NYX Gaming Group Limited Provides Market Update and sets date for Q2 2015 report

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LAS VEGAS, Aug. 4, 2015 /CNW/ - NYX Gaming Group Limited ("NYX" or the "Company") (TSXV: NYX) today announced its Q2 2015 earnings date and conference call details, provided a progress update on its integration of Ongame and its previously announced acquisition (the "Acquisition") of the entire issued share capital of Amaya (Alberta) Inc., formerly Chartwell Technology Inc. ("Chartwell") and CryptoLogic Limited ("CryptoLogic" and together with Chartwell, the "B2B Business") from Amaya Inc. ("Amaya").

Update on B2B Business Acquisition

The newly acquired B2B Business has approximately 300 games, 2 distribution platforms, and jackpot technology that offers both progressive networked and stand-alone jackpots. The Acquisition expands our development team from 120 to 146 and increases our ability to service our customers locally from all across the globe to provide world-class products and services.

The B2B Business customer base will take NYX's customer base from 130 to 170 unique customers, which will give us the ability to cross-market our collective game catalogue of over 650 titles, up from 350. In anticipation of the closing of the acquisition, we completed the integration of NYX's Open Gaming System ("OGS") in Chartwell's CGS (Chartwell's version of NYX's OGS) with the first games from this integration to be launched the week of August 3, 2015. As previously reported, this integration is expected to increase our game royalties of between $3.0 million to $5.0 million over the next twelve months. All $ references are to CAD.

The Company also expects to realize a significant number of opportunities to reduce costs across the organization. As part of the acquisition, we inherited offices in Calgary, Toronto, Dublin, Malta, and Gibraltar.   We anticipate consolidating offices in Malta and Gibraltar, reducing office space in Toronto, and closing the office in Dublin.  We have already commenced an overall reduction in general and administration expenses in the areas of personnel, software and hardware, consulting fees, occupancy cost, internet and bandwidth, legal, accounting, and other professional services. We have previously disclosed that overall cost synergies are estimated to be $7.0 to $9.0 million over the next twelve months and we continue to be on track to achieve this savings.  We anticipate savings of $2.5 million on an annualized basis during 2015, with the remaining synergies to be achieved in 2016. 

As disclosed in the Short Form Prospectus, the B2B Business generated a comprehensive loss of $2.9m from total revenue base of $17.4m for the fiscal 2014 period. Further, during Q1 2015, the B2B Business generated $0.58m loss on $3.17m revenue.

The revenue decline has been due primarily to two factors and not an overall indication of the underlying performance of the core business.  Specifically, in 2014 $3.2 million in revenues were related to one lottery customer for non-recurring services delivered in 2014.  During Q4 of 2014 and Q1 of 2015 revenue declines were the result of termination of certain game IP and the loss of customers. The Company does not anticipate any further loss of IP related game revenues in the short to medium term and intends to revamp certain existing IP games to maximise the value of these assets.

2015 Q1 EBITDA Bridge

In CAD
Comprehensive (loss) income for the year	$	(586,978)
Other comprehensive (income)		(2,325,342)
Net (loss) income before comprehensive (loss) income		(2,912,320)
Impairment of intangible assets		319,681
Depreciation and amortization		329,899
Financial expenses		765,517
EBITDA	$	(1,497,223)
Q1 Annualized EBITDA	$	(5,998,892)
Annualized cost synergies of $7 to $9 million		8,000,000
Annualized revenue synergies of $3 to $5 million		4,000,000
Rational revenue ($12m less est. overheads)		10,000,000
Adjusted EBITDA	$	16,011,108

As part of the Acquisition NYX also entered into a preferred supplier licensing agreement with a subsidiary of Amaya to provide certain casino gaming content to Amaya's real-money casino offering, which will be integrated into the PokerStars and Full Tilt branded casino websites. The Company has made progress integrating our games with the Full Tilt and PokerStars platforms ahead of the execution of its preferred supplier license agreement with Amaya. The license agreement includes a minimum revenue guarantee ("MRG"), a requirement to prominently display NYX proprietary content across the Amaya Casino slot pages and a royalty rate based on net gaming revenue (included in the MRG). We anticipate the MRG of $3 million per quarter to start in October 2015. Whilst the MRG provides a floor on revenues from the license agreement, there is no contractual ceiling on revenues generated above this amount. Generating revenues above the MRG depends in part on the performance of NYX games and the growth of Amaya's casino business. Management anticipates the license agreement to generate revenue in excess of the MRG prior to the end of the initial three year MRG period. We note that the MRG applies for the first 3 years; however, the additional requirements outlined above apply for the full term of the 6 year agreement.

