted EBITDA
Margin (%) 2
|
|
40.0
%
|
|
—
|
%
|
|
—
|
%
|
|
33.2
%
|
|
—
|
%
|
|
—
|
%
|
____________________________
1 Other revenue includes $1.2
million and $2.7 million for
the three and six months ended June 30,
2019, respectively, that the Corporation excluded from its
consolidated results as it related to certain non-gaming related
transactions with the International segment.
2 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, which on a local
currency (Great Britain pound
sterling) basis was a Sky Betting & Gaming record, was
primarily driven by strong growth in QAUs and Stakes, largely as a
result of the success of investments in promotional activity in the
first quarter, including during the Cheltenham Festival, one of the
U.K.'s most popular horse racing events. Betting Net Win Margin was
9.7%, slightly above the historical long-term average of
approximately 9%.
- Customers - Record QAUs and Stakes in the quarter, which
were primarily a result of the successful promotional activity and
ongoing product innovation and improvements across betting and
gaming offerings, in each case exceeding the positive impact of the
FIFA World Cup in the prior year period. Stakes continued to see
strong growth from increased new customer engagement, while QAUs
also continued to benefit from the on-going roll-out of
personalized promotions and new and exclusive content across the
Sky Betting & Gaming brands, including the recent launches of
Sky Bingo Arcade and Sky Lotto, a
new free-to-play game.
Australia
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
In thousands of U.S.
Dollars (except otherwise noted)
|
|
2019
|
|
2018
¹
|
|
%
Change
|
|
2019
|
|
2018
¹
|
|
%
Change
|
|
Stakes
|
|
742,312
|
|
|
710,269
|
|
|
4.5
|
%
|
|
1,496,638
|
|
|
867,726
|
|
|
72.5
|
%
|
|
Betting Net Win
Margin (%)
|
|
8.5
|
%
|
|
8.6
|
%
|
|
(1.2)
|
%
|
|
8.3
|
%
|
|
8.3
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Betting
|
|
63,226
|
|
|
61,277
|
|
|
3.2
|
%
|
|
124,346
|
|
|
72,402
|
|
|
71.7
|
%
|
|
Other
|
|
844
|
|
|
—
|
|
|
—
|
%
|
|
1,898
|
|
|
—
|
|
|
—
|
%
|
|
Total
revenue
|
|
64,070
|
|
|
61,277
|
|
|
4.6
|
%
|
|
126,244
|
|
|
72,402
|
|
|
74.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QAUs
(millions)
|
|
0.21
|
|
|
—
|
|
|
—
|
%
|
|
|
|
|
|
|
|
QNY
($/QAU)
|
|
295
|
|
|
—
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
(excluding depreciation and
amortization)
|
|
38,376
|
|
|
46,799
|
|
|
(18.0)
|
%
|
|
75,657
|
|
|
54,435
|
|
|
39.0
|
%
|
|
Gross profit margin
(%)
|
|
59.9
|
%
|
|
76.4
|
%
|
|
(21.6))
|
%
|
|
59.9
|
%
|
|
75.2
|
%
|
|
(20.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
28,821
|
|
|
40,270
|
|
|
(28.4)
|
%
|
|
54,903
|
|
|
44,607
|
|
|
23.1
|
%
|
|
Sales and
marketing
|
|
13,304
|
|
|
12,262
|
|
|
8.5
|
%
|
|
24,068
|
|
|
16,473
|
|
|
46.1
|
%
|
|
Research and
development
|
|
576
|
|
|
768
|
|
|
(25.0)
|
%
|
|
2,149
|
|
|
984
|
|
|
118.4
|
%
|
|
Operating
loss
|
|
(4,325)
|
|
|
(6,501)
|
|
|
33.5
|
%
|
|
(5,463)
|
|
|
(7,629)
|
|
|
28.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
2
|
|
7,192
|
|
|
13,489
|
|
|
(46.7)
|
%
|
|
15,822
|
|
|
12,643
|
|
|
25.1
|
%
|
|
Adjusted EBITDA
Margin (%) 2
|
|
11.2
|
%
|
|
22.0
|
%
|
|
(49.1)
|
%
|
|
12.5
|
%
|
|
17.4
|
%
|
|
(28.2)
|
%
|
_____________________________
1 The Stars Group acquired 62% of BetEasy on
February 27, 2018 and a further 18%
on April 24, 2018, with BetEasy
acquiring William Hill Australia on the same day.
2 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 increased
year-over-year primarily as a result of Stakes growth driven by the
migration of customers of the former William Hill Australia
business to the BetEasy platform and the launch of MyRewards
towards the end of the first quarter. This was partially offset by
the positive impact of the FIFA World Cup in the prior year period.
Betting Net Win Margin of 8.5% was in line with the long-term
historical average.
- Customers – QAUs improved from the prior quarter
driven by continued player acquisition, but decreased from the
prior year period primarily as a result of the migration of
customers of the former William Hill Australia business to the
BetEasy platform beginning in August
2018, and an increased focus on high-value, recreational
customers. QNY benefited from encouraging results from the
continued roll-out of MyRewards, allowing for targeted,
personalized promotions.
