The Stars Group Reports Second Quarter 2019 Results; Updates 2019 Full Year Guidance; Appoints New Independent Director

Publicado 12/08/2019 13:35:12CET

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, 12 Ago. (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 (292) 1,340 instruments associated with financing activities 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 6,511 2,875 9,220 4,659 professional fees 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 Guidance Low (1) High (1) --- Operating Income (loss) 253 330 355 Depreciation and amortization 283 450 430 Add (deduct) the impact of the following: Adjusting items(2) 136 10 20 Other costs(3) 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

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