CHARTWELL TECHNOLOGY INC.
TSX : CWH

CHARTWELL TECHNOLOGY INC.

June 15, 2005 09:15 ET

Chartwell Announces Financial Results for the Three Months and Six Months Ended April 30, 2005

CALGARY, ALBERTA--(CCNMatthews - June 15, 2005) -

- Revenue growth of 33%, EBITDA of $1,581K, Net Income of $0.05 per share

Chartwell Technology Inc. (TSX:CWH) a leading provider of gaming software systems and entertainment content to the online and remote gaming industry, announces unaudited financial results for the three and six months ended April 30, 2005.

Highlights of the quarter included:

- Total revenue of $3,877K compared with $2,916K during the same period in 2004;

- Software license fees of $3,630K compared to $2,699K during the same period in 2004;

- EBITDA (earnings before depreciation, amortization and interest) of $1,582K compared to $958K during the same period in 2004;

- Operating margins of 40.7% compared to 31.9% during the same period in 2004;

- Net earnings of $934K or $0.05 per diluted share compared with net earnings of $964K or $0.06 per diluted share during the same period in 2004;

- Positive cash flow from operations of $1,728K compared to $276K during the same period in 2004;

- Total assets of $29.3M compared to $11.8M in the same period of 2004;

- Tenth consecutive quarter of profitability;

- Acquisition of MICROPOWER Corporation;

- Expanded customer base;

- Increased profile in the financial community;

- U.K. gambling legislation.

"I am pleased to report another quarter of growth and profitability", states Don Gleason, Chief Financial Officer. "Our second quarter and year to date results are consistent with our financial objectives for the year. We are continuing to focus on profitability while strategically investing in key areas of our business. The addition of new clients coupled with an improved poker offering through the acquisition of MICROPOWER positions us well for continued growth."

Three Months Ended April 30, 2005

Compared to the same period of 2004, total revenue increased by 32.9%, software license fees increased by 34.5%, EBITDA increased by 65.1%, operating margins increased to 40.7% and net earnings decreased by 3.1%.

Total revenue increased to $3,877K from $2,916K in the comparative quarter of 2004. Software license fees, which represent approximately 94% of total revenue, increased to $3,630K from $2,699K in the comparative quarter of 2004.

Total operating expenses, which include foreign currency gains, increased to $2,300K from $1,985K in the comparative quarter of 2004. The increase in operating expenses is within plan and continues to reflect the Company's investment program which began in fiscal 2004 and is continuing in fiscal 2005. Software development and support and sales and marketing are the principal beneficiaries of this investment program. Software development and support expenses ("SWD") increased by 31.1% to $1,319K compared to $1,006K in the comparative quarter of 2004. Sales and marketing expenses increased by 90.7% to $551K compared to $289K in the comparative quarter of 2004. General and administrative ("G&A) expenses decreased by 68.2% to $227K compared to $716K in the comparative quarter of 2004. This decrease was primarily attributable to bad debt expenses.

The increased expenditure level in operating expenses is expected to continue throughout the remainder of the year in order to sustain and fuel continued growth.

Despite planned increases in costs, operating margins increased to 40.7% compared to 31.9% in the comparative period of 2004 and EBITDA increased by 65.1% to $1,581K compared to $958K in the comparative quarter of 2004.

Net income decreased by 3.1% to $934K compared to $963K in the comparative period of 2004. The decrease in net income is the result of a tax expense of $643K compared to a tax recovery of $35K in the comparative quarter of 2004. The decrease in diluted earnings per share to $0.05 from $0.06 is the result of an increase in the Company's issued shares resulting from the December private placement and the dilutive affect of stock options.

Six Months Ended April 30, 2005

Compared to the same six-month period of 2004, total revenue increased by 70.0%, software license fees increased by 77.9%, EBITDA increased by 177.9%, operating margins increased to 43.9%, earnings increased by 79.3% and earnings per share diluted increased by 33.3%.

Total revenue increased to $8,692K from $5,113K in the comparative six-month period in 2004. License fees increased by 77.9% to $8,251K from $4,639K in the comparative six-month period of 2004.