- Kayo Sports – In May 2019,
BetEasy announced a new partnership with Kayo Sports to become the
exclusive wagering partner of the Australian multi-sport streaming
service. Under the two-year agreement, BetEasy and Kayo will work
together to deliver innovative content, statistics and promotional
integrations that deepen engagement and enhance the wagering and
viewing experience for Australian customers.
For additional information regarding The Stars Group's reporting
segments and major lines of operations, please see The Stars
Group's interim condensed consolidated financial statements for the
three and six months ended June 30,
2019 (the "Q2 2019 Financial Statements"), including note 5
therein, and management's discussion and analysis thereon (the "Q2
2019 MD&A").
2019 Updated Full Year Guidance
The Stars Group is updating its 2019 full year consolidated
financial guidance ranges as follows:
- Revenue of between $2,500 and
$2,575 million (previously
$2,640 and $2,765 million);
- Adjusted EBITDA of between $905
and $930 million (previously
$960 and $1,010 million); and
- Adjusted Diluted Net Earnings per Share of between $1.68 and $1.83
(previously $1.87 and $2.11).
In addition to the updated assumptions detailed below, the
expected revenue and Adjusted EBITDA ranges reflect the impact of
negative foreign exchange fluctuations, a historically low Betting
Net Win Margin in the first quarter for the United Kingdom segment, the slower than
planned recovery in certain disrupted markets and some delays in
launching The Stars Group's newly licensed operations in certain
jurisdictions, such as Switzerland.
In addition to approximately $15
million for negative foreign exchange fluctuations, the
expected Adjusted EBITDA range also reflects the impact of the
following factors:
- Approximately $40 million for The
Stars Group's investment in FOX Bet and its U.S. operations;
and
- An offsetting underlying improvement in operations, primarily
driven by an operational excellence program to streamline certain
fixed costs and currently expected sequential improvements in
disrupted markets.
The Stars Group continues to expect to achieve the medium-term
financial and leverage target ranges set out in its news release on
March 27, 2019, but now over the
three to five year period from the updated 2019 financial guidance
ranges above.
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 updating
information for certain financial items, which unless noted below
remain unchanged from the previously announced ranges:
- Depreciation and amortization (excluding purchase price
allocation amortization) of between $75 and $85
million;
- Cash interest expense of between $280 and $290
million (previously between $290 and $300
million);
- Effective tax rate (applied to Adjusted EBITDA less cash
interest expense and non-purchase price allocation related
depreciation and amortization) of approximately 10% (previously
between 8% and 10%);
- Diluted Shares of 283 million (previously 277 million);
and
- Capital expenditures, which includes estimated spend on
intangible assets, property, plant and equipment and certain
development costs, of approximately $150
million (previously between $110 and $150
million)
These unaudited expected results, targets and other information
reflect management's view of current and future market and business
conditions, including certain accounting assumptions and, other
than as noted directly above or below, assumptions of (i) expected
Betting Net Win Margin of approximately 8.5% (with the remainder of
the year and the medium-term targets unchanged from the previous
estimates of approximately 9%), (ii) no further material changes in
the current challenging operating conditions in certain markets
from prior regulatory changes, including constraints on payment
processing and accessing certain products, 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 other material investments associated with the entry
into new markets and no material change in The Stars Group's
current estimate of its aggregate addressable U.S. market size of
approximately 23 states and $9.3
billion by 2025, (v) other than as updated below, no further
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 June 30, 2019
(previously 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 mix of geographies where The Stars Group
currently offers its products, and (x) no material change in The
Stars Group's Diluted Shares.
Such guidance, targets and information are also now based on an
updated Euro to U.S. dollar exchange rate of 1.12 to 1.00
(previously 1.135 to 1.00), a Great
Britain pound sterling to U.S. dollar exchange rate of 1.22
to 1.00 (previously 1.31 to 1.00) and an Australian dollar to U.S.
dollar exchange rate of 0.69 to 1.00 (previously 0.712 to 1.00),
for the second half of 2019.
Consolidated Financial Statements, Management's Discussion
and Analysis and Additional Information
The Stars Group's Q2 2019 Financial Statements, Q2 2019
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 Q2 2019 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, August 12, 2019 at 8:30
a.m. ET to discuss its financial results for the second
quarter 2019 and related matters, and provide additional detail
with respect to the information in this news release, its webcast
presentation and related 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 13693490. To access
the webcast please use the following
link: http://public.viavid.com/index.php?id=134939.
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 earnings (loss), which is the nearest IFRS measure.
For additional information, see "Reconciliations" in the Q2 2019
MD&A.
|
|
Three Months Ended
June 30, 2019
|
|
In thousands of U.S.