Amaya's Real Money Casino Offering

Amaya is the world's largest publicly traded real money gaming company. Combined, its brands PokerStars and Full Tilt are the leaders in the global real money online poker market, per various industry data. .

The brands have recently started to roll out online casino games to their existing player base in eligible jurisdictions. Amaya recently estimated its emerging real money online casino vertical generated approximately C$38 million in revenues in the second quarter ended June 30, 2015, close to double what it achieved in the first quarter of 2015. Amaya has stated that it anticipates further growth in the second half of 2015 and beyond as it expands its offering of casino games and completes the rollout of such games across more geographies and platforms, including mobile and web, and begins advertising its offering to attract new customers. The information in this paragraph is based on public disclosure provided by Amaya and available at www.Amaya.com.

Ongame Restructuring

As an update on our real money poker division, the Ongame restructuring is continuing as planned and we anticipate we will achieve cash flow breakeven by the end of 2015 or early Q1 2016.  Over the past seven months we have reduced costs by approximately $12.0 million on an annualized basis.  We are currently working to migrate the two customers using the Amaya Gaming Office ("AGO") to NYX's Open Platform System ("OPS"), which is expected to generate annual savings of $2.4 to $3.6 million per year. The anticipated migration is expected to be completed by early Q1 2016. Further, we have increased customer sales and are highly confident of consolidating one or more poker networks that will materially improve player liquidity and poker revenues, assisting us to meet our objective of breakeven in Ongame division by the end of 2015 or early Q1 2016.

Q2 2015 Earnings Release and Conference Call

The Company expects to report its second quarter 2015 financial results on Thursday, August 27^th 2015 at 7:00 a.m. ET. The Company will hold a conference call to discuss its financial results for the second quarter of fiscal 2015 on Thursday August 27^th, 2015 at 8:30 am E.T. 

About NYX Gaming Group Limited

NYX Gaming Group Limited is a leading digital gaming supplier headquartered in Las Vegas with a staff of more than 350 employees based in 8 countries across Europe, North America and Australia. The Company provides one of the world's largest portfolios of market leading content and technology to some of the largest gaming operators, lotteries and casinos across the globe. NYX has one of the broadest distribution bases in the industry with over 170 unique customers and a collective game catalogue of over 650 games. The market leading game catalogue includes slots, table games, scratch cards, lottery, bingo and poker available across web and mobile formats. NYX Gaming Group Limited is listed on the TSX Venture Exchange under the symbolTSXV: NYX.

Forward-Looking Statements and Non-IFRS Financial Measures

Certain information in this news release constitutes forward-looking statements under applicable securities laws. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "potential" or the negative of these terms or other similar expressions. Forward-looking statements in this news release include, but are not limited to, future-oriented financial information and financial outlooks, within the meaning of securities laws, information relating to the anticipated benefits of the Acquisition, including the timing and value of revenue and earnings growth potential. Forward-looking statements are based on certain assumptions about the business regarding expected growth, results of operations, performance, industry trends and growth opportunities. While the Company considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Readers are cautioned not to place undue reliance on forward-looking statements.

Forward-looking statements by their nature necessarily involve risks and uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future events, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to: credit, market, currency, operational, liquidity and funding risks, including changes in economic conditions, interest rates or tax rates, the impact of government regulation on the online gaming industry and the risk that such regulation is subject to change, competition from other providers of online gaming services, the possibility that the Company is unable to successfully integrate the B2B Business and complete the Ongame restructuring as contemplated, the risks associated with international and foreign operations, the impact of consolidations in the online gaming industry and the other risks discussed under the heading "Risk Factors" in the Company's final long form prospectus dated December 18, 2014 and the Company's final short form prospectus dated July 9, 2015. The foregoing factors are not intended to represent a complete list of the factors that could affect the Company or the Acquisition. The Company does not intend or undertake to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.

This release contains Non-IFRS financial measures. These financial measures are used by many investors to compare companies and management believes they are important measures in evaluating NYX Gaming Group. However, they are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. Therefore, they may not be comparable to similar measures presented by other issuers. Investors are cautioned that such measures should not be construed as alternatives to comparable IFRS measures determined in accordance with IFRS. EBITDA and adjusted EBITDA is defined by the Company as earnings before interest and financing costs (net of interest income), income taxes, depreciation and amortization, impairments, comprehensive income(loss) and stock-based compensation. EBITDA and adjusted EBITDA are non-IFRS measures.

Neither the 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.

SOURCE NYX Gaming Group Ltd.

Matt Davey, Chief Executive Officer, NYX Gaming Group Limited, 1-702-586-8428, www.nyxgg.com; Keith Richards, Investor Relations, TMX Equicom, [phone] or 1-800-385-5451 ext. 232, [email protected]