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The Stars Group Files Business Acquisition Report and Provides Supplemental Information for Sky Betting & Gaming

17 settembre 2018 | 14.33

LETTURA: 25 minuti

TORONTO, Sept. 17, 2018 /PRNewswire/ -- The Stars Group Inc. (NASDAQ: TSG) (TSX: TSGI) today filed a business acquisition report with respect to its acquisition of Sky Betting & Gaming ("SBG") and is providing certain supplemental historic financial information and additional highlights and updates for SBG. The business acquisition report includes, among other information, SBG's audited financial statements for its fiscal year ended June 30, 2018, as well as certain pro forma unaudited financial statements and information of The Stars Group. Unless otherwise noted, all dollar ($) amounts are in U.S. dollars and all references to "£" and "Pound Sterling" are to Great Britain pound sterling.

"2018 is a transformative year for the business, with three acquisitions and related financings and other significant changes to our corporate and capital structure," said Rafi Ashkenazi, The Stars Group's Chief Executive Officer. "We've executed on these transactions and looking forward into 2019, are now focused on integration and we are confident that we will deliver on our plans to grow market share both globally and in key markets. SBG is a key component of this plan and we are excited about its potential as the fastest growing and one of the largest online and mobile sports betting and gaming businesses in the UK, the world's largest regulated online gaming market," concluded Mr. Ashkenazi.

"The 2018 fiscal year was another strong year for SBG, with continued product leadership and innovation," said Richard Flint, Chief Executive Officer of SBG. "We enjoyed another year of growth, extending our leadership as the UK's most popular online betting and gaming brand. We also continued our investment in brand, technology and people, and continued delivering innovative products that meet the needs of our customers, all of which we believe combined to drive strong operating results," continued Mr. Flint.

"I am also particularly pleased with the progress we made to deliver a safer gambling environment to our customers and to continue our record of job creation and investment in Yorkshire, as well as our contribution to regional and national taxation in the UK," said Mr. Flint.

"The transaction with The Stars Group will allow us to offer our best-in-class products to a truly global audience. We enter the rest of 2018 and head into 2019 as part of one of the world's largest publicly listed online gaming companies, and I am excited about the opportunities that this combination presents," concluded Mr. Flint.

SBG Fiscal Year 2018 Financial Summary
	Fiscal year ended June,
In thousands of Pound Sterling (except percentages or otherwise noted)	2018		2017		% Change
Stakes (millions)		3,859		3,417		13%
Betting Net Win Margin (%)		10.5%		8.7%	1.8 ppts

Betting revenue		406,510		297,399		36.7%
Gaming revenue		239,244		200,949		19.1%
Other revenue		24,712		17,417		41.9%
Total revenue		670,466		515,765		30.0%
Gross profit		500,132		375,533		33.2%
Operating profit		86,719		68,574		26.5%
Net loss		(15,282)		(5,995)		154.9%
Adjusted EBITDA ¹		208,623		145,812		43.1%
Adjusted EBITDA Margin ¹		31.1%		28.3%	2.8 ppts

Net cash flows from operating activities		200,584		141,751		41.5%
Capital Expenditure		28,233		32,673		(13.6%)

SBG Fiscal Year 2018 Quarterly Financial Summary
		Fiscal quarter ended September,						Fiscal quarter ended December,
In millions of Pound Sterling (except percentages or otherwise noted)		2017		2016		% Change		2017		2016		% Change
Stakes (millions)			923		686		35%		910		731		24%
Betting Net Win Margin (%)			9.0%		10.2%	(1.2)ppts			14.0%		8.6%	5.4ppts

Revenue
	Betting		83		70		18%		128		63		103%
	Gaming		58		43		35%		59		46		28%
	Other		5		4		25%		6		4		53%
Total Revenue			146		117		25%		193		113		71%

Gross Profit			109		86		26%		147		83		78%
Gross Profit Margin (%)			74%		74%	0.6ppts			76%		73%	3.1ppts