Dollars
|
|
International
|
|
United
Kingdom
|
|
Australia
|
|
Corporate
|
|
Consolidated
|
|
Net earnings
(loss)
|
|
95,502
|
|
|
34,881
|
|
|
(4,325)
|
|
|
(121,429)
|
|
|
4,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,081)
|
|
|
(21,081)
|
|
|
Net financing
charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(68,245)
|
|
|
(68,245)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
95,502
|
|
|
34,881
|
|
|
(4,325)
|
|
|
(32,103)
|
|
|
93,955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
39,377
|
|
|
60,146
|
|
|
9,404
|
|
|
154
|
|
|
109,081
|
|
|
Add (deduct) the impact
of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,726
|
|
|
4,726
|
|
|
(Gains) losses from
investments
|
|
(463)
|
|
|
44
|
|
|
—
|
|
|
93
|
|
|
(326)
|
|
|
(Recovery) impairment
of intangible assets
|
|
(1)
|
|
|
2,499
|
|
|
—
|
|
|
—
|
|
|
2,498
|
|
|
Other
costs
|
|
8,808
|
|
|
3,483
|
|
|
2,113
|
|
|
12,396
|
|
|
26,800
|
|
|
Total adjusting
items
|
|
8,344
|
|
|
6,026
|
|
|
2,113
|
|
|
17,215
|
|
|
33,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
143,223
|
|
|
101,053
|
|
|
7,192
|
|
|
(14,734)
|
|
|
236,734
|
|
|
|
Six Months Ended
June 30, 2019
|
|
In thousands of U.S.
Dollars
|
|
International
|
|
United
Kingdom
|
|
Australia
|
|
Corporate
|
|
Consolidated
|
|
Net earnings
(loss)
|
|
210,085
|
|
|
8,889
|
|
|
(5,463)
|
|
|
(181,224)
|
|
|
32,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,983)
|
|
|
(7,983)
|
|
|
Net financing
charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(115,222)
|
|
|
(115,222)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
210,085
|
|
|
8,889
|
|
|
(5,463)
|
|
|
(58,019)
|
|
|
155,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
77,356
|
|
|
121,817
|
|
|
18,846
|
|
|
356
|
|
|
218,375
|
|
|
Add (deduct) the impact
of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,462
|
|
|
7,462
|
|
|
(Gains) losses from
investments
|
|
(530)
|
|
|
44
|
|
|
—
|
|
|
93
|
|
|
(393)
|
|
|
Impairment of
intangible assets
|
|
11
|
|
|
2,641
|
|
|
—
|
|
|
—
|
|
|
2,652
|
|
|
Other
costs
|
|
15,641
|
|
|
9,881
|
|
|
2,439
|
|
|
20,540
|
|
|
48,501
|
|
|
Total adjusting
items
|
|
15,122
|
|
|
12,566
|
|
|
2,439
|
|
|
28,095
|
|
|
58,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
302,563
|
|
|
143,272
|
|
|
15,822
|
|
|
(29,568)
|
|
|
432,089
|
|
|
|
Three Months Ended
June 30, 2018
|
|
In thousands of U.S.
Dollars
|
|
International
|
|
United
Kingdom
|
|
Australia
|
|
Corporate
|
|
Consolidated
|
|
Net earnings
(loss)
|
|
125,084
|
|
|
—
|
|
|
(6,501)
|
|
|
(273,407)
|
|
|
(154,824)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
recovery
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,404
|
|
|
3,404
|
|
|
Net financing
charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(160,360)
|
|
|
(160,360)
|
|
|
Net earnings from
associates
|
|
1,068
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
124,016
|
|
|
—
|
|
|
(6,501)
|
|
|
(116,451)
|
|
|
1,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
35,987
|
|
|
—
|
|
|
8,588
|
|
|
10
|
|
|
44,585
|
|
|
Add (deduct) the impact
of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
costs and deal contingent forwards
|
|
—
|
|
|
—
|
|
|
—
|
|
|
95,627
|
|
|
95,627
|
|
|
Stock-based
compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,265
|
|
|
3,265
|
|
|
(Gain) loss from
investments
|
|
(270)
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
(265)
|
|
|
Impairment of
intangible assets
|
|
959
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
959
|
|
|
Other
costs
|
|
3,775
|
|
|
—
|
|
|
11,397
|
|
|
7,864
|
|
|
23,036
|
|
|
Total adjusting
items
|
|
4,464
|
|
|
—
|
|
|
11,402
|
|
|
106,756
|
|
|
122,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
164,467
|
|
|
—
|
|
|
13,489
|
|
|
(9,685)
|
|
|
168,271
|
|
|
|
Six Months Ended
June 30, 2018
|
|
In thousands of U.S.
