Amaya 2013 Q1 financial results

By Shara Tamagi

Revenue grows 496% on a year-over-year basis

MONTREAL, Canada, May 28, 2013 – Amaya Gaming Group Inc. (“Amaya” or the “Corporation”) (TSX.V: AYA), an entertainment solutions provider for the regulated gaming industry, today announced its financial results for the three months ended March 31, 2013. All amounts are stated in Canadian dollars unless otherwise noted.

FINANCIAL HIGHLIGHTS

FOR THE THREE MONTHS ENDED MARCH 31	Q1 2013 $	Q1 2012 $
Revenues	38,053,247	6,384,037
Adjusted EBITDA[1]	10,264,017	(532,402)
Net earnings (loss)	(7,440,841)	(4,558,054)
Basic earnings (loss) per share	(0.09)	(0.09)

Q1 2013 AND SUBSEQUENT HIGHLIGHTS

• Cash provided from operating activities for the three month period ending March 31, 2013 was $7.48 million as compared to cash used for operating activities of $1.38 million for the three-month period ending March 31, 2012.
• Amaya announced today that its company Cadillac Jack has executed a multi-year agreement with one of its largest customers in Mexico to expand Cadillac Jack’s leased install base by 890 gaming units across 13 locations throughout Mexico.
• During the first quarter, Amaya bought back 660,800 shares for $3.24 million pursuant to its approved normal course issuer bid under which Amaya intends to purchase for cancellation up to 5,650,000 Common Shares, representing, to the knowledge of Amaya, less than 10% of the listed Common Shares held by shareholders that are not insiders, promoters or associates or affiliates of an insider of Amaya.
• The Corporation concluded the signing of the definitive agreement with SHFL Entertainment (“SHFL”), pursuant to the terms of the memorandum of understanding (MOU) entered into on December 17, 2012, under which Amaya selected SHFL as its exclusive distributor for its Ongame Poker Platform in the United States for a 10-year term.
• Amaya announced that it has expanded its agreement with mybet to include Amaya’s Ongame Poker Platform and Live Dealer offering on mybet websites.
• Amaya announced that Cogetech S.p.A has chosen Amaya’s Ongame Poker to power Izipoker.it. Cogetech is one of Italy’s largest sportsbetting company and is both a leading gaming provider for the Italian land-based market as well as an online operator with the site IZIPlay.it, which includes betting, poker, skill games, bingo and casino games.
• The Corporation announced that it has entered into an MOU with Aristocrat Technologies Inc. (“Aristocrat”) whereby Aristocrat will offer Amaya’s leading Ongame poker platform to Aristocrat’s U.S. customers through its award-winning nLive™ online gaming platform.
• Amaya announced the signing of a memorandum of understanding with Bally Technologies, Inc. to integrate Amaya’s Ongame poker platform into Bally’s award-winning iGaming Platform as its preferred poker provider in the emerging U.S. online gaming market.
• Amaya announced the launch of some of its most popular online casino slot games by Microgame S.p.A., the leading service provider for the remote gaming market in Italy.
• Amaya announced the launch of its full suite of proprietary and branded games on Circus Group’s Casino777.be, one of Belgium’s first regulated online gaming sites and the country’s premier online gaming destination, pursuant to a three-year licensing agreement announced in July, 2012.
• Amaya announced an agreement with ACEP Interactive, LLC, the interactive gaming arm of Nevada-based American Casino & Entertainment Properties LLC (“ACEP”) for Amaya’s Ongame poker network to power ACEP’s online poker offering at acePLAYpoker.com.
• Amaya announced an extension of its agreement with Warner Bros. Consumer Products, on behalf of DC Entertainment, to be the exclusive provider of DC Comics comic book-inspired pay-to-play online casino games.
• Amaya closed a private placement of Units for aggregate gross proceeds of $30 million, with the Units consisting of: (i) $1,000 principal amount of unsecured non-convertible subordinated debentures bearing interest at a rate of 7.50% per annum payable semi-annually in arrears on January 31 and July 31 in each year commencing July 31, 2013; and (ii) 48 non-transferable common share purchase warrants (each a “Warrant”). Amaya also announced the issuance of a redemption notice to all the holders of its 10.5% convertible unsecured subordinated debentures due April 30, 2014 (the “Convertible Debentures”), all the holders of which converted their Convertible Debentures into common shares of Amaya and the Convertible Debentures were delisted from the TSX Venture Exchange.
• Amaya was honoured as the TSX Venture Tech Stock of the Year and Amaya’s CEO David Baazov was awarded with the TSX Venture Tech Executive of the Year in the third annual Cantech Letter Awards.

FINANCIAL RESULTS
Amaya reported revenues of $38.05 million for the fourth quarter of 2012, an increase of 496% compared to $6.38 million in the first quarter of 2012. This revenue increase is primarily attributable: to consolidating the software licensing and hosted casino revenue of CryptoLogic Limited (“CryptoLogic”), which was acquired on April 2, 2012; consolidating software licensing revenue from Ongame Network Limited (“Ongame”), which was acquired on November 1, 2012; and consolidating participation agreement revenue of Cadillac Jack Inc. (“Cadillac Jack”), which was acquired on November 5, 2012. On a regional basis, revenue in Q1 2013 was concentrated in North America and Europe.