Operating Profit			24		22		7%		58		5		960%

Adjusted EBITDA ¹			42		39		9%		77		23		230%
Adjusted EBITDA Margin (%) ¹			28.6%		32.8%	(4.2)ppts			39.7%		20.5%	19.2ppts

Quarterly Active Uniques (QAUs) (millions)			1.6		1.3		21%		1.6		1.3		19%
Quarterly Net Yield (QNY) (£)			88		86		2%		116		81		43%
		Fiscal quarter ended March,						Fiscal quarter ended June,
In millions of Pound Sterling (except percentages or otherwise noted)		2018		2017		% Change		2018		2017		% Change
Stakes (millions)			1,005		933		8%		1,022		1,068		(4%)
Betting Net Win Margin (%)			9.2%		8.2%	1.0ppts			10.2%		8.3%	1.9ppts

Revenue
	Betting		92		76		21%		104		88		18%
	Gaming		59		54		10%		63		58		8%
	Other		6		3		74%		8		6		29%
Total Revenue			157		133		18%		174		152		15%

Gross Profit			116		96		21%		128		111		16%
Gross Profit Margin (%)			74%		72%	2.1ppts			74%		73%	0.9ppts

Operating Profit (Loss)			19		13		47%		(15)		28		(152%)

Adjusted EBITDA ¹			38		32		21%		52		52		(1%)
Adjusted EBITDA Margin (%) ¹			24.3%		23.7%	0.6ppts			29.8%		34.5%	(4.6)ppts

QAUs (millions)			1.8		1.6		10%		2.0		1.7		16%
QNY (£)			83		79		5%		83		85		(2%)

¹ Non-IFRS measure. For important information on SBG's non-IFRS measures, see below under "Non-IFRS Measures" and the tables under "Reconciliation of Non-IFRS Measures to Nearest IFRS Measures".

SBG Fiscal Year 2018 and Subsequent Financial Highlights

SBG Fiscal Year 2018 and Subsequent Operational Highlights

SBG Fiscal Year 2018 Quarterly Financial and Operational Highlights

2018 Full Year Guidance

These unaudited expected results reflect management's view of current and future market and business conditions, including assumptions of (i) expected Betting Net Win Margin of between 8.0% and 10.5%, (ii) continued negative operating conditions in Poland and potential negative operating conditions in Russia resulting from prior regulatory changes, including constraints on payment processing, (iii) no other material regulatory events or investments associated with the entry into new markets, (iv) no impact from the gaming advertising ban in Italy, and (v) no material foreign currency exchange rate fluctuations, particularly against the Euro, Great Britain pound sterling and Australian dollar. Such guidance is also based on a Euro to U.S. dollar exchange rate of 1.17 to 1.00, a Great Britain pound sterling to U.S. dollar exchange rate of 1.32 to 1.00 and an Australian dollar to U.S. dollar exchange rate of 0.74 to 1.00, and the Proforma 2018 Guidance includes pre-acquisition actual results using historical foreign exchange rates and forward guidance post-acquisition for each of the three acquisitions using the foreign exchange rates in the assumptions above. Such guidance is also based on Diluted Shares of between 241,000,000 and 243,000,000 for the high and low ends of the Adjusted Diluted Net Earnings per Share range, respectively, and certain accounting assumptions.

Capital Expenditures include estimated spend on intangible assets, property, plant and equipment and certain development costs.

Business Acquisition Report and Additional Information

The Stars Group's business acquisition report with respect to its acquisition of SBG, as well as additional information relating to The Stars Group, SBG and their businesses, can be found on SEDAR at www.sedar.com, Edgar at www.sec.gov and The Stars Group's website at www.starsgroup.com.

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.