Dollars
|
|
International
|
|
United
Kingdom
|
|
Australia
|
|
Corporate
|
|
Consolidated
|
|
Net earnings
(loss)
|
|
271,922
|
|
|
—
|
|
|
(7,629)
|
|
|
(344,756)
|
|
|
(80,463)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
recovery
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,249
|
|
|
2,249
|
|
|
Net financing
charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(198,711)
|
|
|
(198,711)
|
|
|
Net earnings from
associates
|
|
1,068
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
270,854
|
|
|
—
|
|
|
(7,629)
|
|
|
(148,294)
|
|
|
114,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
73,956
|
|
|
—
|
|
|
9,868
|
|
|
19
|
|
|
83,843
|
|
|
Add the impact of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
costs and deal contingent
forwards
|
|
—
|
|
|
—
|
|
|
—
|
|
|
110,818
|
|
|
110,818
|
|
|
Stock-based
compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,648
|
|
|
5,648
|
|
|
Loss from
investments
|
|
247
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
247
|
|
|
Impairment of
intangible assets
|
|
1,074
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,074
|
|
|
Other
costs
|
|
4,743
|
|
|
—
|
|
|
10,404
|
|
|
11,585
|
|
|
26,732
|
|
|
Total adjusting
items
|
|
6,064
|
|
|
—
|
|
|
10,404
|
|
|
128,051
|
|
|
144,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
350,874
|
|
|
—
|
|
|
12,643
|
|
|
(20,224)
|
|
|
343,293
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
In thousands of U.S.
Dollars (except per share amounts)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Net earnings
(loss)
|
|
4,629
|
|
|
(154,824)
|
|
|
32,287
|
|
|
(80,463)
|
|
|
Income tax expense
(recovery)
|
|
21,081
|
|
|
(3,404)
|
|
|
7,983
|
|
|
(2,249)
|
|
|
Earnings (loss)
before income taxes
|
|
25,710
|
|
|
(158,228)
|
|
|
40,270
|
|
|
(82,712)
|
|
|
Add (deduct) the impact
of the following:
|
|
|
|
|
|
|
|
|
|
Interest
accretion
|
|
14,088
|
|
|
9,029
|
|
|
22,357
|
|
|
21,080
|
|
|
Loss on debt
extinguishment
|
|
—
|
|
|
124,976
|
|
|
—
|
|
|
124,976
|
|
|
Re-measurement of
contingent consideration
|
|
(3,335)
|
|
|
3,697
|
|
|
(12,713)
|
|
|
3,697
|
|
|
Re-measurement of
embedded derivative
|
|
(12,200)
|
|
|
—
|
|
|
(34,800)
|
|
|
—
|
|
|
Unrealized foreign
exchange (gain) loss on financial
instruments associated with financing
activities
|
|
(292)
|
|
|
—
|
|
|
1,340
|
|
|
—
|
|
|
Ineffectiveness on
cash flow hedges
|
|
5,708
|
|
|
—
|
|
|
7,564
|
|
|
—
|
|
|
Acquisition-related
costs and deal contingent forwards
|
|
—
|
|
|
95,627
|
|
|
—
|
|
|
110,818
|
|
|
Amortization of
acquisition intangibles
|
|
87,789
|
|
|
31,482
|
|
|
177,744
|
|
|
62,858
|
|
|
Stock-based
compensation
|
|
4,726
|
|
|
3,265
|
|
|
7,462
|
|
|
5,648
|
|
|
Gain from investments
and earnings from associates
|
|
(326)
|
|
|
(1,333)
|
|
|
(393)
|
|
|
(821)
|
|
|
Impairment of
intangible assets
|
|
2,498
|
|
|
959
|
|
|
2,652
|
|
|
1,074
|
|
|
Other
costs
|
|
26,800
|
|
|
23,036
|
|
|
48,501
|
|
|
26,732
|
|
|
Adjust for income tax
expense
|
|
(13,697)
|
|
|
(1,487)
|
|
|
(16,915)
|
|
|
(3,565)
|
|
|
Adjusted Net
Earnings
|
|
137,469
|
|
|
131,023
|
|
|
243,069
|
|
|
269,785
|
|
|
Adjusted Net
Earnings attributable to
|
|
|
|
|
|
|
|
|
|
Shareholders of The
Stars Group Inc.
|
|
136,584
|
|
|
129,237
|
|
|
241,410
|
|
|
269,469
|
|
|
Non-controlling
interest
|
|
885
|
|
|
1,786
|
|
|
1,659
|
|
|
316
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
Shares
|
|
282,399,213
|
|
|
215,380,175
|
|
|
278,181,337
|
|
|
212,449,078
|
|
|
Adjusted Diluted Net
Earnings per Share
|
|
0.48
|
|
|
0.60
|
|
|
0.87
|
|
|
1.27
|
|
The table below presents certain items comprising "Other costs"
in the reconciliation tables above:
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
In thousands of U.S.