Gross profit percentage was 99% of revenues for the three months ended March 31, 2013 and 96% for the three month period ended March 31, 2012.
Selling and marketing expenses increased from $1.81 million for the three month period ended March 31, 2012 to $3.73 million for the three month period ended March 31, 2013, representing an increase of 106%, attributable to consolidating advertising, promotion and royalty expenses incurred by CryptoLogic and advertising and promotion expenses incurred by Cadillac Jack.

General and administrative expenses increased from $7.51 million for the three month period ended March 31, 2012, to $34.37 million for the three month period ended March 31, 2013, representing an increase of 358%. The increase in 2013 was driven by a growing employee base and higher rent due to the CryptoLogic, Cadillac Jack, and Ongame acquisitions, and increases in amortization costs, consulting and professional fees, costs incurred in connection with the termination of employment agreements, communications expense in connection with generating CryptoLogic’s hosted casino revenue, maintenance and repairs, and other costs.
Financial expenses were $6.21 million for the three month period ended March 31, 2013 and $0.41 million for the three month period ended March 31, 2012. The increase is primarily attributable to interest on the convertible debentures related to the acquisition of Cryptologic, and the senior secured term loan in connection with the agreement and plan of merger to acquire Cadillac Jack.

Adjusted EBITDA was $10.26 million in the first quarter of 2013 compared to $(0.53) million in the first quarter of 2012 and $16.75 million in the fourth quarter of 2012. Q1 2013 adjusted EBITDA excludes $2.66 million in one-time costs.

Adjusted EBITDA Reconciliation
Net Income	-7,440,841
Financial expenses	6,212,059
Current income taxes	689,914
Deferred income taxes	64,502
Depreciation of property and equipment	3,395,010
Amortization of deferred development costs	131,482
Amortization of intangible assets	4,125,252
Stock-based compensation	431,622
EBITDA	7,609,000
Termination of employment agreements	1,447,829
Termination of agency agreements	100,834
Acquisition-related costs	309,479
Receivables related to terminated operations	497,668
Other one-time costs	299,207
Adjusted EBITDA	10,264,017

Adjusted Net Income Reconciliation $	Q2 2013	Q2 2012	YTD 2013	YTD 2012
Net Income	-11,441,570	-2,724,440	-18,882,411	-7,282,495
One-time costs	2,263,560	1,025,735	4,918,577	4,642,183
Foreign Exchange	3,281,517	-279,480	3,764,908	-90,157
Amortization of purchase price allocation Intangibles	3,438,313	183,846	6,939,152	1,035,520
Interest Accretion	788,817	1,037,936	2,911,424	1,072,186
Stock-Based Compensation	493,778	167,059	925,400	340,236
Adjusted Net income	-1,175,585	-589,344	577,050	-282,527

2013 FULL YEAR QUARTER FINANCIAL GUIDANCE
For the full year of 2013, the Corporation is expecting:

• Revenue in the range of $156 to $167 million
• Adjusted EBITDA in the range of $55 to $64 million

2013 FIRST QUARTER FINANCIAL STATEMENTS AND MANAGEMENT’S DISCUSSION AND ANALYSIS
The quarterly financial statements, notes to financial statements and Management’s Discussion and Analysis for the three months ended March 31, 2013, will be available on the SEDAR website at www.sedar.com.

CONFERENCE CALL
Amaya will host a conference call host a conference call on Wednesday, May 29, 2013 at 9:00 a.m. ET to discuss its 2013 first quarter financial results. David Baazov, CEO of Amaya Gaming Group Inc., 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 Wednesday, June 5, 2013 by calling 416-849-0833 or 1-855-859-2056, reference number 76541422. The conference call will be webcast live at http://bit.ly/14SiBzj.

ANNUAL GENERAL MEETING
Amaya announced that the five nominees listed in its management information circular dated April 29, 2013, namely David Baazov, Daniel Sebag, Gen. Wesley Clark Sr., Divyesh (Dave) Gadhia, and Harlan Goodson, were re-elected as directors of the Corporation at the Annual General Meeting of Shareholders of Amaya Gaming Group Inc. on May 28, 2013. The resolution to reappoint Richter S.E.N.C.R.L./L.L.P. as auditors of Amaya Gaming Group Inc. for the ensuing year, was carried.

ABOUT AMAYA GAMING GROUP INC.
Amaya provides a full suite of gaming products and services including casino, poker, sportsbook, platform, lotteries and slot machines. Some of the world’s largest gaming operators and casinos are powered by Amaya’s online, mobile, and land-based products. Amaya is present in all major gaming markets in the world with offices in North America, Latin America and Europe. Amaya recently acquired Cryptologic, a pioneer within online casino, Ongame, a leader within online poker, and Cadillac Jack, a successful slot machine manufacturer. For more information please visit www.amayagaming.com.

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.
“Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.”

For investor or media inquiries, please contact:
Tim Foran
TMX Equicom
Tel: 416-815-0700 ext. 251
NA toll free: 1-800-385-5451 ext. 251
tforan@tmxequicom.com