Amaya Granted UK Gaming Licenses for PokerStars, Full Tilt and B2B Businesses

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MONTREAL, Canada – March 20, 2015 – Amaya Inc. (TSX: AYA) announced today that it has received licenses from the UK Gambling Commission for PokerStars and Full Tilt to operate online poker and other gaming within the United Kingdom. Since late 2014, the brands had been operating under temporary continuation licenses.  Previously, they were white-listed under their Isle of Man gaming licenses.  Amaya’s B2B online casino business has also received licenses to continue supplying UK-facing online gaming operators with online gaming content and technology.

“We are very pleased to receive operating licenses in the UK, which is a large and growing market for us,” said Eric Hollreiser, Head of Corporate Communications for Amaya and PokerStars. “We continue to build upon PokerStars’ leadership in poker in the UK and intend to leverage our scale and expertise to become market leaders in casino and sports betting.”

The issuance of the UK gaming licenses follows a thorough review including, but not limited to:

  • financial stability and history
  • corporate and business unit management structure
  • technology
  • game integrity
  • payment processing and security
  • anti-crime and anti-money laundering protections
  • responsible gaming policies and practices
  • regulatory approach to various geographic operations

The UK Gambling Commission has introduced a rating system for player fund protection. PokerStars and Full Tilt have voluntarily applied the very highest standards of player fund protection whereby UK player funds are held separately by a trustee, consistent with the approach PokerStars pioneered on the Isle of Man.

“We believe the UK licenses illustrate the strength of our platforms, our regulatory approach, and our commitment to integrity, security, and consumer protection,” Hollreiser said.  “PokerStars and Full Tilt now hold licenses from a dozen European jurisdictions.”

Rational Group was recently recognized for its stringent and ethical responsible gaming policies by being awarded the ‘Socially Responsible Operator of the Year Online’.

ABOUT AMAYA
Amaya owns gaming and related consumer businesses and brands including PokerStars, Full Tilt, the European Poker Tour, PokerStars Caribbean Adventure, Latin American Poker Tour and the Asia Pacific Poker Tour. These brands collectively form the largest poker business in the world, comprising online poker games and tournaments, live poker competitions, branded poker rooms in major global casinos, and poker programming created for television and online audiences. PokerStars is the world’s most popular and successful online poker brand. Amaya also provides B2B interactive and physical gaming solutions to the regulated gaming industry.

Forward-Looking Statements
Certain statements included herein, including those that express management’s expectations or estimates of future performance constitute “forward-looking statements” within the meaning of applicable securities laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business and economic uncertainties and contingencies. Investors are cautioned not to put undue reliance on forward looking statements. Except as required by law, the Corporation does not intend, and undertakes no obligation, to update any forward-looking statements to reflect, in particular, new information or future events.