Dollars
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Integration costs of
acquired businesses
|
|
4,899
|
|
|
11,467
|
|
|
12,922
|
|
|
11,467
|
|
|
Financial
expenses
|
|
1,083
|
|
|
4,330
|
|
|
2,113
|
|
|
2,049
|
|
|
Restructuring
expenses
|
|
2,320
|
|
|
1,426
|
|
|
6,229
|
|
|
2,058
|
|
|
AMF, foreign payments
and other investigation and related
professional fees
|
|
6,511
|
|
|
2,875
|
|
|
9,220
|
|
|
4,659
|
|
|
Lobbying (U.S. and
Non-U.S.) and other legal expenses
|
|
3,290
|
|
|
2,665
|
|
|
6,562
|
|
|
5,658
|
|
|
Professional fees in
connection with non-core activities
|
|
8,643
|
|
|
102
|
|
|
10,463
|
|
|
553
|
|
|
Retention
bonuses
|
|
—
|
|
|
117
|
|
|
—
|
|
|
234
|
|
|
(Gain) loss on disposal
of assets
|
|
(393)
|
|
|
41
|
|
|
(393)
|
|
|
41
|
|
|
Other
|
|
447
|
|
|
13
|
|
|
1,385
|
|
|
13
|
|
|
Other
costs
|
|
26,800
|
|
|
23,036
|
|
|
48,501
|
|
|
26,732
|
|
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
June 30,
|
|
Six Months Ended
June 30,
|
|
In thousands of U.S.
Dollars
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Net cash inflows from
operating activities
|
|
173,208
|
|
|
164,011
|
|
|
283,593
|
|
|
296,080
|
|
|
Customer deposit
liability movement
|
|
12,995
|
|
|
(14,090)
|
|
|
(2,346)
|
|
|
(13,901)
|
|
|
|
186,203
|
|
|
149,921
|
|
|
281,247
|
|
|
282,179
|
|
|
Capital
expenditure:
|
|
|
|
|
|
|
|
|
|
Additions to deferred
development costs
|
|
(18,887)
|
|
|
(9,759)
|
|
|
(39,033)
|
|
|
(16,190)
|
|
|
Additions to property
and equipment
|
|
(4,131)
|
|
|
(5,676)
|
|
|
(8,178)
|
|
|
(9,261)
|
|
|
Additions to
intangible assets
|
|
(13,971)
|
|
|
(9,415)
|
|
|
(18,505)
|
|
|
(11,842)
|
|
|
Interest
paid
|
|
(50,524)
|
|
|
(34,790)
|
|
|
(142,285)
|
|
|
(66,278)
|
|
|
Debt servicing cash
flows (excluding voluntary prepayments)
|
|
(13,870)
|
|
|
(5,425)
|
|
|
(25,939)
|
|
|
(11,493)
|
|
|
Free Cash
Flow
|
|
84,820
|
|
|
84,856
|
|
|
47,307
|
|
|
167,115
|
|
The table below presents a reconciliation of Net Debt:
|
|
|
|
In thousands of U.S.
Dollars
|
|
As at June 30,
2019
|
|
Current portion of
long-term debt
|
|
35,750
|
|
|
Long-term
debt
|
|
5,053,165
|
|
|
Less: Cash and cash
equivalents - operational
|
|
339,239
|
|
|
Net
Debt
|
|
4,749,676
|
|
The table below presents a reconciliation of The Stars Group's
updated 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 as presented in the
news release issued by The Stars Group on March 6, 2019, under the heading "Reconciliation
of Non-IFRS Measures to Nearest IFRS Measures".
|
|
2018
Actual
|
|
2019 Full
Year
|
|
2019 Full
Year
|
|
In millions of U.S.
Dollars (except per share amounts)
|
|
|
|
Guidance
Low1
|
|
Guidance
High1
|
|
Operating Income
(loss)
|
|
253
|
|
330
|
|
355
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
283
|
|
450
|
|
430
|
|
Add (deduct) the
impact of the following:
|
|
|
|
|
|
|
|
Adjusting
items2
|
|
136
|
|
10
|
|
20
|
|
Other
costs3
|
|
109
|
|
115
|
|
125
|
|
Total
Adjustments
|
|
245
|
|
125
|
|
145
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
781
|
|
905
|
|
930
|
|
|
|
|
|
|
|
|
Depreciation and
amortization4
|
|
41
|
|
85
|
|
75
|
|
Interest5
|
|
184
|
|
290
|
|
280
|
|
Taxes6
|
|
22
|
|
50
|
|
53
|
|
Adjusted Net
Earnings
|
|
534
|
|
480
|
|
522
|
|
|
|
|
|
|
|
|
Adjusted Net Earnings
attributable to
|
|
|
|
|
|
|
|
Shareholders of Stars
Group Inc.
|
|
531
|
|
475
|
|
518
|
|
Non-controlling
Interest
|
|
3
|
|
5
|
|
4
|
|
|
|
|
|
|
|
|
Diluted
Shares
|
|
243
|
|
283
|
|
283
|
|
Adjusted Diluted
Net Earnings per Share
|
|
2.19
|
|
1.68
|
|
1.83
|
_____________________________
1 For relevant assumptions, see above under "2019
Updated 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. The Stars Group has also not
provided a reconciliation of the non-IFRS measures to the nearest
IFRS measures included in its updated full year 2019 guidance
provided in this news release because of these reasons.
