March 04, 2005 09:20 ET

Chartwell Announces Financial Results for the First Quarter of Fiscal 2005




MARCH 4, 2005 - 09:20 ET

Chartwell Announces Financial Results for the First
Quarter of Fiscal 2005

CALGARY, ALBERTA--(CCNMatthews - March 4, 2005) - Chartwell Technology
Inc. (TSX:CWH) :

- Revenue growth of 119.1%, Net Income of $1,486K, EPS of $0.08 per
diluted share -

Chartwell Technology Inc. (TSX:CWH) a leading provider of gaming
software systems and entertainment content to the online and remote
gaming industry, is pleased to announce financial results for the first
quarter ended January 31, 2005.

Highlights of the quarter included:

- Revenue of $4,815K compared with $2,198K during the same period in
fiscal 2004;

- Net income of $1,486K or $0.08 per diluted share compared with net
income of $386K or $0.03 per diluted share during the same period in
fiscal 2004;

- Software license fees of $4,622K compared to $1,939K during the same
period in fiscal 2004;

- Cash flow from operations of $1,236K compared to $821K during the same
period in fiscal 2004;

- Working capital of $23,323K compared to $10,549K during the same
period of 2004;

- Nine consecutive quarters of profitability.

Compared to the same period of 2004, total revenue increased 119.1%,
operating income increased 418.6%, net income increased 284.9% and
earnings per diluted share increased 166.7%.

"Consistent with our objective of delivering continued growth and
profitability, I am pleased to report our ninth consecutive profitable
quarter," states Don Gleason, Chief Financial Officer. "I am encouraged
by the overall growth of the industry in general and our installed
customer base but even more excited that new customer business
contributed 18% of our total sales revenue. Through the balance of the
year we will continue to focus on expanding our customer base in key
markets and driving new business while continuing to strategically
invest in our overall growth."


Total revenue increased to $4,815K from $2,198K in the comparative
quarter of 2004. Software license fees, which represent 95.9% of total
revenue, increased by 42.7% to $4,622K over the previous quarter and by
138.3% over the same period of 2004. Historically, license fees in the
first quarter have been 3% to 5% higher than the previous quarter. This
growth is attributable to increased license fees from new customers who
began generating revenue in the previous quarter, continued growth from
our major, established customers and the promotional program of a major
licensee. Management expects that license fees will return to more
traditional levels in the second quarter. Software set-up fees decreased
by 46.5% to $115K from $215K in the comparative quarter of 2004.

Operating Expenses

Total operating expenses, which include foreign currency gains and
losses, increased by 45.5% to $2,576K compared to $1,770K in the
comparative quarter of 2004. The increase in operating expenses reflects
the impact of the Company's investment program which began in fiscal
2004 and is continuing in fiscal 2005. Operating expenses in the first
quarter included the expensing of stock options in the amount of $118K.
There was no comparative expense in the same period of 2004. Operating
expenses as a percentage of sales revenue decreased to 54.4% compared to
82.0% in the comparative quarter of 2004.

Planned personnel additions in the software development and support
organizations have contributed significantly to the 32.2% increase in
software development and support costs to $1,325K compared to $1,002K in
the same period of 2004. Software development and support expenses
accounted for 51.4% of the Company's total costs in the first quarter of
2005 compared to 56.6% in the same period of 2004. Sales and marketing
expenses increased by 105.7% to $600K and general and administrative
("G&A") expenses decreased by 4.6% to $458K compared to $291K and $480K
in the same period of 2004. The increase in sales and marketing expenses
is directly attributable to additional sales and marketing headcount and
the costs relating to the operation of the London, U.K. sales office.
The decrease in G & A is solely attributable to a reduction in bad debt
expenses to $nil in the current quarter compared to $170K in the same
period of 2004.

The increased expenditure level in the first quarter of 2005 is expected
to continue in order to sustain and fuel long term growth.

Income from Operations

Despite planned increases in costs associated with investing in the
Company's growth, income from operations increased by 418.6% to $2,239K
compared to $431K in the comparative quarter of 2004. The increase is
the result of managing expenses relative to the growth in revenue.
Operating margins have improved to 46.5% compared to 29.6% in the
previous quarter and 19.4% in the comparative quarter of 2004.

Net Income

Net income increased by 284.3% to $1,486K compared to $387K in the same
period of 2004. Net income in the current period is net of a provision
for income taxes in the amount of $753K. The Company has used all
non-capital tax loss carry forwards and is expected to be cash taxable
in the current year.

Liquidity and Capital Resources

Positive cash generation coupled with a financing, continued to
strengthen the Company's balance sheet. At January 31, 2005, Chartwell
had an aggregate of $20,899K of cash and short term investments and
providing $23,323K of working capital.

Cash flow from operations for the first quarter of 2005 was $1,236K
compared to $821K for the same period of 2004. The Company's cash
position was significantly increased by positive net earnings and net
proceeds of $10,247K from a private placement financing completed in
December of 2004.

Cash used in investing activities was $10,473K resulting from the
purchase of $10,366K of short term investments and $107K of property and
equipment. For the comparative period of 2004, the Company purchased
$1,530K in short term investments and $185K in property and equipment,
resulting in a cash utilization of $1,715K.

About Chartwell

Chartwell Technology Inc. specializes in the development of gaming
applications and entertainment content for the Internet and wireless
platforms and other remote access devices. Chartwell's JAVA and Flash
based software products and games are designed for deployment in gaming,
entertainment, advertising and promotional applications. Chartwell does
not participate in the online gaming business of its clients.
Chartwell's team of highly trained professionals is committed to
delivering the highest quality software and maintaining its leading edge
through continuous development and unparalleled customer support.

Chartwell invites you to preview and play our games at

Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995: The statements contained herein which are not historical fact
are forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially from
those expressed in the forward-looking statements, including, but not
limited to, certain delays in testing and evaluation of products,
regulation of the online gaming industry, and other risks detailed from
time to time in Chartwell's filings with the Securities & Exchange
Commission. We assume no responsibility for the accuracy and
completeness of these statements and are under no duty to update any of
the forward-looking statements contained herein to conform these
statements to actual results. This is not an offer to sell or a
solicitation of an offer to purchase any securities.


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