For Media Inquiries: Eric Hollreiser, Press@amaya.com

For Investor Inquiries: Tim Foran, +1.416.545.1325, ir@amaya.com

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ncipal amount of 5.0% unsecured subordinate convertible debentures of Intertain maturing on December 31, 2018 (TSX: IT.DB), which are convertible at the option of the holder into common shares of Intertain at a price of $6.00 per common share, as well as 353,000 Intertain common share purchase warrants, with each whole warrant being exercisable by the holder for one Intertain common share at an exercise price of $5.00 per share until December 31, 2015. The securities were acquired for investment purposes. Amaya has no current plan or proposal, which relates to, or would result in, acquiring additional ownership or control over the securities of IT.
  • On February 19, 2014, Amaya announced that its subsidiary Diamond Game Enterprises (“Diamond Game”) had been awarded a 5-year contract with the Maryland Lottery and Gaming Control Agency (the “Lottery”), with the Lottery holding a five year renewal option, to provide Veterans’ Organizations (VOs) in the state with Instant Ticket Lottery Machines (ITLM) and related services. The Contract allows for the placement of up to five ITLMs at each qualified VO meeting hall in Maryland. The Lottery estimates there are currently 150 qualified organizations that may apply for the ITLMs. Diamond Game anticipates deployment of ITLMs to commence by the end of 2014 throughout the state. Under the Contract, Diamond Game will receive a firm-fixed percentage of the ITLM proceeds. The Contract amount is estimated by the Lottery at up to USD$57 million over the original five year term and an additional amount of up toUSD$60 million for the renewal option based upon its projected number of ITLMs placed at VO meeting halls and the projected win for those ITLMs.
  • On February 14, 2014, Amaya announced that it had closed its previously announced acquisition of 100% of the issued and outstanding securities of the private, arms-length company Diamond Game, a designer and manufacturer of gaming related products for the global casino gaming and lottery industries. The purchase price wasUSD$25 million, subject to customary post-closing purchase price adjustments, to acquire 100% of the equity ofDiamond Game and retire its debt. Amaya paid USD$18 million on closing of the Transaction from cash on hand with a USD$7 million holdback for certain contingent liabilities and other items. During the first quarter of 2014 and subsequent to the date of acquisition, Diamond Game recorded USD$2.5 million and USD$0.7 million in revenues and adjusted EBITDA respectively.
  • On February 11, 2014, Amaya announced that pursuant to a share purchase agreement dated November 27, 2013, one of its subsidiaries had completed the previously announced sale to Goldstar Acquisitionco Inc. (“Goldstar”) of all of the issued and outstanding shares of WagerLogic Malta Holdings Ltd. (“WagerLogic”) for $70 million (the “Purchase Price”), less a closing working capital adjustment of $7.5 million, satisfied through cash consideration of$52.5 million and a vendor take-back in the form of a promissory note of $10 million, bearing interest at 6.0% per annum payable semi-annually in arrears starting in the second year following the closing date and due on the fourth anniversary of the closing date (the “WagerLogic Sale”). The Purchase Price is subject to customary post-closing adjustments. WagerLogic, through a subsidiary, is an online casino operator through its “Inter” brand consisting of InterCasino™, InterPoker™ and InterBingo™, amongst other online names (the “InterCasino Business”). The InterCasino business was acquired by Amaya through its acquisition of CryptoLogic. Subsidiaries of Amaya (the “Service Providers”) will continue to supply WagerLogic with software, services and content to power the InterCasino Business pursuant to services agreements. The Share Purchase Agreement provides for a bonus payment of USD$10 million if CryptoLogic Operations Limited (“CryptoLogic Operations”), the wholly-owned operating subsidiary of WagerLogic, achieves a net revenue target of USD $30 million during the second year following closing (payable in 12 monthly instalments during the third year following closing), and a bonus payment of USD $10 million if CryptoLogic Operations achieves a net revenue target of USD $40 million during the third year following closing (payable in 12 monthly instalments during the fourth year following closing). Amaya and its Service Providers have entered into a revenue guarantee agreement (the “WagerLogic Revenue Guarantee”), under which they jointly and severally guarantee the financial obligations of the Service Providers under the service agreements, including an obligation to pay CryptoLogic Operations, during the next two years, an amount equal to the shortfall between CryptoLogic Operation’s quarterly net revenue and a pre-established quarterly net revenue target of USD $4.75 million. Amaya has estimated a provision for the minimum revenue guarantee to be approximately $11.05 million.

    • “We are very pleased with the progression of our business in the first quarter of 2014,” said David Baazov, President and CEO of Amaya. “The acquisition of Diamond Game has significantly bolstered our Lottery solutions and has provided us with an attractive offering for the large public gaming market. Soon after the acquisition was completed,Diamond Game was awarded a significant contract by Maryland for its instant ticket vending machines. We anticipate rollout of those machines to begin in the third quarter of this year.

    “We recorded strong year-over-year growth in revenues from our land-based solutions, through both our installed base of recurring revenue generating leased machines and via sales of gaming machines in the United States and Latin America.”

    “Within our interactive solutions, during the quarter and subsequently, we completed the integration of games from numerous leading third party games suppliers onto our Casino Gaming System, for the benefit of our operator partners in Europe and New Jersey.  This is a process that is continuing as we execute on our strategy of being a leading aggregator of games content for online casinos.

    “To increase our market share within existing customers and to attract new customers, we have also been actively developing new and innovative online and mobile games content through our proprietary games studios. During the first quarter, we launched approximately a half dozen games, including jackpot slots featuring Superman and Wonder Woman. We expect to roll out more games in the second quarter including multiple mobile slots. Additionally, we are continuing the development of more new branded content featuring DC Comics-inspired characters pursuant to the licensing agreement we extended with Warner Bros. last year.

    “Our bottom line was boosted during the quarter by our sale of WagerLogic, which was one of two assets we classified as held for sale during the fourth quarter of 2013. We anticipate announcing further details on an agreement to sell the other during the second quarter. The sale of WagerLogic has resulted in us having a very strong cash balance. Combined with the refinancing of Cadillac Jack’s debt completed yesterday, our balance sheet is positioned to support both our organic growth and potential strategic acquisitions, particularly those that would bolster our current solutions offering significantly and/or enable us to compete more significantly in new verticals,” Mr. Baazov concluded.

    FINANCIAL RESULTS

    Revenue for the three month period ended March 31, 2014 was $41.20 million compared to $38.05 million for the three month period ended March 31, 2013, representing an increase of 8%. This was driven by an increase in gaming machines sold outright and under finance lease. On a regional basis, revenue in Q1 2014 was primarily concentrated in North America, Latin America and the Caribbean, and Europe.