2 With respect to the relevant adjusting items for
2018, see the Adjusted EBITDA reconciliation in the news release
issued by The Stars Group on March 6,
2019, under the heading "Reconciliation of Non-IFRS Measures
to Nearest IFRS Measures". 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 the Other costs for 2018, see the
"Other costs" reconciliation in the news release issued by The
Stars Group on March 6, 2019, under
the heading "Reconciliation of Non-IFRS Measures to Nearest IFRS
Measures". 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 the Q2 2019 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, FOX
Bet, 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 and its customers, partners, suppliers and
industries in which it operates or may operate in the future.
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; contractual relationships of The Stars
Group with FOX Corporation and Sky plc and/or their respective
subsidiaries; 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; ability to
mitigate foreign exchange and currency risks; legal and regulatory
requirements; potential changes to the gaming regulatory framework,
including without limitation, those that may impact The Stars
Group's ability to access and operate in certain jurisdictions,
whether directly or through arrangements with locally based
operators; 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 its most recently filed annual information
form, including under the heading "Risk Factors and Uncertainties",
and in its most recently filed management's discussion and
analysis, 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 tax 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, 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. See note 8 in the Q2 2019 Financial
Statements. For the three and six months ended June 30, 2019, Diluted Shares used for the
calculation of Adjusted Diluted Net Earnings per Share equaled
282,399,213 and 278,181,337, respectively, compared with
215,380,175 and 212,449,078 for the prior year periods,
respectively.
Constant Currency Revenue means IFRS reported revenue for the
relevant period calculated using the applicable prior year period'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 yet have full reported
comparative periods for these segments as a result of the
respective acquisition dates of Sky Betting & Gaming and
BetEasy, and with respect to BetEasy, the Corporation had not yet
completed the previously announced migration of the former William
Hill Australia customers onto the BetEasy platform. The Corporation
intends to provide information on the impact of foreign exchange
rates for these segments either individually or on a consolidated
basis when applicable reported comparative period information is
available that the Corporation believes would be reasonably
comparable to the current periods as noted above.
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 Q2 2019 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 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 (as defined below) or
made a wager on any betting or gaming product within the applicable
quarterly 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 continuing 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 Q2 2019 MD&A, including under the headings
"Non-IFRS Measures, Key Metrics and Other Data" and "Segment
Results of Operations".
|
UNAUDITED INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
In thousands of U.S.
Dollars (except per share and share amounts)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Revenue
|
|
637,618
|
|
|
411,512
|
|
|
1,218,002
|
|
|
804,403
|
|
|
Cost of revenue
(excluding depreciation and amortization)
|
|
(173,910)
|
|
|
(83,637)
|
|
|
(336,546)
|
|
|
(163,901)
|
|
|
Gross profit
(excluding depreciation and amortization)
|
|
463,708
|
|
|
327,875
|
|
|
881,456
|
|
|
640,502
|
|
|
General and
administrative
|
|
(276,440)
|
|
|
(262,786)
|
|
|
(535,797)
|
|
|
(404,093)
|
|
|
Sales and
marketing
|
|
(79,915)
|
|
|
(54,899)
|
|
|
(164,258)
|
|
|
(104,317)
|
|
|
Research and
development
|
|
(13,398)
|
|
|
(9,126)
|
|
|
(25,909)
|
|
|
(17,161)
|
|
|
Operating
income
|
|
93,955
|
|
|
1,064
|
|
|
155,492
|
|
|
114,931
|
|
|
Gain (loss) on
re-measurement of deferred contingent payment
|
|
3,335
|
|
|
(3,697)
|
|
|
12,713
|
|
|
(3,697)
|
|
|
Gain on re-measurement
of embedded derivative
|
|
12,200
|
|
|
—
|
|
|
34,800
|
|
|
—
|
|
|
Unrealized foreign
exchange gain (loss) on financial instruments
associated with financing activities
|
|
292
|
|
|
—
|
|
|
(1,340)
|
|
|
—
|
|
|
Other net financing
charges
|
|
(84,072)
|
|
|
(156,663)
|
|
|
(161,395)
|
|
|
(195,014)
|
|
|
Net financing
charges
|
|
(68,245)
|
|
|
(160,360)
|
|
|
(115,222)
|
|
|
(198,711)
|
|
|
Net earnings from
associates
|
|
—
|
|
|
1,068
|
|
|
—
|
|
|
1,068
|
|
|
Earnings (loss)
before income taxes
|
|
25,710
|
|
|
(158,228)
|
|
|
40,270
|
|
|
(82,712)
|
|
|
Income tax (expense)
recovery
|
|
(21,081)
|
|
|
3,404
|
|
|
(7,983)
|
|
|
2,249
|
|
|
Net earnings
(loss)
|
|
4,629
|
|
|
(154,824)
|
|
|
32,287
|
|
|
(80,463)
|
|
|
Net earnings (loss)
attributable to
|
|
|
|
|
|
|
|
|
|
Shareholders of The
Stars Group Inc.