Investor Conference Call and Webcast

The Stars Group will host an investor conference call today, September 17, 2018 at 8:30 a.m. ET to discuss the information presented in this news release and the business acquisition report. 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 13683167. To access the webcast please use the following link: http://public.viavid.com/index.php?id=131264

Reconciliation of Non-IFRS Measures to Nearest IFRS Measures

The tables below present reconciliations of Adjusted EBITDA of SBG to operating profit, which is the nearest IFRS measure:

	Fiscal quarter ended
	September		September		December		December		March		March		June		June
In millions of Pound Sterling	2017		2016		2017		2016		2018		2017		2018		2017
Operating profit		23.7		22.2		58.1		5.5		19.5		13.2		(14.5)		27.7

Depreciation and amortization		18.2		16.3		18.4		17.7		18.8		18.5		17.8		18.4
Impairment of intangible assets		-		-		-		-		-		-		-		6.3
Transaction-related costs		-		-		-		-		-		-		48.8		-

Adjusted EBITDA ¹		41.9		38.5		76.5		23.2		38.2		31.7		52.0		52.4

^{__________________________________________________}

¹ Fiscal Year 2018 includes disposals of £1.9.

For additional information on SBG's non-IFRS measures, see below under "Non-IFRS Measures" and "Key Metrics and Other Data".

The Stars Group has not provided a reconciliation of the non-IFRS measures to the nearest IFRS measures included in its full year 2018 financial guidance or full year 2018 pro forma financial guidance provided in this news release, including Adjusted EBITDA, Adjusted Net Earnings and Adjusted Diluted Net Earnings per Share, because certain reconciling items necessary to accurately project such IFRS measures, particularly net earnings (loss), cannot be reasonably projected due to a number of factors, including variability from potential foreign exchange fluctuations impacting financial expenses, and the nature of other non-recurring or one-time costs (which are excluded from non-IFRS measures but included in net earnings (loss)), as well as the typical variability arising from the audit of annual financial statements, including, without limitation, certain income tax provision accounting, and related accounting matters.

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, and Sky Poker, as well as live poker tour and event brands, including the PokerStars Players No Limit Hold'em Championship, European Poker Tour, PokerStars Caribbean Adventure, Latin American Poker Tour, Asia Pacific Poker Tour, PokerStars Festival and PokerStars MEGASTACK. The Stars Group is one of the world's most licensed online gaming operators with its subsidiaries collectively holding licenses or approvals in 19 jurisdictions throughout the world, including in Europe, Australia, and the Americas. The Stars Group's vision is to become the world's favorite iGaming destination and its mission is to provide its customers with winning moments.