    Total expenses, comprised of cost of goods sold, selling, general and administrative, and financial expenses as well as acquisition-related costs, were $49.59 million for the three month period ended March 31, 2014, compared to$44.74 million for the three month period ended March 31, 2013, an increase of 11%. The percentage increase was driven by non-recurring acquisition related costs related primarily to the acquisition of Diamond Game and the sale of WagerLogic during Q1 2014; higher cost of products expense reflecting the increased sales of gaming machines in Q1 2014 vs Q1 2013; increased general and administrative expense driven by increased salaries and maintenance and repairs expenses due to the addition of Diamond Game, as well as higher depreciation and amortization expenses; partially offset by lower interest and bank charges and a positive impact from foreign exchange.

    Net income in the first quarter of 2014 was $39.64 million, or $0.42 per basic share and $0.38 per diluted share. Net loss in Q1 2013 was $7.44 million, or $(0.09) per basic and diluted common share. Net income in Q1 2014 was driven by the gain on sale of WagerLogic as well as income from investments.

     

    Adjusted EBITDA Reconciliation $ Q1 2014 Q1 2013
    Net Income 39,643,610 (7,440,841)
    Financial expenses 1,061,025 6,212,059
    Current income taxes 4,103,602 689,914
    Deferred income taxes (2,179,107) 64,502
    Depreciation of property and equipment 3,666,343 3,395,010
    Amortization of deferred development costs 710,173 131,482
    Amortization of intangible assets 5,402,718 4,125,252
    Stock-based compensation 753,563 431,622
    EBITDA 53,161,927 7,609,000
    Termination of employment agreements 1,077,618 1,447,828
    Termination of agency agreements – 100,834
    Gain on sale of investments (49,373,224) –
    Gain on marketable securities (684,000) –
    Office shut down costs 309,219 –
    Acquisition-related costs 3,653,589 309,479
    Net Adjusted EBITDA loss from assets & liabilities classified as held for sale 5,408,753 1,732,774
    Other one-time costs 1,310,781 796,875
    Adjusted EBITDA 14,864,663 11,996,790

     

    Adjusted Net Income Reconciliation $ Q1 2014 Q1 2013
    Net Income 39,643,610 (7,440,841)
    Other one-time costs 1,310,781 796,875
    Termination of employment agreements 1,077,618 1,447,828
    Termination of agency agreements – 100,834
    Gain on marketable securities (684,000) –
    Office shut down costs 309,219 –
    Acquisition-related costs 3,653,589 309,479
    Foreign exchange (3,820,684) 483,392
    Gain on sale of investments (49,373,224) –
    Net adjusted loss of assets & liabilities classified as held for sale 6,196,677 2,148,347
    Amortization of purchase price allocation Intangibles 3,801,781 3,438,311
    Interest accretion 443,100 2,122,607
    Stock-based compensation 753,563 431,622
    Adjusted net income 3,312,031 3,838,454

     

    2014 FULL YEAR FINANCIAL GUIDANCE

    Amaya has set the following 2014 full year financial targets:

     

    FIRST QUARTER 2014 FINANCIAL STATEMENTS AND MANAGEMENT’S DISCUSSION AND ANALYSIS

    The financial statements, notes to financial statements and Management’s Discussion and Analysis for the quarter ended March 31, 2014, will be available on the SEDAR website at www.sedar.com.

    CONFERENCE CALL

    Amaya will host a conference call on Friday, May 16, 2014 at 9:00 a.m. ET to discuss its 2014 first quarter financial results. David Baazov, CEO of Amaya, will chair the call. To participate in the call, please dial 647-427-7450 or 1-888-231-8191 ten minutes prior to the scheduled start of the call. A replay of the conference call will be available until May 23, 2014 by calling 1-416-849-0833 or 1-855-859-2056, reference number 45946225. The conference call will be webcast live at www.newswire.ca/en/webcast/detail/1353853/1497903.

    ABOUT AMAYA

    Amaya provides a full suite of gaming products and services including casino, poker, sportsbook, platform, lotteries and gaming machines. Some of the world’s largest gaming operators and casinos are powered by Amaya’s interactive, land-based, and lottery solutions. Amaya is present in major gaming markets in the world with offices in North America, Latin America and Europe.

    DISCLAIMER IN REGARDS TO FORWARD-LOOKING STATEMENTS

    Certain statements included herein, including those that express management’s expectations or estimates of our future performance constitute “forward-looking statements” within the meaning of applicable securities laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Investors are cautioned not to put undue reliance on forward looking statements. Except as required by law, the Corporation does not intend, and undertakes no obligation, to update any forward-looking statements to reflect, in particular, new information or future events.

    For investor or media inquiries, please contact:
    Tim Foran
    Tel: +1.416.986.8515
    ir@amayagaming.com

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