|
|
4,757
|
|
|
(153,645)
|
|
|
32,670
|
|
|
(78,194)
|
|
|
Non-controlling
interest
|
|
(128)
|
|
|
(1,179)
|
|
|
(383)
|
|
|
(2,269)
|
|
|
Net earnings
(loss)
|
|
4,629
|
|
|
(154,824)
|
|
|
32,287
|
|
|
(80,463)
|
|
|
Earnings (loss) per
Common Share (U.S. dollars)
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$0.02
|
|
|
($1.01)
|
|
|
$0.12
|
|
|
($0.52)
|
|
|
Diluted
|
|
$0.02
|
|
|
($1.01)
|
|
|
$0.12
|
|
|
($0.52)
|
|
|
Weighted average
Common Shares outstanding (thousands)
|
|
|
|
|
|
|
|
|
|
Basic
|
|
281,689
|
|
|
152,788
|
|
|
277,557
|
|
|
150,523
|
|
|
Diluted
|
|
282,399
|
|
|
152,788
|
|
|
278,181
|
|
|
150,523
|
|
|
UNAUDITED INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
As at June
30,
|
|
As at December
31,
|
|
In thousands of U.S.
Dollars
|
|
2019
|
|
2018
|
|
ASSETS
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents - operational
|
|
339,239
|
|
|
392,853
|
|
|
Cash and cash
equivalents - customer deposits
|
|
326,628
|
|
|
328,223
|
|
|
Total cash and cash
equivalents
|
|
665,867
|
|
|
721,076
|
|
|
Restricted cash
advances and collateral
|
|
9,239
|
|
|
10,819
|
|
|
Prepaid expenses and
other current assets
|
|
45,296
|
|
|
43,945
|
|
|
Current investments -
customer deposits
|
|
105,196
|
|
|
103,153
|
|
|
Accounts
receivable
|
|
121,190
|
|
|
136,347
|
|
|
Income tax
receivable
|
|
25,074
|
|
|
26,085
|
|
|
Total current
assets
|
|
971,862
|
|
|
1,041,425
|
|
|
Non-current
assets
|
|
|
|
|
|
Restricted cash
advances and collateral
|
|
10,677
|
|
|
10,630
|
|
|
Prepaid expenses and
other non-current assets
|
|
31,605
|
|
|
32,760
|
|
|
Non-current accounts
receivable
|
|
15,418
|
|
|
14,906
|
|
|
Property and
equipment
|
|
139,532
|
|
|
85,169
|
|
|
Income tax
receivable
|
|
24,686
|
|
|
15,611
|
|
|
Deferred income
taxes
|
|
8,405
|
|
|
1,775
|
|
|
Derivatives
|
|
62,518
|
|
|
54,583
|
|
|
Intangible
assets
|
|
4,590,758
|
|
|
4,742,699
|
|
|
Goodwill
|
|
5,256,819
|
|
|
5,265,980
|
|
|
Total non-current
assets
|
|
10,140,418
|
|
|
10,224,113
|
|
|
Total
assets
|
|
11,112,280
|
|
|
11,265,538
|
|
|
LIABILITIES
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts payable and
other liabilities
|
|
439,349
|
|
|
424,007
|
|
|
Customer
deposits
|
|
421,084
|
|
|
423,739
|
|
|
Current
provisions
|
|
29,556
|
|
|
39,189
|
|
|
Derivatives
|
|
10,051
|
|
|
16,493
|
|
|
Income tax
payable
|
|
60,419
|
|
|
72,796
|
|
|
Current portion of
lease liability
|
|
18,764
|
|
|
—
|
|
|
Current portion of
long-term debt
|
|
35,750
|
|
|
35,750
|
|
|
Total current
liabilities
|
|
1,014,973
|
|
|
1,011,974
|
|
|
Non-current
liabilities
|
|
|
|
|
|
Lease
liability
|
|
44,121
|
|
|
—
|
|
|
Long-term
debt
|
|
5,053,165
|
|
|
5,411,208
|
|
|
Long-term
provisions
|
|
3,637
|
|
|
4,002
|
|
|
Derivatives
|
|
40,675
|
|
|
6,068
|
|
|
Other long-term
liabilities
|
|
—
|
|
|
79,716
|
|
|
Income tax
payable
|
|
11,659
|
|
|
18,473
|
|
|
Deferred income
taxes
|
|
574,392
|
|
|
580,697
|
|
|
Total non-current
liabilities
|
|
5,727,649
|
|
|
6,100,164
|
|
|
Total
liabilities
|
|
6,742,622
|
|
|
7,112,138
|
|
|
EQUITY
|
|
|
|
|
|
Share
capital
|
|
4,355,902
|
|
|
4,116,287
|
|
|
Reserves
|
|
(525,270)
|
|
|
(469,629)
|
|
|
Retained
earnings
|
|
535,431
|
|
|
502,761
|
|
|
Equity attributable
to the Shareholders of The Stars Group Inc.
|
|
4,366,063
|
|
|
4,149,419
|
|
|
Non-controlling
interest
|
|
3,595
|
|
|
3,981
|
|
|
Total
equity
|
|
4,369,658
|
|
|
4,153,400
|
|
|
Total liabilities
and equity
|
|
11,112,280
|
|
|
11,265,538
|
|
|
UNAUDITED INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
In thousands of U.S.