Cautionary Note Regarding Forward Looking Statements

This news release contains forward-looking statements and information within the meaning of the Private Securities Litigation Reform Act of 1995 and applicable securities laws, including, without limitation, certain financial and operational expectations and projections, such as certain future operational and growth plans and strategies, including as it relates to SBG and full year 2018 financial guidance. 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, including SBG, and its and their respective customers and industries. Although The Stars Group and management believe the expectations reflected in such forward-looking statements and information are reasonable and are based on reasonable assumptions and estimates as of the date hereof, there can be no assurance that these assumptions or estimates are accurate or that any of these expectations will prove accurate. Forward-looking statements are inherently subject to significant business, regulatory, economic and competitive risks, uncertainties and contingencies that could cause actual events to differ materially from those expressed or implied in such statements. Specific risks and uncertainties include, but are not limited to: the heavily regulated industry in which The Stars Group carries on its business; risks associated with interactive entertainment and online and mobile gaming generally; current and future laws or regulations and new interpretations of existing laws or regulations, or potential prohibitions, with respect to interactive entertainment or online gaming or activities related to or necessary for the operation and offering of online gaming; potential changes to the gaming regulatory framework; legal and regulatory requirements; ability to obtain, maintain and comply with all applicable and required licenses, permits and certifications to offer, operate and market its product offerings, including difficulties or delays in the same; significant barriers to entry; competition and the competitive environment within addressable markets and industries; impact of inability to complete future or announced acquisitions or to integrate businesses successfully; The Stars Group's substantial indebtedness requires that it use a significant portion of its cash flow to make debt service payments; The Stars Group's secured credit facilities contain covenants and other restrictions that may limit its flexibility in operating its business; risks associated with advancements in technology, including artificial intelligence; ability to develop and enhance existing product offerings and new commercially viable product offerings; ability to mitigate foreign exchange and currency risks; ability to mitigate tax risks and adverse tax consequences, including, without limitation, the imposition of new or additional taxes, such as value-added and point of consumption taxes, and gaming duties; The Stars Group's exposure to greater than anticipated tax liability; risks of foreign operations generally; protection of proprietary technology and intellectual property rights; ability to recruit and retain management and other qualified personnel, including key technical, sales and marketing personnel; defects in product offerings; losses due to fraudulent activities; management of growth; contract awards; potential financial opportunities in addressable markets and with respect to individual contracts; ability of technology infrastructure to meet applicable demand and reliance on online and mobile telecommunications operators; systems, networks, telecommunications or service disruptions or failures or cyber-attacks and failure to protect customer data, including personal and financial information; regulations and laws that may be adopted with respect to the Internet and electronic commerce or that may otherwise impact The Stars Group in the jurisdictions where it is currently doing business or intends to do business, particularly those related to online gaming or that could impact the ability to provide online product offerings, including, without limitation, as it relates to payment processing; ability to obtain additional financing or to complete any refinancing on reasonable terms or at all; customer and operator preferences and changes in the economy; dependency on customers' acceptance of its product offerings; consolidation within the gaming industry; litigation costs and outcomes; expansion within existing and into new markets; relationships with vendors and distributors; and natural events; contractual relationships of SBG or The Stars Group with Sky plc and/or its subsidiaries; counterparty risks; failure of systems and controls of The Stars Group to restrict access to its products; reliance on scheduling and live broadcasting of major sporting events; macroeconomic conditions and trends in the gaming and betting industry; bookmaking risks; an ability to realize projected financial increases attributable to acquisitions and The Stars Group's business strategies; and an ability to realize all or any of The Stars Group's estimated synergies and cost savings in connection with acquisitions. Other applicable risks and uncertainties include, but are not limited to, those identified in The Stars Group's annual information form for the year ended December 31, 2017, including under the heading "Risk Factors and Uncertainties", in the June 21, 2018 prospectus supplement to the short form base shelf prospectus dated January 16, 2018 (the "Prospectus Supplement") under the heading "Risk Factors", and in The Stars Group's management's discussion and analysis for the three and six months ended June 30, 2018 (the "Q2 2018 MD&A"), including under the headings "Risk Factors and Uncertainties", "Limitations of Key Metrics, Other Data and Non-IFRS Measures" and "Key Metrics and Non-IFRS Measures", each available on SEDAR at www.sedar.com, EDGAR at www.sec.gov and The Stars Group's website at www.starsgroup.com, and in other filings that The Stars Group has made and may make with applicable securities authorities in the future. Investors are cautioned not to put undue reliance on forward-looking statements or information. 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 of SBG, including QNY, Adjusted EBITDA and Adjusted EBITDA Margin, and of The Stars Group, including Adjusted EBITDA, Adjusted Net Earnings and Adjusted Diluted Net Earnings per Share. The Stars Group believes these non-IFRS financial measures will provide investors with useful supplemental information about the financial performance of its and SBG's business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating its business. Although management believes these financial measures are important in evaluating The Stars Group and SBG, they are not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with IFRS. They are not recognized measures under IFRS and do not have standardized meanings prescribed by IFRS. These measures may be different from non-IFRS financial measures used by other companies, limiting its usefulness for comparison purposes. Moreover, presentation of certain of these measures is provided for year-over-year comparison purposes, and investors should be cautioned that the effect of the adjustments thereto provided herein have an actual effect on The Stars Group's operating results. In addition to QNY, which is defined below under "Key Metrics and Other Data", The Stars Group provides the following non-IFRS measures in this news release, in each case as they relate solely to SBG:

Adjusted EBITDA means profit/(loss) for the period attributable to equity shareholders before tax expense/(credit), finance costs, investment income, revaluation of financial instruments measured at fair value, depreciation, amortization, impairment and exceptional items (being transaction-related costs, which are adjusted for in this news release but are not adjusted for in SBG's audited financial statements for its fiscal year ended June 30, 2018). See the reconciliation table presented above within this news release for additional information.

Adjusted EBITDA Margin means Adjusted EBITDA as a proportion of total revenue.

For additional information on SBG's non-IFRS measures, see elsewhere in this news release and the Prospectus Supplement, including under the headings "Cautionary Note Regarding Use of Non-GAAP Measures" and "Management's Discussion and Analysis of Sky Betting & Gaming".

The Stars Group provides the following non-IFRS measures in this news release, in each case as they relate solely to The Stars Group on a consolidated basis and as it relates to full year 2018 financial guidance and full year 2018 pro forma financial guidance provided 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.

Adjusted Net Earnings means net earnings before interest accretion, amortization of intangible assets resulting from purchase price allocations following acquisitions, deferred income taxes, stock-based compensation, restructuring and certain other items.

Adjusted Diluted Net Earnings per Share means Adjusted Net Earnings attributable to the shareholders of The Stars Group divided by Diluted Shares. Diluted Shares means the weighted average number of common shares of The Stars Group ("Common Shares") on a fully diluted basis, including options, other equity-based awards, warrants and preferred shares. The effects of anti-dilutive potential Common Shares are ignored in calculating Diluted Shares. For the purposes of the full year 2018 financial guidance and full year 2018 pro forma financial guidance provided in this news release, Diluted Shares equals between 241,000,000 and 243,000,000 for the high and low ends of the Adjusted Net Earnings per Diluted Share range, respectively.

For additional information on The Stars Group's non-IFRS measures, see elsewhere in this news release and the Q2 2018 MD&A, including under the headings "Management's Discussion and Analysis", "Limitations of Key Metrics, Other Data and Non-IFRS Measures" and "Key Metrics and Non-IFRS Measures".

Key Metrics and Other Data

The Stars Group provides the following key metrics in this news release, in each case as they relate solely to SBG:

QAUs means active unique customers (online, mobile and desktop client) who have settled a stake on any betting or gaming product within the relevant quarterly period. SBG defines unique 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 vertical (betting and gaming). QAUs are disclosed in this news release on a combined basis for SBG's real-money online gaming and betting brands. The average QAU numbers provided in this news release reflect a simple average for the respective periods presented.

QNY is calculated by dividing the quarterly betting and gaming revenue (total revenue less other revenue generated by SBG's Oddschecker and international divisions) generated by SBG by the number of QAUs in the period indicated. QNY is a non-IFRS measure. The Stars Group does not provide a reconciliation for the numerator of QNY as the revenue components thereof (i.e., betting and gaming revenues) are set forth in this news release.

Stakes means betting amounts wagered on SBG's online betting product offerings, and is also an industry term that represents the aggregate amount of funds wagered by customers within the betting line of operation for the period specified.

Betting Net Win Margin is calculated as betting revenue as a proportion of Stakes.

Capital Expenditure for SBG specifically means the purchase of property, plant and equipment and the purchase of intangible assets.

For additional information on SBG's key metrics and other data, see the Prospectus Supplement, including under the heading "Management's Discussion and Analysis of Sky Betting & Gaming".

For investor relations, please contact: Tim Foran, Tel: +1 437-371-5730, ir@starsgroup.com; For media inquiries, please contact: Eric Hollreiser, Press@starsgroup.com