TORONTO, ONTARIO — (Marketwired) — 02/08/16 — The Intertain Group Limited (“Intertain”) (TSX: IT)(OTCQX: ITTNF) today provided an update on the review of its independent committee (the “Committee”) established on December 17, 2015 following the release that day of a report targeting Intertain by a self-described short seller.
As Intertain stated at the time, while it considered the short seller–s report to be self-serving and to contain numerous factual inaccuracies and mischaracterizations of data, the Board of Directors, consistent with its responsibilities, requested a thorough review of the report by the Committee. The Committee, which consists only of non-management directors, retained Voorheis & Co. LLP and Stockwoods LLP of Toronto to assist it in structuring and conducting a completely independent review. Deloitte LLP was also retained as an advisor to the Committee.
Affirmation of the Strength of Intertain–s Underlying Businesses
The short seller–s report made allegations regarding Intertain–s prior acquisitions and the prospects of its acquired businesses, including in particular the Jackpotjoy brands. With the assistance of its advisors, the Committee reviewed Intertain–s key operating performance, including the performance of Intertain–s acquired businesses before and following their acquisition by Intertain.
Contrary to the claims of the short seller, each of the Jackpotjoy, Vera&John and Mandalay businesses performed well during 2015 and continues to meet, or exceed, management–s expectations. This is consistent with Intertain–s January 11, 2016 press release announcing increased total revenue, adjusted net income and adjusted net income per share guidance for 2015. Intertain–s only business unit that has been underperforming is InterCasino, which is no longer a significant component of Intertain–s consolidated results.
Importantly, the Jackpotjoy brands, which represent Intertain–s most significant acquisition to date, continue to perform, on a consolidated basis, in line with the expectations of Intertain–s management at the time the acquisition was negotiated and completed. As set forth in Intertain–s December 22, 2015 press release, the principal criticisms levelled by the short seller regarding the Jackpotjoy brands, including in regards to their EBIT margins and their market leading position in the UK online Bingo-led market, were false and misleading.
The Committee–s review revealed no basis for concern with respect to any of the Jackpotjoy, Vera&John or Mandalay acquisitions or the continued performance of those businesses.
No Change to Intertain–s Prior Financial Statements
The Committee, assisted by its independent advisors, carefully considered the accounting allegations raised by the short seller. The Committee and its advisors treated these allegations seriously, notwithstanding the many apparent substantial inaccuracies in other parts of the short seller–s report.
Following the Committee–s consideration of the principal accounting allegations raised in the short report, which included a review of those allegations with Intertain–s independent auditor, BDO LLP, the Committee was satisfied that no changes to Intertain–s previously disclosed financial statements are required in relation to these matters.
Corporate Processes and Controls
The Committee and its advisors also considered the performance of Intertain–s corporate processes and controls and the financial and governance functions and oversight at Intertain. The Committee has made recommendations for changes and improvements in these areas, including to address inadequate documentation, approvals and record keeping in respect of certain payments previously made by Intertain that were recorded and fully expensed by it as transaction expenses in connection with its prior acquisitions. The Committee–s review is substantially complete and the Committee expects its remaining review to be completed shortly. The Committee and the Board are committed to promptly implementing those changes and improvements required to appropriately address these matters.
About The Intertain Group Limited
Intertain is an online gaming company that provides entertainment to a global consumer base. Intertain currently offers bingo and casino to its customers using the InterCasino , Costa , Vera&John , Jackpotjoy , and Botemania brands. For more information about Intertain, please visit .
Contacts:
Investor Contact
Jacques Cornet
+1 646-277-1285
Media Contact
Phil Denning
+1 646-277-1258
Michael Robinson
+1 646-277-1288
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