Dollars
|
|
2019
|
|
2018
|
|
Operating
activities
|
|
|
|
|
|
Net earnings
(loss)
|
|
32,287
|
|
|
(80,463)
|
|
|
Add
(deduct):
|
|
|
|
|
|
Income tax expense
(recovery) recognized in net earnings (loss)
|
|
7,983
|
|
|
(2,249)
|
|
|
Net financing
charges
|
|
115,222
|
|
|
198,710
|
|
|
Depreciation and
amortization
|
|
218,375
|
|
|
83,843
|
|
|
Stock-based
compensation
|
|
7,462
|
|
|
5,948
|
|
|
Unrealized loss on
foreign exchange
|
|
656
|
|
|
68,996
|
|
|
Unrealized gain on
investments
|
|
(485)
|
|
|
(164)
|
|
|
Impairment of
property and equipment and intangible assets
|
|
2,652
|
|
|
1,074
|
|
|
Net earnings from
associates
|
|
—
|
|
|
(1,068)
|
|
|
Realized (gain) loss
on current investments and promissory note
|
|
(292)
|
|
|
28
|
|
|
Income taxes
paid
|
|
(46,512)
|
|
|
(15,772)
|
|
|
Changes in non-cash
operating elements of working capital
|
|
(57,433)
|
|
|
18,525
|
|
|
Customer deposit
liability movement
|
|
2,346
|
|
|
13,901
|
|
|
Other
|
|
1,332
|
|
|
4,771
|
|
|
Net cash inflows
from operating activities
|
|
283,593
|
|
|
296,080
|
|
|
Investing
activities
|
|
|
|
|
|
Acquisition of
subsidiaries, net of cash acquired
|
|
—
|
|
|
(310,563)
|
|
|
Additions to intangible
assets
|
|
(18,505)
|
|
|
(11,842)
|
|
|
Additions to property
and equipment
|
|
(8,178)
|
|
|
(9,261)
|
|
|
Additions to deferred
development costs
|
|
(39,033)
|
|
|
(16,190)
|
|
|
Net (purchase) sale of
investments utilizing customer deposits
|
|
(2,043)
|
|
|
16,044
|
|
|
Settlement of minimum
revenue guarantee
|
|
(675)
|
|
|
(2,713)
|
|
|
Net investments in
associates
|
|
—
|
|
|
1,068
|
|
|
Other
|
|
(356)
|
|
|
(1,137)
|
|
|
Net cash outflows
from investing activities
|
|
(68,790)
|
|
|
(334,594)
|
|
|
Financing
activities
|
|
|
|
|
|
Issuance of Common
Shares
|
|
235,963
|
|
|
646,000
|
|
|
Transaction costs on
issuance of Common Shares
|
|
—
|
|
|
(24,225)
|
|
|
Issuance of Common
Shares in relation to stock options
|
|
1,784
|
|
|
27,627
|
|
|
Issuance of long-term
debt
|
|
—
|
|
|
425,041
|
|
|
Repayment of long-term
debt
|
|
(367,875)
|
|
|
(106,493)
|
|
|
Transaction costs on
long-term debt
|
|
—
|
|
|
(23,061)
|
|
|
Repayment of lease
liability principal
|
|
(8,064)
|
|
|
—
|
|
|
Interest
paid
|
|
(142,285)
|
|
|
(66,278)
|
|
|
Acquisition of further
interest in subsidiaries
|
|
—
|
|
|
(48,240)
|
|
|
Proceeds on loan issued
to the holders of non-controlling interest
|
|
4,894
|
|
|
30,918
|
|
|
Net cash (outflows)
inflows from financing activities
|
|
(275,583)
|
|
|
861,289
|
|
|
(Decrease) increase in
cash and cash equivalents
|
|
(60,780)
|
|
|
822,775
|
|
|
Unrealized foreign
exchange difference on cash and cash equivalents
|
|
5,571
|
|
|
(6,090)
|
|
|
Cash and cash
equivalents – beginning of period
|
|
721,076
|
|
|
510,323
|
|
|
Cash and cash
equivalents – end of period
|
|
665,867
|
|
|
1,327,008
|
|
For investor relations and media inquiries, please
contact: Vaughan Lewis, Senior
Vice President, Communications, press@starsgroup.com,
ir@starsgroup.com
View original
content:http://www.prnewswire.com/news-releases/the-stars-group-reports-second-quarter-2019-results-updates-2019-full-year-guidance-appoints-new-independent-director-300899914.html
SOURCE The Stars Group