Total operating expenses increased by 29.9% to $4,876K from $3,752K in the same period of 2004. SWD expense increased by 31.7% to $2,645K compared to $2,008K in the same period of 2004. Sales and marketing expenses increased by 98.4% to $1,151K compared to $580K in the same period of 2004. G & A expenses decreased by 42.7% to $685K compared to $1,195K in the same period of 2004.

EBITDA increased by 177.9% to $3,836K compared to $1,380K in the same period of 2004.

Net income increased by 79.3% to $2,420K compared to $1,350K in the same period of 2004. Diluted EPS increased by 33.3% to $0.12 compared to $0.09 in the same period of 2004.

Balance Sheet Strength

The Company continued to strengthen its balance sheet through positive cash generation and strong earnings performance. At April 30, 2005, the Company's total assets increased to $29,328K and working capital increased to $23,793K.The Company had no debt and an aggregate cash balance, including short-term investments, of $21,754K.

Operating cash flow was $1,728K for the quarter and $2,948K year to date. This increase was primarily attributable to positive earnings in both the first and second quarters. Cash provided by financing was $349K for the quarter and was due to the exercise of stock options. Cash used in investing activities was $6,328K for the quarter. Investing activities consisted of the purchase of short-term investments and property and equipment in the amounts of $5,106K and $309K and a deposit on the MICROPOWER acquisition in the amount of $913K.

Acquisition of MICROPOWER Corporation

The online poker industry continues to enjoy strong momentum with significant growth expected to continue. Chartwell recognized that in order to capitalize on this growth opportunity its Poker software capabilities needed significant enhancement. To address this issue, Chartwell, subsequent to quarter end, acquired MICROPOWER Corporation of Gibraltar. MICROPOWER, one of the premier online poker software development companies, has quickly established a brand that is synonymous with multi-player poker. The acquisition satisfies the need for a significantly enhanced poker product and provides Chartwell with greatly increased poker development capabilities. Chartwell now has a very competitive poker offering that positions us to capture a meaningful market shares in this rapidly growing sector of the gaming industry.

Expanded Customer Base

Chartwell expanded its customer base with the addition of two major clients in the second quarter, Sportingbet plc and Bingo.com. Sportingbet is regarded as the largest online gaming company in the world with betting turnover of over $2-billion (U.S.) from a player base that exceeds 2.2 million customers in over 100 countries and currently averages over 13 bets per second. Bingo.com is one of the world's largest online bingo destinations, with a player base of over one million registered players and attracts over 30,000 visitors each day. These two top tier additions to the Chartwell client base contribute additional revenue streams in two new areas, soft gaming and bingo.

Increased Profile in the Financial Community

The Company's profile in the financial community has been increased with additional research coverage now being provided by GMP Securities Ltd. and Paradigm Capital Inc. This brings to four the number of firms covering the Company.

U.K. Gambling Legislation

In April, 2005 the U.K. government passed legislation to regulate online gambling in the United Kingdom. The Gambling Act will establish world-class standards for a safe, secure and regulated environment for players in a key market and may provide the impetus for similar regulatory advancements in other jurisdictions, including elsewhere in Europe. In anticipation of the regulatory changes in the U.K the Company invested significantly in Europe with its office in London and the development of responsible gaming functionality and certification capabilities for its software systems.

2005 Second Quarter Analyst Call

Chartwell will host an Analyst/Investor conference call review 2nd quarter 2005 results. To participate in the call please dial the appropriate number below 5 minutes prior to call commencement. You will be requested to provide your name, telephone and corporate affiliation (if applicable).



Date: June 15th 2005
Time: 8:30 am EDT
Local/International Access: 416-695-9702
Toll-free North America: 1-877-323-2091

Audio playback will be available after the call and will remain
accessible until June 29th, 2005.

Instant Replay Access Information:
Local/International Access: 416-695-5275
Toll-free Access: 1-888-509-0082


About Chartwell

Chartwell Technology Inc. specializes in the development of leading edge 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.

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.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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